Explorer

For loans collectively evaluated for impairment the firm's approach for substantively testing the ALL was to test the issuer's process. The following deficiencies were identified: · For another component the firm did not evaluate whether the issuer had a reasonable basis for significant assumptions related to the basis points used for the qualitative base adjustment and for its selection of basis points from a range of potential basis points. (AS 2501.16)

The firm relied on certain ITGCs including those over the issuer's online banking application and manual controls in its approach to testing certain deposit liabilities. The following deficiencies were identified: · The firm did not identify and test ITGCs over the issuer's online banking application. (AS 2301.16)

The firm relied on certain ITGCs including those over the issuer's online banking application and manual controls in its approach to testing certain deposit liabilities. The following deficiencies were identified: · The firm selected for testing a control over the monitoring of the transfer of data from the teller system to the general ledger. The firm did not evaluate whether the control was designed to address the risk related to the completeness of the data transferred. (AS 2301.19)

The firm relied on certain ITGCs including those over the issuer's online banking application and manual controls in its approach to testing certain deposit liabilities. The following deficiencies were identified: · The firm selected for testing controls over user access to the general ledger. The firm did not evaluate the specific review procedures that the control owners performed to determine whether to initially grant access and whether previously granted access continued to be appropriate. (AS 2301.19 and .21)

The firm relied on certain ITGCs including those over the issuer's online banking application and manual controls in its approach to testing certain deposit liabilities. The following deficiencies were identified: · The firm selected for testing controls over change management. The firm did not test or in the alternative test controls over the completeness of the population of changes that the firm used in its testing of these controls. (AS 1105.10)

The firm's internal inspection program inspected this audit and reviewed this area but did not identify the deficiencies below. The issuer recognized revenue when customer invoices were generated based on shipment information that was entered into the issuer's systems. The firm did not identify and test any controls that addressed whether customer invoices were associated with valid customer orders and shipments. Further the firm did not identify and test any controls that addressed whether the performance obligation had been satisfied when revenue was recognized. (AS 2201.39)

The firm's internal inspection program inspected this audit and reviewed this area but did not identify the deficiencies below. The firm selected for testing a control that consisted of the issuer's review and approval of certain revenue deductions. The firm did not test or test any controls over the accuracy and completeness of the system-generated report that it used to select its samples for testing this control. (AS 1105.10)

The firm's internal inspection program inspected this audit and reviewed this area but did not identify the deficiencies below. The firm selected for testing controls over inventory but did not identify and test any controls over the accuracy and completeness of certain system-generated data or reports that the control owners used in the operation of these controls. (AS 2201.39)

The firm's internal inspection program inspected this audit and reviewed this area but did not identify the deficiencies below. The firm did not identify and test any controls that addressed whether the unit costs the issuer used to record inventory were based on the standard material labor and overhead rates that the issuer had determined. (AS 2201.39)

The firm's internal inspection program inspected this audit and reviewed this area but did not identify the deficiencies below. As a result of the firm's control testing deficiencies discussed above the firm did not perform sufficient substantive procedures as follows: · The sample sizes the firm used in certain of its substantive procedures to test inventory 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 2301.16 .18 and .37; AS 2315.19 .23 and .23A)

The firm's internal inspection program inspected this audit and reviewed this area but did not identify the deficiencies below. As a result of the firm's control testing deficiencies discussed above the firm did not perform sufficient substantive procedures as follows: · The firm did not perform procedures to test or sufficiently test controls over the accuracy and completeness of a system-generated report that it used in its substantive testing of inventory. (AS 1105.10)

The firm's internal inspection program inspected this audit and reviewed this area but did not identify the deficiencies below. The firm's substantive procedures to test the unit cost of certain inventory included selecting a sample of items for testing. The firm did not perform sufficient procedures to test the labor and overhead costs of the selected items because the firm did not test the labor and overhead rates the issuer had determined beyond reviewing the nature of the cost types that the issuer used to calculate the overhead rates. (AS 2301.08)

During the year the issuer transferred certain securities from its available-for-sale portfolio to its held-to-maturity portfolio. The firm did not perform substantive procedures beyond inquiring of management to evaluate whether the issuer had the intent and ability to hold these securities to maturity. (AS 2301.08)

During the year the issuer transferred certain securities from its available-for-sale portfolio to its held-to-maturity portfolio. The firm did not perform any substantive procedures to test the fair value of these securities and the related unrealized loss as of the date of this transfer. (AS 2501.07)

The issuer determined the qualitative reserve component of the ACL using various qualitative factors. The following deficiencies were identified: · The firm selected for testing a control that included the issuer's reviews of these qualitative factors. The firm did not evaluate the specific review procedures that the control owners performed to assess the reasonableness of certain factors. (AS 2201.42 and .44)

The issuer determined the qualitative reserve component of the ACL using various qualitative factors. The following deficiencies were identified: · The firm selected for testing a control that included the issuer's reviews of these qualitative factors. The firm did not identify and test any controls over the accuracy and completeness of certain loan information that the control owners used in the operation of this control. (AS 2201.39)

The issuer determined the qualitative reserve component of the ACL using various qualitative factors. The following deficiencies were identified: · The firm's approach for substantively testing the ACL was to test the issuer's process. The firm did not sufficiently evaluate the reasonableness of certain significant assumptions the issuer used to develop the qualitative reserve component of the ACL because its procedures were limited to a year-over-year comparison of these significant assumptions. (AS 2501.16)

The issuer engaged a specialist to assist it in determining the quantitative reserve component of the ACL using a model that was developed by the company's specialist. The following deficiencies were identified: · The firm selected for testing a control that consisted of the issuer's review of the ACL. The firm did not evaluate the specific review procedures that the control owners performed to assess the reasonableness of the forecasting assumption developed by the company's specialist and used in the model. (AS 2201.42 and .44)

The issuer engaged a specialist to assist it in determining the quantitative reserve component of the ACL using a model that was developed by the company's specialist. The following deficiencies were identified: · The firm selected for testing a control that consisted of the issuer's reconciliation of certain loan data but did not identify and test any controls over the completeness of certain reports that the control owner used in the operation of this control. (AS 2201.39)

The issuer engaged a specialist to assist it in determining the quantitative reserve component of the ACL using a model that was developed by the company's specialist. The following deficiencies were identified: · The firm did not evaluate the reasonableness of the forecasting significant assumption that was developed by the company's specialist and used in the model. (AS 1105.A8b)

The issuer recognized certain revenue based on product volumes delivered to its customers and accounted for certain of these arrangements as operating leases. The following deficiencies were identified: · The firm identified a control deficiency related to the issuer's lack of controls over the accuracy of the volume data. The firm used these volume data in its substantive testing of this revenue but did not perform any procedures to test the accuracy and completeness of these data. (AS 1105.10)

The issuer recognized certain revenue based on product volumes delivered to its customers and accounted for certain of these arrangements as operating leases. The following deficiencies were identified: · The firm did not identify and test any controls that addressed whether the issuer's classification of certain arrangements as operating leases was appropriate. (AS 2201.39)

The issuer recognized revenue from finance leases. The firm did not identify and evaluate a departure from IFRS related to the issuer's exclusion of the present value of the exercise price of purchase options in determining the lease payments as required by IFRS 16 Leases. (AS 2810.30) In connection with our review the issuer reevaluated its accounting for revenue from finance leases and determined a misstatement existed that had not been previously identified. The issuer did not file an amended Form 20-F or Form 6-K indicating that its previously issued financial statements should not be relied on. Instead the issuer corrected this misstatement in a subsequent filing by revising the prior-period financial statements.

Outside custodians held certain of the issuer's inventory. The firm did not perform sufficient procedures to test the existence of this inventory because it limited its procedures to the roll forward described above and positive confirmation requests with the outside custodians. Further the firm did not perform procedures to compare the quantities of inventory included in the confirmation responses to the quantities in the issuer's records. (AS 2301.08; AS 2510.14)

The firm did not perform sufficient procedures to test whether one type of inventory was stated at the lower of cost or net realizable value because the firm did not consider estimated costs of completion and estimated costs necessary to make the sale. (AS 2301.08)

For a second type of inventory the firm did not perform procedures to test whether the inventory was stated at the lower of cost or net realizable value beyond concluding that although the inventory had not yet been sold it expected the sales price to be higher than similar inventory given it was physically bigger. (AS 2301.08)

With respect to a third type of inventory in testing whether the inventory was stated at the lower of cost or net realizable value the firm did not (1) test the accuracy of the cost of the inventory beyond comparing it to the amounts relieved from inventory as part of its roll forward procedures described above (2) evaluate the effect of differences in asset types beyond consideration of physical size on the selling prices used in its analysis and (3) evaluate the ongoing availability of vouchers from government programs in its determination of the selling prices used in its analysis. (AS 2301.08)

The issuer recognized certain revenue on the percentage-of-completion basis. To test this revenue the firm selected a sample of open projects. For the selected open projects the firm did not perform procedures beyond obtaining issuer-produced documentation to test the transaction price at contract inception. (CAS 330.6)

The firm's approach for substantively testing the fair value of investment securities was to test the issuer's process. The firm used a pricing tool it developed to recalculate the fair value of certain investment securities. The firm did not test the functionality of this pricing tool. (AS 2501.10)

The firm did not identify and evaluate a departure from IFRS related to the issuer's incorrect disclosure that all proceeds from government grants were included in vehicle sales revenue when certain of those proceeds were included in finance lease revenue. (AS 2810.30 and .31) In connection with our review the issuer reevaluated its disclosures regarding government grants and determined that misstatements existed in disclosures that had not been previously identified. The issuer did not file an amended Form 20-F or Form 6-K indicating that its previously issued financial statements should not be relied on. Instead the issuer corrected these misstatements in a subsequent filing by revising the disclosures.

The firm did not perform procedures to evaluate the disclosures of vouchers from government programs as 'government grants' that may have suggested that the 'grants' were for the economic benefit of the issuer and that IAS 20 Accounting for Government Grants and Disclosure of Government Assistance was applicable. (AS 2301.08) In connection with our review the issuer reevaluated its disclosures regarding government grants and determined that misstatements existed in disclosures that had not been previously identified. The issuer did not file an amended Form 20-F or Form 6-K indicating that its previously issued financial statements should not be relied on. Instead the issuer corrected these misstatements in a subsequent filing by revising the disclosures.

The firm did not perform sufficient procedures to test revenue recognized based on vouchers from government programs because it did not obtain evidence that these vouchers were approved by the government or received by the issuer. (AS 2301.08 and .13)

The firm did not perform procedures to test the market interest rate used to determine the present value of lease payments beyond comparing it to the rate used by the issuer in the prior year. (AS 2301.08 and .13)

The firm did not perform procedures to test the installation dates for certain of the leases entered into during the year. (AS 2301.08 and .13)

In its testing of vehicle sales revenue the firm obtained evidence that certain vehicles may not have been delivered until after year end. The firm did not evaluate this evidence beyond concluding that it was shortly after year end. (AS 2301.08 and .13; AS 2810.03)

To substantively test inventory the firm rolled forward the inventory balance from prior year and performed procedures to test the activity during the year including confirming purchases of inventory. The firm received an electronic response to one of its confirmation requests related to the purchase of inventory that was received from a different email address than the contact email address included in the issuer's contracts with the vendor. The firm did not consider performing procedures to verify the source of the response. (AS 2310.29)

To substantively test inventory the firm rolled forward the inventory balance from prior year and performed procedures to test the activity during the year including confirming purchases of inventory. The firm did not test the accuracy of the cost of certain inventory that was sold during the year. (AS 2301.08)

The firm's substantive procedures to test certain revenue consisted of a test of details and analytical procedures. The firm used certain transactional data in these procedures but did not test or in the alternative test any controls over the accuracy and completeness of these data. (AS 1105.10; AS 2301.17; AS 2305.16)

The firm did not perform sufficient procedures to evaluate information that appeared to indicate that all revenue recognition criteria may not have been met. The firm's procedures were limited to inquiry of management and internal counsel and inspecting a delivery document that did not include information related to the contents of the package and/or the name of the entity receiving the delivery. (AS 2301.08; AS 2810.03)

The issuer used a service organization to process and record revenue transactions. The firm's approach to substantively test revenue included reliance on controls including controls over the accuracy and completeness of transaction data that the issuer obtained from the service organization. The firm did not perform any procedures to test the operating effectiveness of complementary user controls in place at the issuer. (AS 2601.14)

For certain excess inventory that the issuer determined did not require a reserve the firm did not perform any procedures beyond inquiring of management to evaluate the reasonableness of the issuer's forecasted usage of this inventory. (AS 2501.24)

The firm's substantive procedures to test revenue included analytical procedures. The firm used the transaction data from the service organization to develop its expectations but did not perform any substantive procedures to test or in the alternative sufficiently test controls over (as discussed above) the accuracy and completeness of these data. (AS 2305.16)

With respect to Revenue the firm designed certain of its substantive procedures as a dual-purpose test. The firm performed its substantive procedures using the sample size it determined for its control testing. This sample size was too small to provide sufficient appropriate audit evidence because the firm did not use the larger of the samples that would otherwise have been designed for the two separate purposes. (AS 2315.44)

The issuer used data provided by service organizations to determine its estimate for one of its liabilities. The firm used certain of these data in its substantive procedures. The firm's approach to substantively test one component of this liability was to develop an independent expectation. The firm did not perform any procedures to test the accuracy and completeness of certain service organization data that it used to develop its independent expectation. (AS 2301.08)

The issuer used data provided by service organizations to determine its estimate for one of its liabilities. The firm used certain of these data in its substantive procedures. The firm's approach to substantively test one component of this liability was to test the issuer's process. The firm did not perform any procedures to test the accuracy and completeness of certain service organization data that the issuer used to determine its estimate. (AS 2301.08)

The firm did not perform sufficient substantive procedures to test certain of the issuer's revenue because its procedures were limited to vouching a sample of sales transactions recorded by the issuer to the bill of sale for each transaction. (AS 2301.08)

The issuer recorded revenue based on completed delivery of products to its customers. The firm tested certain transactions prior to year end to determine whether the issuer recorded revenue in the appropriate period. The firm however did not perform any procedures to verify that delivery had occurred before revenue was recorded. (AS 2301.08)

The firm's approach to substantively test the excess and obsolete inventory reserve was to develop an independent expectation. The firm did not perform any procedures to demonstrate that it had a reasonable basis for the assumptions used in its expectation. (AS 2501.22)

The firm's approach to substantively test the excess and obsolete inventory reserve was to develop an independent expectation. The firm did not perform any procedures to test or in the alternative test any controls over the accuracy and completeness of a report generated from the issuer's inventory management system and used to develop its expectation. (AS 1105.10)

The issuer issued shares of its common stock in exchange for consulting services to be performed over various periods ranging from six to 36 months. The issuer's financial statements reflected an expense for the fair value of the shares issued only to the extent the service period for the consulting services had elapsed with the exception of one terminated agreement for which the entire fair value of the shares issued was expensed upon termination. The firm did not evaluate whether there was a performance condition associated with each of the arrangements in order to determine whether the accounting was in conformity with FASB ASC Subtopic 505-50 Equity-Based Payments to Non-Employees. (AS 2810.30) Unrelated and prior to our review the issuer reevaluated its accounting for these arrangements and the related stock issuance and concluded that a material misstatement existed that had not been previously identified. The issuer subsequently corrected this misstatement in a restatement of its financial statements.