Explorer

The firm sent confirmation requests to a sample of customers and a majority of the confirmation responses received were provided to the firm after having been initially received by the issuer. The firm did not maintain control over the confirmation requests and responses through direct communication between the firm and the intended recipients of the confirmation requests. (AS 2310.28)

For another type of revenue the firm selected transactions for testing that met certain criteria. The firm did not perform any procedures to test the remaining population that was not included in the selections. (AS 1105.27)

For another type of revenue the firm selected transactions for testing that met certain criteria. The firm did not perform any substantive procedures to test or in the alternative test controls over the accuracy and completeness of issuer-generated invoices used in the firm's testing of this type of revenue. (AS 1105.10)

The firm received electronic responses to its accounts receivable confirmation requests. 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 firm's approach for substantively testing the allowance for doubtful accounts was to review subsequent transactions. The firm did not sufficiently evaluate the reasonableness of the allowance because the firm limited its procedures to reviewing cash collections subsequent to year end for one customer's accounts receivable balance. (AS 2501.09 .10 and .13)

The firm did not identify and evaluate the significance to the issuer's financial statements of a departure from GAAP related to the conversion features of certain convertible notes that should have been accounted for as either beneficial conversion features in conformity with FASB ASC Subtopic 470-20 Debt — Debt with Conversion and Other Options or as embedded derivatives in conformity with FASB ASC Topic 815 Derivatives and Hedging. (AS 2810.30)

The firm identified errors related to certain of the issuer's convertible notes. The firm did not evaluate whether the uncorrected misstatements were material individually or in combination with other misstatements. (AS 2810.17)

The issuer performed a qualitative assessment of goodwill impairment and used a recent fair value calculation prepared by an external specialist in concluding to not perform a quantitative goodwill impairment test. The firm did not sufficiently evaluate whether the issuer considered certain relevant events or changes in circumstances in conformity with FASB ASC Subtopic 350-20 Intangibles — Goodwill and Other— Goodwill including the issuer's operating losses negative working capital and substantial doubt about the issuer's ability to continue as a going concern. (AS 2810.03 and .30)

The issuer performed a qualitative assessment of goodwill impairment and used a recent fair value calculation prepared by an external specialist in concluding to not perform a quantitative goodwill impairment test. The firm did not perform any procedures beyond inquiry of the external specialist to (1) test the data (2) evaluate the reasonableness of assumptions and (3) evaluate the relevance and reliability of information the specialist used in the recent fair value calculation that the firm used to support its evaluation of the issuer's qualitative assessment. (AS 2501.09 .10 and .11)

The firm did not evaluate whether each segment disclosed by the issuer met the criteria to be considered an operating segment in conformity with FASB ASC Topic 280. (AS 2810.30 and .31)

The firm performed inventory observations at an interim date and performed roll-forward procedures for the period from the interim date to year end. The firm did not perform any substantive procedures to test or in the alternative test controls over the accuracy and completeness of information the firm used in performing the roll-forward procedures. (AS 1105.10)

The firm received electronic responses to its accounts receivable confirmation requests. 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 firm's approach for substantively testing the allowance for doubtful accounts was to review and test management's process. The firm did not sufficiently evaluate the reasonableness of the allowance because it limited its procedures to (1) inquiry of management and (2) obtaining documents from the issuer related to promises from its customers to pay the amounts owed without evaluating the authenticity and reliability of those documents. (AS 2501.09 .10 and .11)

The firm did not perform substantive procedures to test revenue beyond comparing it to prior year revenue and comparing certain revenue to the issuer's information system. (AS 2301.08)

The issuer reported gains from the sales of certain discontinued operations. The issuer reclassified certain amounts from equity to the gain on disposal. The firm did not perform sufficient procedures to test the assets liabilities and equity accounts included in the calculation of the gains on the sales because it limited its procedures to comparing the amounts to the respective general ledgers. (AS 2301.08)

The issuer reported gains from the sales of certain discontinued operations. The issuer reclassified certain amounts from equity to the gain on disposal. The firm did not identify and evaluate the significance to the financial statements of an error related to the issuer's use of an incorrect exchange rate at the date of certain of the sales to translate the assets liabilities and certain equity adjustments. (AS 2810.30)

The issuer reported gains from the sales of certain discontinued operations. The issuer reclassified certain amounts from equity to the gain on disposal. The firm did not identify and evaluate the significance to the financial statements of errors in the disclosures of discontinued operations related to (1) an incorrect amount disclosed related to the gain on disposal for one sale and (2) the aggregation of the reclassification of certain equity adjustments for different discontinued operations within the gain on disposal for one sale. (AS 2810.30 and .31)

Prior to the report release date the firm did not complete all necessary audit procedures and obtain sufficient evidence to support the representations in the auditor's report. Specifically the firm completed the performance and review of a significant number of auditing procedures after the report release date. (AS 1105.04; AS 1215.15)

During the year the issuer acquired a business and engaged a specialist to estimate the fair value of the acquired intangible assets and goodwill at the acquisition date. The firm's approach for substantively testing the fair value of these assets was to test the issuer's process. The firm did not perform sufficient substantive procedures to evaluate the reasonableness of certain significant assumptions developed by the issuer because the firm limited its procedures to obtaining issuer-prepared documents. (AS 2501.16)

During the year the issuer acquired a business and engaged a specialist to estimate the fair value of the acquired intangible assets and goodwill at the acquisition date. The firm's approach for substantively testing the fair value of these assets was to test the issuer's process. The firm did not perform any substantive procedures to test or in the alternative identify and test controls over the accuracy and completeness of those documents. (AS 1105.10)

During the year the issuer acquired a business and engaged a specialist to estimate the fair value of the acquired intangible assets and goodwill at the acquisition date. The firm's approach for substantively testing the fair value of these assets was to test the issuer's process. The firm did not perform any substantive procedures to evaluate the reasonableness of other significant assumptions developed by the issuer. (AS 2501.16)

During the year the issuer acquired a business and engaged a specialist to estimate the fair value of the acquired intangible assets and goodwill at the acquisition date. The firm's approach for substantively testing the fair value of these assets was to test the issuer's process. The firm did not perform any substantive procedures to test the completeness existence and accuracy of the other assets acquired and liabilities assumed at the acquisition date. (AS 2301.08)

During the year the issuer acquired a business and engaged a specialist to estimate the fair value of the acquired intangible assets and goodwill at the acquisition date. The firm's approach for substantively testing the fair value of these assets was to test the issuer's process. The firm did not perform any substantive procedures to test the fair value of the other assets acquired and liabilities assumed at the acquisition date. (AS 2501.07)

The firm did not perform substantive procedures to test whether the performance obligation had been satisfied when revenue was recognized beyond reviewing the issuer's internal invoices. (AS 2301.08)

The firm did not perform any substantive procedures to evaluate whether the issuer's revenue recognition policies were in accordance with GAAP. (AS 2301.08)

The firm did not perform substantive procedures to evaluate the completeness of deferred revenue beyond obtaining the issuer's internal documentation of revenue recognized. (AS 2301.08)

The issuer reported derivative liabilities at fair value. The firm's approach for substantively testing the fair value of the derivative liabilities was to test the issuer's process. The firm did not perform any substantive procedures to evaluate the relevance and/or reliability of certain data the issuer used to develop assumptions used in its determination of the fair value. (AS 1105.04 and .06)

The issuer reported derivative liabilities at fair value. The firm's approach for substantively testing the fair value of the derivative liabilities was to test the issuer's process. The firm did not evaluate whether the method the issuer used to develop the fair value was in conformity with the applicable financial reporting framework including whether the data was appropriately used and significant assumptions appropriately applied and appropriate for the nature of the related account. (AS 2501.10)

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

The issuer reported discontinued operations classified as held for sale at year end including intangible assets. The issuer recorded an adjustment to measure an intangible asset at fair value less cost to sell ('adjustment') and an impairment for certain other intangible assets during the year. The firm did not sufficiently evaluate whether the adjustment of the intangible asset subject to amortization was determined in conformity with FASB ASC Topic 360 Property Plant and Equipment because the firm did not evaluate that the issuer appeared to remeasure the valuation of this asset based on the fair value of the discontinued operations as opposed to a fair value estimate of this asset. (AS 2301.08)

The issuer reported discontinued operations classified as held for sale at year end including intangible assets. The issuer recorded an adjustment to measure an intangible asset at fair value less cost to sell ('adjustment') and an impairment for certain other intangible assets during the year. The firm did not sufficiently evaluate whether the impairment of certain intangible assets not subject to amortization was determined in conformity with FASB ASC Topic 350 Intangibles - Goodwill and Other because the firm did not evaluate that the issuer appeared to determine the impairment of these assets based on the fair value of the discontinued operations as opposed to a fair value estimate of these intangible assets. (AS 2301.08)

The issuer reported discontinued operations classified as held for sale at year end including intangible assets. The issuer recorded an adjustment to measure an intangible asset at fair value less cost to sell ('adjustment') and an impairment for certain other intangible assets during the year. The firm did not perform substantive procedures beyond reviewing an issuer-prepared memorandum and recalculating the amounts to test the adjustment and impairment. (AS 2501.07)

To test certain revenue the firm (1) confirmed certain revenue transactions and received two confirmations back with exceptions (2) selected revenue transactions above a threshold and a sample of transactions below that threshold for detail testing and (3) performed cut-off testing. The firm did not evaluate the nature of exceptions on the two returned confirmations. (AS 2310.33)

To test certain revenue the firm (1) confirmed certain revenue transactions and received two confirmations back with exceptions (2) selected revenue transactions above a threshold and a sample of transactions below that threshold for detail testing and (3) performed cut-off testing. In determining its sample size for transactions below the threshold for detail testing the firm did not take into account the tolerable misstatement for the population and the allowable risk of incorrect acceptance. (AS 2315.16 .19 .23 and .23A)

To test certain revenue the firm (1) confirmed certain revenue transactions and received two confirmations back with exceptions (2) selected revenue transactions above a threshold and a sample of transactions below that threshold for detail testing and (3) performed cut-off testing. The firm did not sufficiently perform substantive procedures to test or in the alternative identify and test controls over the accuracy and completeness of issuer-prepared information the firm used in its substantive procedures because the firm limited its procedures comparing the issuer-prepared information to other issuer-provided information. (AS 1105.10)

The firm did not perform substantive procedures to test certain receivables beyond comparing the balance to the sub-ledger. (AS 2301.08)

The firm did not perform any substantive procedures to test the existence of accounts receivable. (AS 2301.08)

The firm did not perform any substantive procedures to test the valuation of accounts receivable. (AS 2501.07)

For the majority of certain revenue the issuer concluded that there was a single performance obligation. The firm did not perform sufficient procedures to evaluate whether certain services offered as part of those transactions represented separate performance obligations because the firm concluded they were not separate performance obligations since the issuer had not performed the services during the year and did not evaluate whether the issuer would perform the services as part of completing the transactions. (AS 2301.08; AS 2810.03)

For the majority of certain revenue the issuer concluded that there was a single performance obligation. The firm did not sufficiently test the transaction price because it did not evaluate whether the promised consideration included a variable amount. (AS 2301.08)

For the majority of certain revenue the issuer concluded that there was a single performance obligation. The issuer identified one transaction with multiple performance obligations. The firm did not perform procedures to evaluate the allocation of the transaction price to the performance obligations. (AS 2301.08)

For certain other revenue the firm did not obtain an understanding of the specific terms and provisions of the contracts to evaluate whether the issuer appropriately recognized revenue. (AS 2301.08)

During the prior year the issuer acquired a controlling interest in a business and during the current year engaged a specialist to estimate the final fair value of the non-controlling interest. The firm did not evaluate whether the model the company's specialist used to determine the fair value was appropriate under the circumstances. (AS 1105.A8c)

During the prior year the issuer acquired a controlling interest in a business and during the current year engaged a specialist to estimate the final fair value of the non-controlling interest. The firm did not evaluate the reasonableness of certain significant assumptions the company's specialist developed and used. (AS 1105.A8b)

The issuer reported goodwill for several reporting units and recorded an impairment of goodwill for one of the reporting units during the year. The firm did not perform any substantive procedures to evaluate whether the issuer identified the reporting units in conformity with FASB ASC Topic 350. (AS 2301.08)

The issuer identified impairment indicators for an intangible asset and engaged a specialist to estimate the fair value of the asset. The firm's approach for substantively testing the fair value of this asset was to test the issuer's process. The firm did not perform substantive procedures beyond inquiry to evaluate the reasonableness of certain significant assumptions the issuer developed that the company's specialist used. (AS 2501.16)

The firm did not perform substantive procedures to test certain other receivables beyond obtaining and reading memoranda from the issuer and a legal letter which did not include any conclusions with respect to these receivables. (AS 2301.08)

The issuer identified impairment indicators for an intangible asset and engaged a specialist to estimate the fair value of the asset. The firm's approach for substantively testing the fair value of this asset was to test the issuer's process. The firm did not sufficiently evaluate the reasonableness of another significant assumption developed by the issuer because it limited its procedures to inquiry and vouching an aspect of the assumption to support. (AS 2501.16)

The issuer reported right-of-use assets and lease liabilities. The issuer performed a recoverability test to determine whether these assets were impaired that included cash flows for years beyond the terms of the leases. The firm's approach for substantively testing the recoverability test was to test the issuer's process. The firm did not sufficiently evaluate whether any of the issuer's leases met the criteria for classification as finance leases in conformity with FASB ASC Topic 842 Leases because the firm did not perform procedures to determine whether (1) the lease term is for the major part of the remaining economic life of the underlying asset and (2) the present value of the of the lease payments exceeds substantially all of the fair value of the underlying asset. (AS 2301.08)

The issuer reported right-of-use assets and lease liabilities. The issuer performed a recoverability test to determine whether these assets were impaired that included cash flows for years beyond the terms of the leases. The firm's approach for substantively testing the recoverability test was to test the issuer's process. The firm did not perform any substantive procedures to evaluate the reasonableness of the discount rate the issuer used to develop the estimate of lease liabilities. (AS 2501.16)