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For loans that were collectively evaluated for impairment the issuer determined the quantitative reserve component of the ALL using various assumptions. The firm's approach for substantively testing the ALL was to test the issuer's process. The firm did not evaluate whether the issuer had a reasonable basis for certain significant assumptions beyond reading an issuer-prepared memorandum. (AS 2501.16)

The issuer determined the fair values of certain acquired assets using cash-flow forecasts. The following deficiency was identified: · The firm selected for testing a control that included the issuer's review of assumptions used in these cash flow forecasts. The firm did not evaluate the specific review procedures that the control owner performed to assess the reasonableness of certain of these assumptions. (AS 2201.42 and .44)

The issuer determined the fair values of certain acquired assets using cash-flow forecasts. The following deficiency was identified: · The firm selected for testing a control that included the issuer's review of assumptions used in these cash flow forecasts. The firm did not identify and test any controls over the accuracy and completeness of certain issuer-produced reports used in the operation of the control. (AS 2201.39)

The issuer determined the fair values of certain acquired assets using cash-flow forecasts. The following deficiency was identified: · The firm did not perform procedures to test or test any controls over the accuracy and completeness of certain issuer-produced reports used to develop certain assumptions that were used to determine these fair values. (AS 1105.10)

The issuer determined the fair values of certain acquired assets using cash-flow forecasts. The following deficiency was identified: · The firm did not sufficiently evaluate the reasonableness of certain significant assumptions the issuer used because the firm did not evaluate (1) the relevance and reliability of certain market information it used and (2) whether these assumptions were consistent with certain industry factors and existing market information. (AS 1105.04 and .06; AS 2501.16)

The firm selected for testing various controls over revenue and inventory but did not identify and test any controls over the accuracy and completeness of certain system-generated data or reports that were used in the operation of these controls. (AS 2201.39)

The firm did not perform sufficient substantive procedures to test the issuer's foreign currency translation adjustments because the firm did not test the exchange rates that the issuer used in the translation of certain accounts. (AS 2301.08)

For certain contracts the issuer recognized revenue over time based on costs incurred to date relative to total estimated costs to complete. The firm's substantive procedures to test this revenue and the related accounts included (1) selecting a sample of contracts that exceeded a monetary threshold (2) selecting a sample of costs incurred and billings to customers during the year and (3) performing analytical procedures. The following deficiencies were identified: · For certain contracts selected for testing the firm did not perform procedures to test whether the performance obligations had been satisfied before revenue was recognized beyond comparisons to issuer-produced reports and invoices. (AS 2301.08 and .13)

For certain contracts the issuer recognized revenue over time based on costs incurred to date relative to total estimated costs to complete. The firm's substantive procedures to test this revenue and the related accounts included (1) selecting a sample of contracts that exceeded a monetary threshold (2) selecting a sample of costs incurred and billings to customers during the year and (3) performing analytical procedures. The following deficiencies were identified: · The firm's sample sizes to test costs incurred and billings to customers were too small to provide sufficient appropriate audit evidence because in determining the sample sizes the firm did not take into account tolerable misstatement the allowable risk of incorrect acceptance and the characteristics of the population. (AS 2315.16 .23 and .23A)

For certain contracts the issuer recognized revenue over time based on costs incurred to date relative to total estimated costs to complete. The firm's substantive procedures to test this revenue and the related accounts included (1) selecting a sample of contracts that exceeded a monetary threshold (2) selecting a sample of costs incurred and billings to customers during the year and (3) performing analytical procedures. The following deficiencies were identified: · The firm used certain labor rates in its substantive testing of costs incurred but did not perform procedures to test or test any controls over the accuracy of these labor rates. (AS 1105.10)

For certain contracts the issuer recognized revenue over time based on costs incurred to date relative to total estimated costs to complete. The firm's substantive procedures to test this revenue and the related accounts included (1) selecting a sample of contracts that exceeded a monetary threshold (2) selecting a sample of costs incurred and billings to customers during the year and (3) performing analytical procedures. The following deficiencies were identified: · The firm did not perform substantive procedures to test the occurrence of revenue or the existence of contract assets for contracts below the monetary threshold beyond performing the procedures to test a sample of costs incurred and billings to customers discussed above. (AS 1105.27; AS 2301.08 and .13)

For certain contracts the issuer recognized revenue over time based on costs incurred to date relative to total estimated costs to complete. The firm's substantive procedures to test this revenue and the related accounts included (1) selecting a sample of contracts that exceeded a monetary threshold (2) selecting a sample of costs incurred and billings to customers during the year and (3) performing analytical procedures. The following deficiencies were identified: · For the analytical procedures over certain revenue the firm developed its expectations in part using data derived from the recorded amounts of revenue. The firm did not evaluate whether these data were sufficiently relevant and reliable for the purpose of achieving its audit objectives. (AS 1105.04 and .06; AS 2305.16)

For certain contracts the issuer recognized revenue over time based on costs incurred to date relative to total estimated costs to complete. The firm's substantive procedures to test this revenue and the related accounts included (1) selecting a sample of contracts that exceeded a monetary threshold (2) selecting a sample of costs incurred and billings to customers during the year and (3) performing analytical procedures. The following deficiencies were identified: · For the analytical procedures over certain other revenue the firm identified a difference in excess of the firm's established threshold but did not obtain any evidential matter to evaluate the difference. (AS 2305.21)

During the year the issuer acquired a business. The firm did not identify and evaluate the issuer's omission of certain disclosures required under FASB ASC Topic 805 Business Combinations. (AS 2810.30 and .31)

The firm relied on controls it selected for testing in its approach to testing revenue at two of the issuer's business units. The following deficiencies were identified: · For the first business unit the only control the firm selected for testing over the occurrence of revenue consisted of the issuer's reconciliation of the sales subledger to the general ledger and its review of this reconciliation. The firm did not evaluate whether the design of this control was sufficient to address the risks of material misstatement related to the occurrence of sales transactions in the sales subledger. (AS 2301.19)

The firm relied on controls it selected for testing in its approach to testing revenue at two of the issuer's business units. The following deficiencies were identified: · For the second business unit the firm selected for testing a control that consisted of the issuer's review of sales transactions included in the general ledger. The firm's testing of this control was not sufficient because the firm did not directly test the review procedures that the control owner performed. (AS 2301.19 .21 and .23)

The firm selected for testing controls that consisted of the issuer's reviews of gross margins estimates of revenue deductions and customer shipments and invoices. The firm did not evaluate the review procedures that the control owners performed including the procedures to identify items for follow up and/or the procedures to determine whether those items were appropriately resolved. (AS 2201.42 and .44)

The firm relied on controls it selected for testing in its approach to testing revenue at two of the issuer's business units. The following deficiencies were identified: · The sample sizes the firm used in certain of its substantive procedures to test this revenue 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 due to the deficiencies in the firm's control testing discussed above. (AS 2301.16 .18 and .37; AS 2315.19 .23 and .23A)

The firm's substantive procedures to test revenue consisted of selecting a sample of transactions for testing. The following deficiencies were identified: · For certain transactions selected for testing the firm did not perform any procedures to test whether the performance obligations had been satisfied before revenue was recognized. (AS 2301.08 and .13)

The firm's substantive procedures to test revenue consisted of selecting a sample of transactions for testing. The following deficiencies were identified: · For certain other transactions selected for testing the firm used issuer-produced data or information from external sources in its testing. The firm did not (1) test or test any controls over the accuracy and completeness of the issuer-produced data or (2) evaluate the reliability of the external information. (AS 1105.04 .06 and .10)

The firm's substantive procedures to test revenue consisted of selecting a sample of transactions for testing. The following deficiencies were identified: · The firm did not evaluate whether the issuer (1) was acting as a principal or as an agent and (2) appropriately disclosed whether revenue was recognized at a point in time or over time. (AS 2301.08)

The issuer used forecasted cash flows in its assessment of certain amortizable intangible assets for possible impairment. The firm's approach for substantively testing the valuation of these intangible assets was to test the issuer's process. The following deficiencies were identified: · For one of the issuer's asset groups the firm did not evaluate whether the issuer's inclusion of expected cash flows from a certain product in its forecasted cash flows was in conformity with FASB ASC Topic 360 Property Plant and Equipment. (AS 2501.10)

The issuer used forecasted cash flows in its assessment of certain amortizable intangible assets for possible impairment. The firm's approach for substantively testing the valuation of these intangible assets was to test the issuer's process. The following deficiencies were identified: · For one of the issuer's asset groups the firm did not evaluate the reasonableness of the significant assumptions the issuer used related to the expected cash flows from this product beyond obtaining evidence from an external party that this product was under development. (AS 2501.16)

The issuer used forecasted cash flows in its assessment of certain amortizable intangible assets for possible impairment. The firm's approach for substantively testing the valuation of these intangible assets was to test the issuer's process. The following deficiencies were identified: · For the other asset groups the firm used an issuer-prepared spreadsheet in its substantive testing of the issuer's allocation of historical revenue to these asset groups. The firm did not test or test any controls over the accuracy of this spreadsheet. (AS 1105.10)

The firm did not identify and evaluate the issuer's omission of certain required disclosures under FASB ASC Topic 350 Intangibles – Goodwill and Other. (AS 2810.30 and .31)

The firm's internal inspection program had inspected this audit reviewed these areas and also identified the deficiencies below. The issuer used multiple information-technology (IT) systems to initiate process and record transactions related to inventory. The firm selected for testing an automated control that used data generated or maintained by these IT systems. As a result of the deficiencies in the firm's testing of IT general controls the firm's testing of this automated control was not sufficient. (AS 2201.46)

The firm's internal inspection program had inspected this audit reviewed these areas and also identified the deficiencies below. The issuer used multiple information-technology (IT) systems to initiate process and record transactions related to inventory. The firm selected for testing an automated control that used data generated or maintained by these IT systems. · The firm selected for testing two controls over change management and one control over transaction processing within these IT systems. The firm did not evaluate whether user access to perform the control over transaction processing was appropriately restricted for one of these IT systems. (AS 2201.42 and .44)

The firm selected for testing a control that consisted of the issuer's review and approval of customer price changes. The firm did not evaluate the specific review procedures that the control owners performed to assess the appropriateness of the price changes and whether they were appropriately approved. (AS 2201.42 and .44)

The firm's internal inspection program had inspected this audit reviewed these areas and also identified the deficiencies below. The issuer used multiple information-technology (IT) systems to initiate process and record transactions related to inventory. The firm selected for testing an automated control that used data generated or maintained by these IT systems. · The firm selected for testing a control over user access to these IT systems but did not perform procedures to test or test any controls over the accuracy and completeness of certain reports that the firm used in its testing. (AS 1105.10)

The firm's internal inspection program had inspected this audit reviewed these areas and also identified the deficiencies below. The issuer used multiple information-technology (IT) systems to initiate process and record transactions related to inventory. The firm selected for testing an automated control that used data generated or maintained by these IT systems. · The firm selected for testing two controls over change management and one control over transaction processing within these IT systems. The firm did not perform any procedures to test or test any controls over the completeness of the population of items from which it selected its samples for testing these controls. (AS 1105.10)

The firm's internal inspection program had inspected this audit reviewed these areas and also identified the deficiencies below. The firm did not identify and test any controls that addressed the risk related to the accuracy and completeness of data transferred from the issuer's inventory subledger to the general ledger. (AS 2201.39)

The firm's internal inspection program had inspected this audit reviewed these areas and also identified the deficiencies below. The firm selected for testing controls over the calculation of the issuer's excess and obsolete inventory reserve and inventory unit costs. The firm did not identify and test any controls over the accuracy and completeness of certain system-generated data or reports that were used in the operation of these controls. (AS 2201.39)

The firm's internal inspection program had inspected this audit reviewed these areas and also identified the deficiencies below. As a result of the firm's control testing deficiencies the firm did not perform sufficient substantive procedures to test the valuation of inventory as follows: · The sample size the firm used in certain of its substantive procedures to test inventory 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. (AS 2301.16 .18 and .37; AS 2315.19 .23 and .23A)

The firm's internal inspection program had inspected this audit reviewed these areas and also identified the deficiencies below. As a result of the firm's control testing deficiencies the firm did not perform sufficient substantive procedures to test the valuation of inventory as follows: · The firm did not perform procedures to test or test any controls over the accuracy and/or completeness of certain system-generated data or reports that the firm used in its substantive testing. (AS 1105.10)

The firm's internal inspection program had inspected this audit reviewed these areas and also identified the deficiencies below. During the year the issuer acquired a business. The firm selected for testing controls that consisted of the issuer's reviews of the fair values of tangible assets acquired and liabilities assumed. The firm did not evaluate the specific review procedures that the control owners performed to assess the reasonableness of the fair values of certain of these tangible assets acquired and liabilities assumed. (AS 2201.42 and .44)

The firm's approach for substantively testing the allowance for loan losses (ALL) was to test the issuer's process. The following deficiencies were identified: · For loans that were collectively evaluated for impairment the issuer determined the qualitative reserve component of the ALL using various qualitative factors. The firm did not evaluate whether the issuer had a reasonable basis for the significant assumptions the issuer used to develop these qualitative factors. (AS 2501.16)

The firm's approach for substantively testing the allowance for loan losses (ALL) was to test the issuer's process. The following deficiencies were identified: · The issuer also reported an unallocated reserve component of the ALL. The firm did not evaluate the reasonableness of the significant assumptions the issuer used to develop this component. (AS 2501.16)

The issuer used a service organization to process and record transactions related to payroll expense and the firm used a report produced by the service organization in its substantive testing. The firm did not perform any procedures that addressed the accuracy and completeness of this report. (AS 2301.08)

The firm's substantive procedures to test revenue consisted of selecting a sample of transactions for testing. The firm did not perform sufficient procedures to test these transactions because it did not test (1) whether the issuer had a valid contract with the customer and (2) the issuer's determination of the transaction price. (AS 2301.08 and .13)

The issuer included payroll costs as a component of various operating expenses it reported. The firm did not perform any substantive procedures to test whether the issuer had appropriately classified these payroll costs. (AS 2301.08)

The firm selected for testing a control that consisted of the issuer's review of standard costs for its inventory items. The firm did not evaluate the specific review procedures that the control owner performed to assess the reasonableness of the standard costs included in the issuer's inventory system. (AS 2201.42 and .44)

The firm did not identify and test any controls that addressed whether variances between actual and standard costs were appropriately calculated and recorded in the issuer's inventory system. (AS 2201.39)

The firm did not identify and test any controls over the completeness of the issuer's in-transit inventory. (AS 2201.39)

For in-transit inventory and freight included in inventory the firm did not perform procedures to test or test any controls over the accuracy and completeness of certain system-generated data or reports the firm used in its substantive testing including its substantive analytical procedures. (AS 1105.10; AS 2305.16)

The firm did not identify and test any controls over the issuer's foreign currency translation adjustments. (AS 2201.39)

The firm's approach for substantively testing the reserve for excess and obsolete (E&O) inventory was to test the issuer's process. The firm did not perform procedures to evaluate the reasonableness of a significant assumption the issuer used to develop the E&O reserve beyond reading an issuer-prepared memorandum. (AS 2501.16) Unrelated to our review the issuer reevaluated its accounting for its inventory and concluded that material misstatements existed that had not been previously identified. The issuer corrected these misstatements in a restatement of its financial statements in a subsequent filing.

The firm selected for testing a control that consisted of the issuer's review of a significant assumption used to develop a reserve for certain customer discounts. The firm did not evaluate the specific review procedures that the control owners performed to assess the reasonableness of this assumption. (AS 2201.42 and .44)

The issuer's ACL included reserves for loans collectively evaluated for impairment and for loans individually evaluated for impairment. For loans that were collectively evaluated for impairment the issuer estimated quantitative qualitative and economic reserve components. The following deficiencies were identified: · The issuer assigned a loan risk rating to its commercial loans. The loan risk rating was an important input in estimating the ACL and determining whether a loan would be individually or collectively evaluated for impairment. The firm did not identify and test any controls over the assignment of the loan risk rating to a certain population of these loans. (AS 2201.39)

The issuer's ACL included reserves for loans collectively evaluated for impairment and for loans individually evaluated for impairment. For loans that were collectively evaluated for impairment the issuer estimated quantitative qualitative and economic reserve components. The following deficiencies were identified: · The firm's approach for substantively testing the ACL was to test the issuer's process and the firm used an auditor-employed specialist to evaluate the methods and certain significant assumptions used by the issuer. The firm did not identify that the auditor-employed specialist did not evaluate the reasonableness of the significant assumptions that the issuer used to develop the quantitative and economic reserve components. (AS 1201.C6 and .C7; AS 2501.16)

The issuer's ACL included reserves for loans collectively evaluated for impairment and for loans individually evaluated for impairment. For loans that were collectively evaluated for impairment the issuer estimated quantitative qualitative and economic reserve components. The following deficiencies were identified: · The firm's approach for substantively testing the ACL was to test the issuer's process and the firm used an auditor-employed specialist to evaluate the methods and certain significant assumptions used by the issuer. The firm did not evaluate the reasonableness of the significant assumptions related to the qualitative factors that the issuer used to develop the qualitative reserve component. (AS 2501.16)