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The firm selected for testing a control that consisted of the issuer's review of the fair value measurements of redeemable noncontrolling interests. The firm did not evaluate the specific review procedures that the control owner performed to evaluate the reasonableness of the earnings multiples used in determining the fair values. (AS 2201.42 and .44)

The firm selected for testing a control that consisted of the issuer's review of the fair value measurements of redeemable noncontrolling interests. The firm did not identify and test any controls over the accuracy and completeness of the historical earnings multiples that the control owner used in the operation of this control. (AS 2201.39)

The firm identified the issuer's omission of a required disclosure under FASB ASC Topic 820 related to the earnings multiples used in the fair value measurements of redeemable noncontrolling interests. The firm did not sufficiently evaluate the effect of this omission because it limited its assessment to asserting that including the omitted disclosure would not change a financial statement user's decision. (AS 2810.17 .30 and .31)

With respect to user access: · The firm selected for testing certain controls over the restriction of access to these IT systems. In its testing of the operating effectiveness of one of these controls the firm excluded a certain type of user from its testing population. (AS 2201.44)

During the year the issuer acquired a business and engaged a specialist to assist in determining the fair values of certain acquired assets and the related liabilities as of the acquisition date using various significant assumptions. This specialist also assisted the issuer in determining the fair values at year end. The following deficiencies were identified: · In evaluating the company's specialist's methods to determine these fair values as of the acquisition date the firm selected a sample of assets to evaluate whether the data and significant assumptions were appropriately applied. The firm's sample was too small to provide sufficient appropriate audit evidence because in determining the sample size the firm did not take into account tolerable misstatement and the allowable risk of incorrect acceptance. (AS 1105.A8c; AS 2315.16 .23 and .23A)

During the year the issuer acquired a business and engaged a specialist to assist in determining the fair values of certain acquired assets and the related liabilities as of the acquisition date using various significant assumptions. This specialist also assisted the issuer in determining the fair values at year end. The following deficiencies were identified: · In evaluating the company's specialist's methods to determine these fair values as of the acquisition date the firm selected a sample of assets to evaluate whether the data and significant assumptions were appropriately applied. For one category of these assets the firm did not evaluate whether the data and significant assumptions were appropriately applied to the complete population of these assets. (AS 1105.A8c)

During the year the issuer acquired a business and engaged a specialist to assist in determining the fair values of certain acquired assets and the related liabilities as of the acquisition date using various significant assumptions. This specialist also assisted the issuer in determining the fair values at year end. The following deficiencies were identified: · For these acquired assets and the related liabilities as of the acquisition date the firm did not perform procedures to evaluate the reasonableness of certain significant assumptions developed by the company's specialist beyond comparing these assumptions to assumptions the issuer used in the prior year. (AS 1105.A8b)

During the year the issuer acquired a business and engaged a specialist to assist in determining the fair values of certain acquired assets and the related liabilities as of the acquisition date using various significant assumptions. This specialist also assisted the issuer in determining the fair values at year end. The following deficiencies were identified: · The issuer used a service organization to process and record transactions related to certain of these assets and the related liabilities which was the source of certain data used by the company's specialist. The firm's approach to testing these data upon acquisition and year end included reliance on controls at the service organization. The firm did not perform procedures to test or test the operating effectiveness of certain complimentary user controls over these data that were identified in the service auditor's report. (AS 1105.A8a; AS 2601.14)

For a sample of certain acquired assets as of the acquisition date and at year end the firm sent positive confirmation requests. For the confirmations that were not returned the firm did not perform alternative procedures that provided sufficient appropriate audit evidence that the recorded amounts were accurate as of the confirmation date. (AS 2310.31)

The firm used an auditor-engaged specialist to assist it with testing the fair values of certain assets and the related liabilities at year end which were determined by one of the company's specialists. The following deficiencies were identified: · The firm did not identify that the auditor-engaged specialist did not perform any procedures to evaluate the (1) reasonableness of significant assumptions developed by the company's specialist or by the issuer and (2) relevance and reliability of certain external data used by the company's specialist. (AS 1105.A8a and .A8b; AS 1210.09 and .12; AS 2501.16)

The firm used an auditor-engaged specialist to assist it with testing the fair values of certain assets and the related liabilities at year end which were determined by one of the company's specialists. The following deficiencies were identified: · The firm did not perform any procedures to test the accuracy or completeness of certain issuer-produced data used by the issuer to estimate the discount rates that the company's specialist used to estimate the fair values of one category of these assets and the related liabilities. (AS 1105.10)

The firm used an auditor-engaged specialist to assist it with testing the fair values of certain assets and the related liabilities at year end which were determined by one of the company's specialists. The following deficiencies were identified: · The firm did not sufficiently evaluate the appropriateness of the methods used by the company's specialist for this category of these assets and the related liabilities because it did not evaluate whether certain other information used was relevant to the estimate. (AS 1105.A8c)

During the year the issuer acquired two businesses. The firm did not perform any procedures to evaluate the reasonableness of certain significant issuer-developed assumptions that were used by another of the company's specialists to determine the fair values of acquired intangible assets as of the acquisition date and at year end. (AS 2501.16)

The firm used system-generated data and reports in its testing of revenue. The following deficiencies were identified: · The extent of the firm's procedures to test the accuracy of certain of these system-generated reports was not sufficient because when calculating its sample size the firm did not take into account an identified significant deficiency over ITGCs for this system. (AS 1105.10)

The firm's internal inspection program had inspected this audit and reviewed these areas but did not identify the deficiencies below. The issuer recorded revenue at the time its services were provided to its customers. The firm did not perform any substantive procedures to test whether the performance obligation had been fully satisfied before revenue was recognized. (AS 2301.08)

The firm used an issuer-prepared schedule in its substantive testing of certain loans-receivable disclosures but did not perform any procedures to test or test controls over the accuracy and completeness of this schedule. (AS 1105.10)

During the year the issuer acquired a business and determined the fair value of an acquired intangible asset using forecasted cash flows which included significant assumptions related to sales growth product mix and pricing for the forecast period. The following deficiencies were identified: · The firm did not evaluate whether the issuer had a reasonable basis for (1) the product mix assumption and (2) another pricing assumption. (AS 2501.16)

The firm did not perform procedures to evaluate certain indicators of potential impairment that existed at year end. (AS 2301.08)

For certain revenue at one business unit the following deficiencies were identified: · For contracts with recurring monthly revenue the firm did not identify and test any controls over the recording of certain of this revenue. (AS 2201.39)

For certain revenue at one business unit the following deficiencies were identified: · The firm selected for testing a control that included the issuer's review of the accuracy and completeness of customer contract information in the issuer's system that it used to record revenue. In its testing of the operating effectiveness of this control the firm did not test this aspect of the control. (AS 2201.44)

For certain revenue at one business unit the following deficiencies were identified: · As a result of the deficiency identified the firm did not perform sufficient procedures to test or sufficiently test controls over the completeness of a report used in its substantive testing. (AS 1105.10)

For certain revenue at two other business units the firm selected for testing controls that addressed whether the performance obligation had been satisfied before revenue was recognized. The number of occurrences selected for testing did not provide sufficient appropriate audit evidence in light of either the assessed inherent risk associated with the account or the frequency of the operation of the control. (AS 2201.46)

For one of these two business units the firm did not perform any substantive procedures to test whether the performance obligation was satisfied before revenue was recognized for the first 10 months of the year. (AS 2301.08)

The sample sizes the firm used in certain of its substantive procedures to test revenue were too small to provide sufficient appropriate audit evidence because (1) these procedures were designed based on a level of control reliance that was not supported due to the deficiencies in the firm's control testing discussed above and/or (2) in determining the sample size the firm did not take into account the allowable risk of incorrect acceptance. (AS 2301.16 .18 and .37; AS 2315.16 .19 .23 and .23A)

The issuer used a service organization to accumulate revenue data initiated in and processed by the issuer's various IT systems and the issuer recorded certain revenue based on these data. The following deficiency was identified: · The firm did not identify and test any controls over the accuracy and completeness of the revenue data that had been accumulated by the service organization from the various IT systems. (AS 2201.39)

The issuer used a service organization to accumulate revenue data initiated in and processed by the issuer's various IT systems and the issuer recorded certain revenue based on these data. The following deficiency was identified: · The firm did not perform procedures to test or identify and test controls over the accuracy and/or completeness of certain of these data that the firm used in its substantive testing of this revenue. (AS 1105.10)

The issuer offered preferred pricing based on a customer's status. The following deficiencies were identified with respect to revenue from certain of these customers: · The firm selected for testing a control that consisted of the issuer's review of customer pricing changes subsequent to the execution renewal or amendment of a customer contract with preferential pricing. The number of changes selected for testing did not provide sufficient appropriate audit evidence given the frequency with which the control operated. (AS 2201.46)

The issuer used a service organization to accumulate revenue data initiated in and processed by the issuer's various IT systems and the issuer recorded certain revenue based on these data. The following deficiency was identified: · The sample size the firm used in its substantive procedures to test certain of this revenue was too small to provide sufficient appropriate audit evidence because these procedures were designed based on a level of control reliance that was not supported due to the deficiency in the firm's control testing discussed above. (AS 2301.16 .18 and .37; AS 2315.19 .23 and .23A)

During the year the issuer acquired a business. The firm selected for testing a control that included the issuer's review of the valuation of acquired intangible assets and related assumptions. The firm did not identify and test any controls over the accuracy and completeness of certain data used in the operation of this control. (AS 2201.39)

The issuer recognized certain revenue based on customer activity that was tracked using the issuer's various IT systems and it used service organizations to process customer payments. The firm's approach for substantively testing certain of this revenue consisted primarily of performing a software-assisted analysis to test the relationships between revenue and cash receipts. The reliability of the audit evidence obtained from this analysis was dependent upon the firm's testing of the underlying data. The firm did not sufficiently test the accuracy of the underlying data because the firm did not perform any procedures to (1) test or test controls over certain internally generated information that it used and (2) test the issuer's complementary user controls that the service auditor's reports described as necessary to rely on this payment information. (AS 1105.10; AS 2301.08 and .13)

To identify and select journal entries for testing the firm identified fraud characteristics and obtained a list of all journal entries with these characteristics. The firm did not perform sufficient procedures to test those journal entries because it examined the underlying support for only certain journal entries without having an appropriate rationale for limiting its testing to those certain journal entries. (AS 2401.61)

During the year the issuer entered into a convertible debt agreement that included an embedded conversion option; the issuer accounted for this option as a derivative liability. The following deficiency was identified: · The issuer engaged a specialist to determine the fair value of this liability at issuance. The firm's approach for substantively testing the fair value of this liability at issuance was to test the issuer's process and the firm used an auditor-employed specialist to evaluate a significant assumption the company's specialist developed using a range of potential assumptions from comparable companies. The firm did not identify that the work of the auditor-employed specialist did not provide sufficient appropriate audit evidence because the auditor-employed specialist's procedures were limited to determining that the assumption was among the higher end of the range of potential assumptions. (AS 1105.A8b; AS 1201.C6 and .C7)

During the year the issuer entered into a convertible debt agreement that included an embedded conversion option; the issuer accounted for this option as a derivative liability. The following deficiency was identified: · The firm did not identify and evaluate misstatements in the financial statements and required disclosures related to this derivative liability. (AS 2810.30 and .31)

The firm did not identify and test any controls that addressed the risk related to the issuer's compliance with transfer pricing regulations for intercompany transactions. (AS 2201.39)

The firm did not perform any substantive procedures to evaluate the issuer's assessment of its compliance with transfer-pricing regulations for intercompany transactions. (AS 2301.08)

The firm used an auditor-engaged specialist to assist it with evaluating the appropriateness of the issuer's categorization of investments within the fair value hierarchy set forth in FASB ASC Topic 820. The firm identified a difference between the categorization determined by the issuer and determined by the auditor-engaged specialist but did not perform any procedures to evaluate this difference. (AS 2301.08)

To identify and select journal entries for testing the firm identified fraud characteristics. The firm did not perform any procedures to evaluate whether any of the journal entries recorded in the last month of the year had these characteristics. (AS 2401.61 and .62)

The issuer offered preferred pricing based on a customer's status. The following deficiencies were identified with respect to revenue from certain of these customers: · The firm selected for testing controls that included the issuer's review of customers' status. The firm did not test the aspects of these controls that addressed the issuer's review of changes to existing customers' status. (AS 2201.42 and .44)

During the year the issuer acquired a business and engaged a specialist to assist it in determining the fair values of certain acquired assets. The firm selected for testing a control that included the issuer's comparison of fair values determined by the company's specialist to fair values included in a separate valuation report received by the issuer. The firm did not identify and test any controls over the reasonableness of the fair values included in the separate valuation report used in the operation of this control. (AS 2201.39)

The firm used an auditor-employed specialist to assist it with testing the fair values of these acquired assets which were determined by the company's specialist. The auditor-employed specialist's approach consisted of developing independent expectations consisting of a range of the fair values for a selection of these assets. The firm did not identify that the work of the auditor-employed specialist did not provide sufficient appropriate audit evidence because it did not evaluate whether the independent expectations of the fair values as a range encompassed only reasonable outcomes and were supported by sufficient appropriate audit evidence. (AS 1201.C6 and .C7; AS 2501.25)

The issuer recorded revenue net of customer rebates and other deductions. The following deficiency was identified: · The firm selected for testing a control that consisted of the issuer's review of the reconciliation between net revenue and cash receipts. The firm did not evaluate the specific review procedures that the control owner performed to assess certain adjustments between net revenue and cash receipts. (AS 2201.42 and .44)

The issuer recorded revenue net of customer rebates and other deductions. The following deficiency was identified: · The firm did not identify and test any controls over accrued rebates and other deductions. (AS 2201.39)

The firm's substantive procedures to test the unit cost of inventory consisted of selecting a sample of items for testing. For certain items selected for testing the firm did not perform sufficient procedures to test the unit cost because it inspected supporting documentation for only a portion of the quantity of these items held at year end. (AS 2301.08)

The firm used information produced by the issuer in its substantive procedures to test the reserve for excess and obsolete inventory. The firm did not perform any procedures to test or test controls over the accuracy and/or completeness of certain of this information. (AS 1105.10)

The issuer issued warrants that were recorded as liabilities. For certain of these warrants the following deficiencies were identified: · The firm did not perform any procedures to evaluate the reasonableness of a significant assumption the issuer used to value these warrants at year end. (AS 2501.16)

The issuer issued warrants that were recorded as liabilities. For certain of these warrants the following deficiencies were identified: · The firm did not perform any substantive procedures to evaluate the appropriateness of the issuer's categorization of these warrants within the fair value hierarchy as set forth in FASB ASC Topic 820. (AS 2301.08)

The firm selected for testing the issuer's cycle-count control over inventory at certain locations. The firm did not test the aspect of this control that addressed whether all inventory items at these locations were counted during the period. (AS 2201.42 and .44)

The firm selected for testing the issuer's cycle-count control over inventory at certain locations. The firm did not identify and test any controls that addressed the completeness of certain reports used in the operation of this control. (AS 2201.39)

The issuer offered preferred pricing based on a customer's status. The following deficiencies were identified with respect to revenue from certain of these customers: · The firm did not identify and test any controls over the accuracy of product cost information the issuer used to determine the sales prices in accordance with certain customer contracts. (AS 2201.39)

The issuer evaluated certain long-lived assets for possible impairment using significant assumptions it developed based on its planned course of action. The firm's approach for substantively testing the issuer's impairment assessment was to test the issuer's process and the firm used an auditor-employed specialist to evaluate one of these assumptions. The firm did not identify that the work of the auditor-employed specialist did not provide sufficient appropriate audit evidence because it did not evaluate a significant difference between this assumption and the issuer's recent experience. Further when evaluating the issuer's ability to carry out its planned course of action the firm performed a sensitivity analysis for this assumption but did not evaluate the significant differences between the alternative assumptions it used in this analysis and the issuer's recent experience. (AS 1201.C6 and .C7; AS 2501.16)