Explorer

The firm used certain reports in its substantive testing of inventory but did not perform any procedures to test or test controls over the accuracy and completeness of this information. (AS 1105.10)

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 did not identify and test any controls that addressed whether the issuer's fixed overhead was expensed or capitalized appropriately in accordance with FASB ASC Topic 330 Inventory. (AS 2201.39)

The firm did not perform any substantive procedures to evaluate whether the issuer's fixed overhead was expensed or capitalized appropriately in accordance with FASB ASC Topic 330. (AS 2810.30)

The issuer changed its method of valuing certain inventory during the year. The firm did not identify and test any controls over the issuer's evaluation of whether this change represented a change in accounting principle. (AS 2201.39)

The firm did not perform any substantive procedures to evaluate whether this change represented a change in accounting principle under FASB ASC Topic 250 Accounting Changes and Error Corrections. (AS 2810.30)

The firm selected for testing a combination of automated and manual controls to address the risk that revenue was not accurately recorded. The firm did not sufficiently test certain of these manual controls which consisted of the issuer's reviews of (1) customer credit requests (2) customer rebates and (3) the accounts receivable aging as follows: · For the controls related to customer credit requests and rebates the firm did not test or in the alternative test any controls over the completeness of the system-generated reports that it used to select its samples for testing these controls. (AS 1105.10)

The firm selected for testing a combination of automated and manual controls to address the risk that revenue was not accurately recorded. The firm did not sufficiently test certain of these manual controls which consisted of the issuer's reviews of (1) customer credit requests (2) customer rebates and (3) the accounts receivable aging as follows: · For the control related to the accounts receivable aging the firm did not identify and test any controls that addressed the application of cash receipts to accounts receivable balances. (AS 2201.39)

The issuer used multiple information-technology (IT) systems to initiate process and record transactions related to two types of revenue and the related accounts receivable deferred revenue related to one of these types of revenue and/or investment securities. In its testing of controls over these accounts the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by certain of these IT systems. With respect to user access: · The firm selected for testing certain controls over user access for the issuer's IT systems. The firm did not identify and test any controls over the accuracy and completeness of the information the control owners used in the operation of these controls. (AS 2201.39)

To test certain deposit liabilities the firm sent either positive or negative confirmation requests to the issuer's customers for samples of deposit liabilities as of an interim date and year end. For positive confirmations that were not returned and for negative confirmations that were undeliverable the firm did not perform procedures that provided sufficient appropriate audit evidence that the recorded amounts of the deposit liabilities were accurate as of the confirmation date. (AS 2310.21 and .31)

For certain other deposit liabilities selected for testing as of an interim date and year end the firm did not perform substantive procedures that provided sufficient appropriate audit evidence that the recorded amounts of the deposit liabilities were accurate. (AS 2301.08)

For deposit liabilities tested at an interim date the firm's procedures to extend its conclusions from the interim date to year end included comparing the deposit liabilities balances as of the interim date to the corresponding year-end balances. The firm identified differences in excess of the firm's established threshold but did not investigate these differences. (AS 2301.45)

The firm selected for testing a control that consisted of the issuer's review of its assessment of certain long-lived assets for potential impairment including the underlying cash-flow forecasts. The firm did not evaluate the specific review procedures that the control owner performed to assess the reasonableness of certain assumptions underlying these cash-flow forecasts. (AS 2201.42 and .44)

The issuer used multiple information-technology (IT) systems to initiate process and record transactions related to two types of revenue and the related accounts receivable deferred revenue related to one of these types of revenue and/or investment securities. In its testing of controls over these accounts the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by certain of these IT systems. With respect to user access: · The firm selected for testing a control over privileged access in which certain control owners reviewed their own access. The firm did not evaluate whether this resulted in a lack of segregation of duties. (AS 2201.42)

For one type of revenue and the related deferred revenue which were affected by the audit deficiencies the following deficiencies related to the firm's testing of controls were identified: · The firm's testing of certain automated controls was not sufficient because the firm did not test the configuration or programming of these controls or perform other procedures that would have provided sufficient appropriate audit evidence that these controls were designed and operating effectively. Further the firm's testing of certain automated controls was not sufficient because its testing of certain aspects of the controls was limited to inquiry. (AS 2201.42 and .44)

For one type of revenue and the related deferred revenue which were affected by the audit deficiencies the following deficiencies related to the firm's testing of controls were identified: · For two automated controls the firm did not perform any substantive procedures to test or in the alternative test any controls over the completeness of the lists from which it selected items for testing. (AS 1105.10)

The firm did not identify and test any controls over the occurrence of revenue. (AS 2201.39)

The issuer used an information technology (IT) system to process certain transactions related to revenue. In its testing of controls over revenue the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by this IT system. As a result of the following deficiencies in the firm's testing of IT general controls (ITGCs) the firm's testing of these automated and IT-dependent controls was not sufficient. (AS 2201.46)

A component of the issuer (“component”) entered into contracts with customers in which revenue was recognized over time based on the extent of progress towards completion of the performance obligation. The following deficiency was identified: · The firm selected for testing a control that consisted of the component's review of invoices. The firm did not identify and test any controls over the accuracy and completeness of certain data used in the operation of the control. (AS 2201.39)

A component of the issuer (“component”) entered into contracts with customers in which revenue was recognized over time based on the extent of progress towards completion of the performance obligation. The following deficiency was identified: · The firm selected for testing a control that consisted of the component's review of manual journal entries. The firm did not sufficiently test the operating effectiveness of this control because it made its selections to test the control from an incomplete population of journal entries. (AS 2201.44)

A component of the issuer (“component”) entered into contracts with customers in which revenue was recognized over time based on the extent of progress towards completion of the performance obligation. The following deficiency was identified: · The firm selected for testing a control that consisted of the component's review of manual journal entries. The firm did not identify and test any controls over the component's recording of the manual journal entries in the general ledger. (AS 2201.39)

A component of the issuer (“component”) entered into contracts with customers in which revenue was recognized over time based on the extent of progress towards completion of the performance obligation. The following deficiency was identified: · The firm selected for testing a control that consisted of the component's review of financial information. The firm did not evaluate the review procedures that the control owners performed to identify items for follow up. Further the firm did not sufficiently evaluate whether items identified for follow up were appropriately resolved because it limited its testing to one item. (AS 2201.42 and .44)

A component of the issuer (“component”) entered into contracts with customers in which revenue was recognized over time based on the extent of progress towards completion of the performance obligation. The following deficiency was identified: · The firm selected for testing a control that consisted of the component's review of gross receivables. The firm did not sufficiently test the operating effectiveness of the control because it did not test an aspect of the control related to certain receivables. (AS 2201.44)

A component of the issuer (“component”) entered into contracts with customers in which revenue was recognized over time based on the extent of progress towards completion of the performance obligation. The following deficiency was identified: · The firm selected for testing a control that consisted of the component's review of gross receivables. The firm did not identify and test any controls over the accuracy and completeness of certain data used in the operation of the control. (AS 2201.39)

A component of the issuer (“component”) entered into contracts with customers in which revenue was recognized over time based on the extent of progress towards completion of the performance obligation. The following deficiency was identified: · The firm did not perform any substantive procedures to evaluate the appropriateness of certain revenue recognized for new and modified customer contracts. (AS 2301.08)

A component of the issuer (“component”) entered into contracts with customers in which revenue was recognized over time based on the extent of progress towards completion of the performance obligation. The following deficiency was identified: · The firm's approach for substantively testing certain revenue consisted primarily of performing a software-assisted analysis to test the relationships among revenue accounts receivable and cash receipts. The firm did not perform any substantive procedures to test the underlying revenue transactions for revenue with no relationship to accounts receivable. (AS 2301.08)

A component of the issuer (“component”) entered into contracts with customers in which revenue was recognized over time based on the extent of progress towards completion of the performance obligation. The following deficiency was identified: · The firm did not perform any substantive procedures to test certain revenue. (AS 2301.08 and .13)

A component of the issuer (“component”) entered into contracts with customers in which revenue was recognized over time based on the extent of progress towards completion of the performance obligation. The following deficiency was identified: · The firm used certain data to substantively test accounts receivable but did not test or (as discussed above) test controls over the accuracy and completeness of this data. (AS 1105.10)

With respect to user access: · The firm selected for testing a control that consisted of the annual review of user access. The firm did not identify and test any controls over the completeness of the user access listing used in the operation of the control. (AS 2201.39)

A component of the issuer (“component”) entered into contracts with customers in which revenue was recognized over time based on the extent of progress towards completion of the performance obligation. The following deficiency was identified: · The sample size the firm used in certain of its substantive procedures to test accounts receivable 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 deficiencies in the firm's control testing discussed above. (AS 2301.16 .18 and .37; AS 2315.19 .23 and .23A)

The firm did not identify and test any controls over certain other liabilities for the component. (AS 2201.39)

The firm did not perform any substantive procedures to test certain other liabilities. (AS 2301.08)

With respect to user access: · The firm selected for testing a control that consisted of the annual review of user access. The firm did not test an aspect of the control related to the role and functions assigned to users. (AS 2201.42 and .44)

With respect to user access: · The firm selected for testing another control that consisted of the review of new and modified user access tickets. The firm did not perform sufficient procedures to test the completeness of the user access list from which it made its selections to test this control because it did not (1) evaluate whether the user access list was a customizable report and (2) test any customization used to generate the user access list. (AS 1105.10)

The firm selected for testing a control that consisted of the issuer's review of new and modified contracts for appropriate revenue recognition. The firm did not evaluate the specific review procedures that the control owners performed to assess the appropriateness of (1) the performance obligations identified and (2) the standalone selling price used to allocate revenue to separate performance obligations. (AS 2201.42 and .44)

The firm did not perform any substantive procedures to (1) evaluate the reasonableness of the performance obligations identified and (2) test the standalone selling price used to allocate revenue to separate performance obligations. (AS 2301.08)

A component of the issuer (“component”) entered into contracts with customers in which revenue was recognized over time based on the extent of progress towards completion of the performance obligation. The following deficiency was identified: · The firm selected for testing two controls that consisted of the component's review of contracts including the review of new and modified contracts for appropriate revenue recognition. For one control the firm did not identify and test any controls over the completeness of the new and modified contract data used in the operation of the control. (AS 2201.39)

A component of the issuer (“component”) entered into contracts with customers in which revenue was recognized over time based on the extent of progress towards completion of the performance obligation. The following deficiency was identified: · The firm selected for testing two controls that consisted of the component's review of contracts including the review of new and modified contracts for appropriate revenue recognition. The firm did not (1) evaluate the specific review procedures that the control owner performed to assess the appropriateness of revenue recognition and (2) test an aspect of the control over the accuracy of the report used in the operation of the control. (AS 2201.42 and .44))

A component of the issuer (“component”) entered into contracts with customers in which revenue was recognized over time based on the extent of progress towards completion of the performance obligation. The following deficiency was identified: · The firm selected for testing two controls that consisted of the component's review of contracts including the review of new and modified contracts for appropriate revenue recognition. For the other control the firm did not test or test any controls over the completeness of the contract listing from which it made its selections to test the control. (AS 1105.10)

The issuer used multiple information-technology (IT) systems to initiate process and/or record transactions related to revenue and the related accounts receivable investment securities and cash. In its testing of controls over these accounts the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by certain of 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 automated and IT-dependent controls was not sufficient. (AS 2201.46)

The issuer used an IT system to retain certain data related to revenue and deferred revenue. The firm tested certain IT-dependent manual controls that used data from this IT system. As a result of the deficiencies in the firm's testing of controls the firm's testing of these IT-dependent manual controls was not sufficient. (AS 2201.46)

During the year the issuer acquired a business. The issuer accounted for an acquired investment using the equity method and determined the fair value of certain acquired intangible assets using cash-flow forecasts. The following deficiency was identified: · The firm selected for testing controls over the accounting for this business combination which included the issuer's review of assumptions used in these cash-flow forecasts. The firm did not evaluate the specific review procedures the control owner performed to assess (1) the appropriateness of the accounting for this investment and certain acquired assets and (2) the reasonableness of certain of these assumptions. (AS 2201.42 and .44)

During the year the issuer acquired a business. The issuer accounted for an acquired investment using the equity method and determined the fair value of certain acquired intangible assets using cash-flow forecasts. The following deficiency was identified: · The firm's approach for substantively testing the valuation of these acquired intangible assets was to test the issuer's process. The firm did not perform any procedures to evaluate the reasonableness of certain significant assumptions used in these cash-flow forecasts. (AS 2501.16)

During the year the issuer acquired a business. The issuer accounted for an acquired investment using the equity method and determined the fair value of certain acquired intangible assets using cash-flow forecasts. The following deficiency was identified: · The firm did not perform any procedures to evaluate whether the accounting for this acquired investment and certain acquired assets was in conformity with FASB ASC Topic 323 Investments – Equity Method and Joint Ventures and FASB ASC Topic 970 Real Estate – General. Further the firm did not perform any substantive procedures to test the existence of these acquired assets. (AS 2301.08)

During the year the issuer identified misstatements in its accounting for certain leases and control deficiencies associated with these misstatements. The following audit deficiency was identified: · The firm did not evaluate the severity of these control deficiencies individually or in combination to determine whether they represented a material weakness. (AS 2201.62)

During the year the issuer identified misstatements in its accounting for certain leases and control deficiencies associated with these misstatements. The following audit deficiency was identified: · The firm performed substantive procedures to test certain of these misstatements but did not test or test any controls over the completeness of the lease data that the issuer used to calculate these misstatements. (AS 1105.10)

The sample sizes the firm used in certain of its substantive procedures to test leases 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 deficiency in the firm's control testing discussed above. (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 deficiency below. The issuer used store-level operating results to evaluate whether any impairment indicators existed for its operating lease right-of-use assets and to perform an impairment analysis. The following deficiency was identified: · The firm selected for testing a control that included the issuer's reviews of the accuracy and completeness of these operating results and this impairment analysis. When evaluating the design of this control the firm did not evaluate the number of items the control owner reviewed to assess whether it was sufficient to address the risks of material misstatement. Further the firm did not identify that the control owner did not assess whether these operating results were accurately entered into this impairment analysis. (AS 2201.42)

The firm's internal inspection program inspected this audit and reviewed this area but did not identify the deficiency below. The issuer used store-level operating results to evaluate whether any impairment indicators existed for its operating lease right-of-use assets and to perform an impairment analysis. The following deficiency was identified: · The firm used these operating results in its substantive testing of the potential impairment of these lease right-of-use assets but did not perform any procedures to test or sufficiently test controls over the accuracy and completeness of these operating results. (AS 1105.10)

During the year the issuer acquired a business and determined the fair value of certain acquired intangible 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 owners performed to assess the reasonableness of certain of these assumptions. (AS 2201.42 and .44)