Explorer

Certain of the cash reported by the issuer was held in an account in the name of the issuer's chief executive officer. The firm did not perform procedures to test this cash beyond inquiring of management and reviewing issuer documentation. (AS 2301.08)

The firm did not identify and evaluate the significance to the financial statements of a departure from GAAP related to the issuer's omission of disclosures that this cash was held by a related party and the terms and manner of settlement in conformity with FASB ASC Topic 850 Related Party Disclosures. (AS 2410.17; AS 2810.30 and .31)

The firm did not evaluate whether the presentation of cash held by a related party within cash and cash equivalents was in conformity with GAAP. (AS 2810.30)

For certain significant transactions the firm did not sufficiently evaluate whether an assumption used to value these transactions represented its fair value because it did not consider certain contrary evidence. (AS 2502.26 .28 .31 and .36)

For certain significant transactions the firm did not evaluate whether these transactions were recorded in the appropriate period and at the appropriate amount in conformity with GAAP. (AS 2810.30)

The issuer performed physical inventory counts and cycle counts and the firm was not present at the counts. The firm did not make or observe some physical counts of inventory and apply appropriate tests of intervening transactions. Further the firm did not inspect the records of the issuer's counts and perform procedures relating to the physical inventory on which the balance-sheet inventory was based. (AS 2510.12)

The issuer performed physical inventory counts and cycle counts and the firm was not present at the counts. The firm did not evaluate whether certain inventory was recorded at the lower of cost or market. (AS 2501.07)

The firm assessed inherent risk of cash as high and sent confirmation requests. The firm did not receive replies to its confirmation requests. The firm did not sufficiently test the existence of cash because its alternative procedures were limited to tracing the reported cash balance to copies of the bank statements obtained from the issuer without verifying the validity of the bank statement. (AS 2310.31)

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

The firm did not identify and evaluate the significance to the financial statements of a departure from GAAP related to the issuer not adopting FASB ASC 606 Revenue from Contracts with Customers and the omission of the required disclosures. (AS 2810.30 and .31)

The firm did not evaluate whether the issuer was acting as either a principal or agent for each good or service in the contract and was appropriately recognizing revenue on either a gross or net basis. (AS 2810.30)

The firm did not test the existence of an asset and completeness of a liability. (AS 2301.08)

The firm did not test the fair value of this liability. (AS 2502.15)

To reduce the extent of its substantive procedures over revenue and trade receivables the firm selected for testing certain controls over unauthorized access to the sales system changes in credit limits and commercial conditions of customers monitoring of customer credit ratings and collectability of outstanding receivables approval of the allowance for doubtful accounts journal entry approval of product price changes and discounts and review and approval of allowances for returned goods and credits. The sample sizes the firm used to test revenue and trade receivables were too small to provide sufficient appropriate audit evidence because these procedures were designed based on a level of control reliance that was not supported as the firm did not identify and test any controls over the occurrence and completeness of revenue and the existence of trade receivables. (AS 2301.16 .18 and .37; AS 2315.19 .23 and .23A)

The following deficiency was identified: · The firm did not perform procedures to test or test any controls over the accuracy and completeness of certain IT system data used in its substantive testing of revenue. (AS 1105.10)

The issuer used certain IT systems to process and record transactions related to revenue. The following deficiency was identified: · The firm's approach for testing revenue included sending confirmation requests to a sample of the issuer's customers. The firm did not consider performing procedures to address the risks associated with electronic responses such as verifying the source and contents of the confirmation responses. (AS 2310.29)

The following deficiency was identified: · The firm did not perform sufficient procedures to test the occurrence of certain revenue because the firm did not perform any procedures to test whether the performance obligations had been met prior to the recognition of the revenue. (AS 2301.08 and .13)

The following deficiency was identified: · The firm did not perform sufficient procedures to evaluate whether the issuer recognized certain revenue in conformity with IFRS 15 Revenue from Contracts with Customers because the firm limited its procedures to revenue recognized from a single customer and did not perform any procedures to evaluate the issuer's recognition of revenue from the remaining customers. (AS 2301.08 and .13)

The following deficiency was identified: · The firm did not perform any procedures to evaluate the sufficiency of the issuer's disclosures regarding certain of its revenue recognition policies. (AS 2301.08 and .13)

To test cash the firm's substantive procedures included confirmation procedures in which confirmation requests were sent electronically to email addresses provided by the issuer. The following deficiency was identified: · The firm did not perform procedures to determine whether the confirmation requests were directed to third parties who were knowledgeable about the information to be confirmed. (AS 2310.26)

To test cash the firm's substantive procedures included confirmation procedures in which confirmation requests were sent electronically to email addresses provided by the issuer. The following deficiency was identified: · The firm received electronic responses to four of the five confirmation requests. The firm did not consider performing procedures to address the risks associated with electronic responses such as verifying the source of the confirmation responses. (AS 2310.29)

The issuer used certain IT systems to process and record transactions related to revenue. The following deficiency was identified: · The firm selected for testing a control that consisted of management's review of a billing workbook to ensure that the calculations and billing details were accurate. The firm did not identify and test any controls over the accuracy and completeness of a system-generated report and the accuracy of certain other data used in the operation of this control. (AS 2201.39)

The issuer used certain IT systems to process and record transactions related to revenue. The following deficiency was identified: · The firm selected for testing a control that consisted of management's review of a billing workbook to ensure that the calculations and billing details were accurate. The firm did not evaluate the specific review procedures that the control owner performed to identify billing changes for review. (AS 2201.42 and .44)

The issuer used certain IT systems to process and record transactions related to revenue. The following deficiency was identified: · The firm's approach for testing revenue included sending confirmation requests to a sample of the issuer's customers. The issuer electronically sent the confirmation requests to the customers on behalf of the firm and the firm received the responses to the confirmation requests electronically. The firm did not maintain control over the confirmation requests through direct communication with the intended recipients of the confirmation requests. (AS 2310.28)

The firm did not identify and evaluate a departure from GAAP related to the recognition of revenue for a tax credit which was not in conformity with FASB ASC Topic 606 Revenue from Contracts with Customers. (AS 2810.30 and .31)

The firm did not perform sufficient substantive procedures to evaluate whether the issuer recognized revenue in conformity with FASB ASC Topic 606 because the firm did not evaluate all terms and conditions included in the issuer's contracts that could affect the recognition of revenue. (AS 2301.08 and .13)

The firm did not perform any procedures to evaluate the relevance and reliability of information obtained from external sources that it used to test revenue. (AS 1105.04 and .06)

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 issuer used multiple information-technology (IT) systems to initiate process and record transactions related to revenue accounts receivable and unbilled receivables. In its testing of controls over these accounts the firm tested various IT-dependent manual controls that used data and reports generated or maintained by these IT systems. As a result of the deficiencies in the firm's testing of IT general controls (ITGCs) the firm's testing of these IT-dependent manual controls was not sufficient. (AS 2201.46)

With respect to the firm's substantive procedures the following deficiency was identified: · The firm did not perform procedures to test or sufficiently test controls over as discussed above the accuracy and completeness of information and reports that it used in its substantive procedures to test revenue. (AS 1105.10)

The issuer engaged an external specialist to estimate an insurance-related liability. The firm engaged another specialist to test this liability. The following deficiency was identified: · The firm did not identify and test controls that addressed (1) the reasonableness of the company's specialist's estimate of this liability and (2) the accuracy and completeness of data and reasonableness of assumptions which were developed by the issuer that the company's specialist used to develop the estimate of this liability. (AS 2201.39)

The issuer engaged an external specialist to estimate an insurance-related liability. The firm engaged another specialist to test this liability. The following deficiency was identified: · The firm did not perform procedures beyond obtaining and reading the issuer's analysis to evaluate whether the issuer's recognition of this liability was appropriate including evaluation of certain contrary information included in its work papers. (AS 2301.08; AS 2810.03)

The issuer engaged an external specialist to estimate an insurance-related liability. The firm engaged another specialist to test this liability. The following deficiency was identified: · The firm did not evaluate whether the auditor-engaged specialist's work provided sufficient appropriate audit evidence because it did not identify that the specialist did not perform substantive procedures to test this liability beyond inquiry and obtaining and reading the report prepared by the company's specialist. Further the firm did not perform any procedures with respect to its use of the work of the (1) company's specialist as audit evidence and (2) auditor-engaged specialist as audit evidence beyond obtaining an independence confirmation and documenting the resolution of an inquiry by the specialist. (AS 1105.A1 - .A10; AS 1210.03 - .12; AS 2501.07)

During the year the issuer issued common stock with warrants. The firm did not perform any procedures to test whether the warrants should have been accounted for as equity or a liability. (AS 2301.08)

The issuer used multiple information-technology (IT) systems to initiate process and record transactions related to revenue accounts receivable and unbilled receivables. In its testing of controls over these accounts the firm tested various IT-dependent manual controls that used data and reports generated or maintained by these IT systems. As a result of the following deficiency in the firm's testing of IT general controls (ITGCs) the firm's testing of these IT-dependent manual controls was not sufficient. • The firm selected for testing certain controls over change management and user access but did not test or test any controls over the completeness of the population from which it selected its samples for testing. (AS 1105.10)

The issuer used multiple information-technology (IT) systems to initiate process and record transactions related to revenue accounts receivable and unbilled receivables. In its testing of controls over these accounts the firm tested various IT-dependent manual controls that used data and reports generated or maintained by these IT systems. As a result of the following deficiency in the firm's testing of IT general controls (ITGCs) the firm's testing of these IT-dependent manual controls was not sufficient. • The firm did not identify and test controls that addressed the risk that users with the ability to develop changes also have the ability to implement those changes. (AS 2201.39)

The issuer used multiple information-technology (IT) systems to initiate process and record transactions related to revenue accounts receivable and unbilled receivables. In its testing of controls over these accounts the firm tested various IT-dependent manual controls that used data and reports generated or maintained by these IT systems. As a result of the following deficiency in the firm's testing of IT general controls (ITGCs) the firm's testing of these IT-dependent manual controls was not sufficient. • The firm selected for testing a control over logical access to several IT systems but did not test the aspect of this control related to these IT systems. (AS 2201.42 and .44)

For revenue accounts receivable and unbilled receivables the following additional deficiency was identified: · The firm selected for testing certain controls that consisted of the issuer's review of certain aspects of revenue accounts receivable and unbilled receivables. The firm did not perform procedures to evaluate the review procedures the control owners performed including the procedures to identify items for follow up and the procedures to determine whether those items were appropriately resolved. (AS 2201.42 and .44)

For revenue accounts receivable and unbilled receivables the following additional deficiency was identified: · The firm selected for testing a control over the review of the accuracy of invoices. The firm identified deviations in the operation of this control but did not determine the effect of these deviations on the operating effectiveness of this control. (AS 2201.48)

With respect to the firm's substantive procedures the following deficiency was identified: · The sample sizes that the firm used in certain of its substantive procedures to test revenue and accounts receivable were too small to provide sufficient appropriate audit evidence because these procedures were designed based on (1) a level of control reliance that was not supported due to (a) the deficiencies in the firm's control testing discussed above and (b) the firm not obtaining evidence that a control over change management which it selected for testing was operating effectively during the entire period of reliance and (2) an assessment of risk for other substantive tests related to the same assertion that was not supported as the engagement team did not perform any other substantive procedures to test the same assertions. (AS 2301.16 .18 and .37; AS 2315.19 .23 and .23A)

With respect to the firm's substantive procedures the following deficiency was identified: · The firm did not perform substantive procedures to test unbilled receivables. (AS 2301.08 and .13)

With respect to the firm's substantive procedures the following deficiency was identified: · The firm did not perform substantive procedures to test the allowance for doubtful accounts. (AS 2501.07)