Explorer

The firm's substantive procedures to test the existence and valuation of certain assets consisted of testing a sample of items. The firm did not perform sufficient procedures to test these assets because it (1) did not establish a basis to support the number of items selected in its sample as it did not appropriately take into account the relevant factors including the tolerable misstatement for the population allowable risk of incorrect acceptance and the characteristics of the population; (AS 2315.16 .19 .23 and .23A)

The firm's substantive procedures to test the existence and valuation of certain assets consisted of testing a sample of items. The firm did not perform sufficient procedures to test these assets because it did not test the completeness of the issuer-prepared report from which the sampled items were selected (AS 1105.10)

The firm did not evaluate the relevance and reliability of information from external sources used to test the valuation of the assets. (AS 1105.04 and.06)

In addition the issuer recognized income related to the valuation of the assets. The firm did not perform any procedures to evaluate whether the recognition of the income was appropriate. (AS 2301.08)

The firm did not perform any procedures to test whether the issuer's presentation and disclosure of the assets were in conformity with GAAP including not identifying and evaluating a departure from GAAP related to the issuer's omission of a required disclosure related to these assets. (AS 2301.08; AS 2810.30 and .31)

The firm did not (1) perform any procedures to obtain an understanding of the entity's financial reporting process and the controls over journal entries and other adjustments and (2) identify and select journal entries and other adjustments for testing. (AS 2401.58)

The firm did not identify and address inconsistencies between the firm's unqualified opinion on ICFR and management's report on ICFR which identified multiple material weaknesses. (AS 2201.72 .73 and .C2)

The firm did not perform any procedures to test revenue beyond documenting invoices were checked for total revenue. (AS 2301.08)

The firm did not evaluate (1) whether the issuer was recognizing revenue in conformity with FASB ASC Topic 606 Revenue from Contracts with Customers and (2) whether the revenue disclosures were accurate in light of certain information documented in the firm's work papers. (AS 2301.08)

The firm did not perform any procedures to test debt and a related transaction beyond obtaining agreements and performing recalculations of certain amounts. (AS 2301.08)

The firm did not perform any procedures to test a significant transaction. (AS 2301.08)

The firm did not identify and evaluate a departure from GAAP related to the transaction. (AS 2810.30 and .31)

The firm did not perform any procedures to identify and select journal entries and other adjustments for testing. (AS 2401.58)

The firm identified certain transactions that did not appear to have a clear business purpose or evidence of proper authorization. The firm did not evaluate whether the business purpose (or lack thereof) indicated that these transactions may have been entered into to engage in fraudulent financial reporting or conceal misappropriation of assets. (AS 2401.67)

The issuer had multiple subsidiaries. During the year the issuer entered into a certain type of transaction through one of its subsidiaries. The following deficiency was identified: · The firm did not evaluate whether the issuer's accounting for the transactions was appropriate. (AS 2301.08)

The issuer had multiple subsidiaries. During the year the issuer entered into a certain type of transaction through one of its subsidiaries. The following deficiency was identified: · The firm did not perform procedures to evaluate the relevance and reliability of certain information it used as audit evidence including taking into account the issuer's circumstances and other relevant conditions. (AS 1105.04 and .06; AS 2501.29)

The issuer had multiple subsidiaries. During the year the issuer entered into a certain type of transaction through one of its subsidiaries. The following deficiency was identified: · The firm did not evaluate whether the nature of these transactions required the firm to take any action in response to certain information regarding this transaction that indicated a possible illegal act. (AS 2405.10)

The issuer had multiple subsidiaries. During the year the issuer entered into a certain type of transaction through one of its subsidiaries. The following deficiency was identified: · The firm did not evaluate whether the business purpose (or lack thereof) of these transactions indicated that the transactions may have been entered into to engage in fraudulent financial reporting or conceal misappropriation of assets. (AS 2401.67)

The firm did not perform sufficient procedures to evaluate the issuer's qualitative assessment of potential impairment indicators to test the valuation of an investment because the firm did not address certain inconsistencies in the issuer's assessment. (AS 2301.08)

In addition the firm did not evaluate whether the business purpose (or lack thereof) of the investment transaction indicated that it may have been entered into to engage in fraudulent financial reporting or conceal misappropriation of assets. (AS 2401.67)

For certain subsidiaries the firm did not perform any procedures to identify and select journal entries and other adjustments for testing for evidence of possible material misstatement due to fraud without having an appropriate basis for excluding those subsidiaries. (AS 2401.61)

The firm's internal inspection program inspected this audit and reviewed this area but did not identify the deficiency below. The firm did not perform procedures to evaluate whether the recognition of revenue and related disclosures regarding the number of performance obligations in the financial statements were in conformity with FASB ASC Topic 606 Revenue from Contracts with Customers. (AS 2301.08 and .13)

The firm's internal inspection program inspected this audit and reviewed this area but did not identify the deficiency below. The firm did not identify and evaluate a departure from GAAP related to the issuer's omission of certain disclosures required by FASB ASC Topic 606. (AS 2810.30 and .31)

The issuer recorded an investment at fair value that was determined in part based on assumptions that were developed by the company's specialists. The firm's approach for testing the fair value of the investment was to develop an independent expectation of the estimate using certain significant assumptions that were developed by the company's specialists. The following deficiency was identified: • The firm did not perform procedures to evaluate the reasonableness of certain of these significant assumptions developed by one of the company's specialists beyond reading the company's specialist's valuation reports inspecting certain contracts and inquiring of management. Further the firm did not perform any procedures beyond inquiring of management with respect to its use of this company's specialist's work as audit evidence. (AS 1105.A1 - .A10; AS 2501.16)

The issuer recorded an investment at fair value that was determined in part based on assumptions that were developed by the company's specialists. The firm's approach for testing the fair value of the investment was to develop an independent expectation of the estimate using certain significant assumptions that were developed by the company's specialists. The following deficiency was identified: • The firm did not perform procedures to evaluate the reasonableness of certain other significant assumptions developed by two of the company's specialists beyond reading and comparing the two company's specialists' valuation reports inspecting certain contracts and inquiring of management. Further the firm did not perform procedures to evaluate the work of the company's specialists beyond inquiries of the company's specialists and certain comparisons to issuer documentation. (AS 1105.A6 - .A10; AS 2501.16)

The firm did not sufficiently evaluate whether the issuer's accounting for this investment was appropriate because the firm did not determine how the issuer evaluated all relevant factors including certain contrary evidence related to one of the factors. (AS 2301.08; AS 2810.03)

During the year the issuer acquired a business and determined the fair value of certain acquired intangible assets using forecasted revenue which the firm identified as a significant assumption. The firm did not evaluate the reliability of certain historical revenue data from the acquiree that was used to develop these revenue forecasts. (AS 1105.04 and .06)

The firm did not perform procedures beyond inquiry to evaluate the issuer's conclusions that quantitative impairment assessments for certain goodwill and intangible assets were not necessary including how the issuer evaluated certain relevant events or changes in circumstances of which the firm was aware that indicated that these assets may not be recoverable. (AS 2301.08; AS 2810.03)

The firm did not identify and evaluate departures from GAAP related to the issuer's inaccurate disclosures that it recognized revenue in conformity with FASB ASC Topic 605 Revenue Recognition which was superseded by FASB ASC Topic 606 Revenue from Contracts with Customers prior to the year under audit. (AS 2810.30 and .31) Unrelated to our review the issuer reevaluated its disclosures of revenue recognition and determined that the disclosures were inaccurate. The issuer did not file an amended Form 10-K or a Form 8-K indicating that its previously issued financial statements should not be relied on. Instead the issuer corrected the disclosures in a subsequent filing. The firm reissued its report on the financial statements.

The firm did not perform sufficient procedures to test one type of revenue because its procedures were limited to determining for a sample of transactions that a contract existed between the issuer and the customer. (AS 2301.08)

The firm did not perform sufficient procedures to test another type of revenue because it limited its procedures to tracing a sample of revenue transactions to issuer-prepared invoices and/or other issuer prepared information. (AS 2301.08)

The firm did not perform procedures to test the completeness of a related account. (AS 2301.08)

In addition the firm did not perform sufficient procedures to test this account because it limited its procedures to tracing a sample of transactions to certain issuer-prepared information. (AS 2301.08)

The firm did not perform procedures to test the fair value of a certain asset beyond performing recalculations of an issuer-prepared schedule. (AS 2501.07)

The firm did not perform any procedures to evaluate the issuer's accounting treatment of certain significant transactions. (AS 2301.08)

In addition the firm did not identify and evaluate departures from GAAP related to the issuer's omission of certain required disclosures related to these significant transactions. (AS 2810.30 and .31)

The firm did not identify and select journal entries and other adjustments for testing to address the potential for material misstatement due to fraud. (AS 2401.58)

The firm did not identify and evaluate departures from GAAP related to the issuer's omission of certain disclosures required by FASB ASC Topic 606 Revenue from Contracts with Customers. (AS 2810.30 and .31)

In addition the firm did not perform sufficient procedures to test revenue because it limited its procedures to tracing a sample of revenue transactions to issuer-prepared invoices. (AS 2301.08 and .13)

The firm did not perform procedures to test the issuer's restated revenue disclosures discussed. (AS 2301.08)

The firm sent positive confirmation requests to test related party payables. The firm did not perform any alternative procedures for a positive confirmation request for which it did not receive a response. (AS 2310.31)

The firm did not identify and select journal entries and other adjustments for testing to address the potential for material misstatement due to fraud. (AS 2401.58)

The firm did not perform sufficient procedures to test revenue because it limited its procedures to tracing a sample of revenue transactions to issuer-prepared invoices. (AS 2301.08)

The firm sent positive confirmation requests to test accounts receivable. The firm did not perform any alternative procedures for the positive confirmation requests for which it did not receive a response. (AS 2310.31)

The firm did not perform procedures to test the allowance for doubtful accounts beyond reading issuer prepared accounts receivable aging schedules. (AS 2501.07)

The firm did not perform any procedures to test the transactions with related parties disclosed in the financial statements. (AS 2410.12)

The firm did not evaluate whether the issuer had properly identified its related parties and relationships and transactions with related parties. (AS 2410.14)

The firm did not perform auditing procedures at or near the date of the auditor's report to ascertain the occurrence of subsequent events that may have required adjustment or disclosure essential to a fair presentation of the financial statements. (AS 2801.12)

The firm did not identify and select journal entries and other adjustments for testing to address the potential for material misstatement due to fraud. (AS 2401.58)

The firm did not perform procedures to test whether certain revenue recognition criteria had been met including whether delivery had occurred and collectability was reasonably assured. (AS 2301.08)