Explorer

With respect to Inventory at one of the issuer's business units: The firm selected for testing a control that included the issuer's annual physical inventory count of this inventory. The following deficiencies were identified: · The firm did not evaluate whether the issuer had appropriately investigated and resolved differences between the physical counts and the quantities recorded in the issuer's inventory system. (AS 2201.42 and .44)

With respect to Inventory at one of the issuer's business units: The firm selected for testing a control that included the issuer's annual physical inventory count of this inventory. The following deficiencies were identified: · The firm did not evaluate whether the IT-dependent aspects of this control would be effective given the significant deficiency related to this IT system. (AS 2201.46)

With respect to Inventory at one of the issuer's business units: The firm did not perform sufficient substantive procedures to test the existence of this inventory because the firm did not assess the effectiveness of the methods the issuer used to conduct its inventory counts. (AS 2510.09)

With respect to Inventory at another of the issuer's business units: The issuer performed cycle counts of this inventory and the issuer's cycle-count policy required this inventory to be counted at specific frequencies during the year. The firm selected for testing a control that consisted of the issuer's cycle-count procedures including the issuer's reviews of cycle-count results. The firm did not test the aspects of this control that addressed whether inventory counts were performed in accordance with the issuer's designated count frequency in its cycle-count policy. (AS 2201.42 and .44)

Certain of the issuer's revenue arrangements included multiple performance obligations. The issuer allocated the total transaction price for each of these arrangements to the separate performance obligations based on the issuer's estimate of the relative standalone selling prices. The following deficiencies were identified: · The firm selected for testing a control that consisted of the issuer's reviews of the estimated standalone selling prices. The firm did not evaluate the specific review procedures that the control owner performed to assess the reasonableness of certain significant assumptions used to develop the standalone selling prices. (AS 2201.42 and .44)

With respect to the issuer's revenue disclosures the following deficiencies were identified: · The firm selected for testing a control that included the issuer's review of certain revenue disclosures but did not test the aspect of the control that addressed the accuracy and completeness of the issuer-prepared schedules used to prepare these disclosures. (AS 2201.42 and .44)

With respect to the issuer's revenue disclosures the following deficiencies were identified: · The firm used these issuer-prepared schedules in its substantive testing of these revenue disclosures but did not perform any procedures to test or sufficiently test controls over the accuracy and completeness of these schedules. (AS 1105.10)

The firm selected for testing two controls that consisted of the issuer's review of the reserve for excess and obsolete inventory at certain business units. For the first control the firm did not evaluate the specific review procedures that the control owners performed to assess the reasonableness of the significant assumptions that the issuer used to develop this reserve. (AS 2201.42 and .44)

The firm selected for testing two controls that consisted of the issuer's review of the reserve for excess and obsolete inventory at certain business units. For the second control the firm did not identify and test any controls over the accuracy of certain data that the control owners used in the operation of the control. (AS 2201.39)

The firm's approach for substantively testing the reserve for excess and obsolete inventory at these business units was to test the issuer's process. The following deficiencies were identified: · The firm did not perform procedures to evaluate the reasonableness of the significant assumptions that the issuer used to develop this reserve beyond reading an issuer-prepared memorandum. (AS 2501.16)

The firm's approach for substantively testing the reserve for excess and obsolete inventory at these business units was to test the issuer's process. The following deficiencies were identified: · The firm used certain issuer-produced data in its testing of this reserve but did not test or test any controls over the accuracy of these data. (AS 1105.10)

Certain of the issuer's inventory was subject to cycle counts and the issuer's cycle-count policy required this inventory to be counted at specific frequencies during the year. The following deficiencies were identified: · The firm did not identify and test any controls that addressed whether each inventory item was counted with sufficient frequency in accordance with the issuer's cycle-count policy. (AS 2201.39)

Certain of the issuer's inventory was subject to cycle counts and the issuer's cycle-count policy required this inventory to be counted at specific frequencies during the year. The following deficiencies were identified: · The firm selected for testing a control that consisted of the issuer's monitoring of its cycle count results. The firm did not identify and test any controls over the accuracy and completeness of certain information that the control owners used in the operation of the control. (AS 2201.39)

With respect to the issuer's work-in-process inventory at certain business units that the firm subjected to more extensive audit procedures the following deficiencies were identified: · The firm did not identify and test any controls over the existence of this work-in-process inventory. (AS 2201.39)

With respect to the issuer's work-in-process inventory at certain business units that the firm subjected to more extensive audit procedures the following deficiencies were identified: · The firm did not perform any procedures to test the existence of this work-in-process inventory. (AS 2301.08)

Certain of the issuer's revenue arrangements included multiple performance obligations. The issuer allocated the total transaction price for each of these arrangements to the separate performance obligations based on the issuer's estimate of the relative standalone selling prices. The following deficiencies were identified: · The firm's approach for substantively testing the estimated standalone selling prices was to test the issuer's process. The firm selected a sample of revenue arrangements for testing but did not perform procedures to evaluate the reasonableness of certain significant assumptions used to develop the standalone selling prices beyond performing a sensitivity analysis for certain revenue arrangements selected for testing. (AS 2501.16)

During the year the issuer recognized certain revenue upon its delivery of products to a customer and also delivered additional products to this customer in exchange for the return of products sold to the customer in the previous year. The firm did not identify and evaluate that the issuer's conclusion that certain criteria required to recognize revenue for the products sold to this customer had been met was not in conformity with FASB ASC Topic 606 Revenue from Contracts with Customers. (AS 2810.30)

During the year the issuer recognized certain revenue upon its delivery of products to a customer and also delivered additional products to this customer in exchange for the return of products sold to the customer in the previous year. The firm did not identify and evaluate that the issuer's conclusion that the exchange of products did not represent a product return was not in conformity with FASB ASC Topic 606. (AS 2810.30)

The issuer entered into arrangements to purchase inventory from certain suppliers. The firm did not evaluate whether these arrangements represented firm purchase commitments for which a loss should have been recognized under FASB ASC Topic 330 Inventory. Further the firm did not evaluate whether these arrangements created an unconditional performance obligation that would have required disclosure under FASB ASC Topic 440 Commitments. (AS 2301.08)

The issuer used multiple information technology (IT) systems to initiate process and record transactions related to certain revenue and insurance-related liabilities. 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 these IT systems. As a result of the following deficiencies in the firm's testing of IT general controls the firm's testing of these automated and IT-dependent manual controls was not sufficient. (AS 2201.46)

The firm selected for testing a control at three of the issuer's business units that consisted of the issuer's monitoring and review of changes to certain of these IT systems. The following deficiencies were identified: · The firm did not identify and test any controls over the accuracy and completeness of certain system change reports that the control owners used in the operation of this control at all three business units. (AS 2201.39)

The firm selected for testing a control at three of the issuer's business units that consisted of the issuer's monitoring and review of changes to certain of these IT systems. The following deficiencies were identified: · For the control at one of these business units the firm did not evaluate the specific review procedures that the control owner performed to assess whether the system changes were appropriate. (AS 2201.42 and .44)

The firm selected for testing a control at these three business units that consisted of the issuer's approval of changes to these IT systems and testing of those changes prior to implementation into the production environment. The following deficiencies were identified: · The firm used the system change reports discussed above to select its samples for testing this control at all three business units but did not test or test any controls over the completeness of these reports. (AS 1105.10)

The firm selected for testing a control at these three business units that consisted of the issuer's approval of changes to these IT systems and testing of those changes prior to implementation into the production environment. The following deficiencies were identified: · The firm performed certain of its testing of this control at all three business units in the issuer's testing environment rather than in its production environment but did not perform any procedures to determine whether the testing environment was consistent with the production environment. (AS 2201.42 and .44)

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 revenue at two of these business units 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)

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 sufficient procedures to test or sufficiently test controls over the completeness of certain system-generated data or reports that the firm used in its substantive testing of insurance-related liabilities at one of these business units. (AS 1105.10)

During the year the issuer recorded revenue from bill-and-hold arrangements with one of its customers. The following deficiencies were identified: · The firm did not identify and test any controls that addressed whether the issuer had met certain revenue recognition criteria for these bill-and-hold arrangements. (AS 2201.39)

For revenue at one of the issuer's segments the firm did not identify and test any controls over the accuracy and completeness of certain customer order data that were entered or transferred into the issuer's systems and used to recognize revenue. (AS 2201.39)

The sample sizes the firm used in its substantive procedures to test revenue and accounts receivable at this segment 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. (AS 2301.16 .18 and .37; AS 2315.19 .23 and .23A)

With respect to certain of the issuer's disclosures related to revenue the following deficiencies were identified: · The firm selected for testing a control that included the issuer's review of its financial statement disclosures. The firm did not identify and test any controls over the accuracy and completeness of certain issuer-prepared schedules related to revenue that the control owners used in the operation of this control. (AS 2201.39)

With respect to certain of the issuer's disclosures related to revenue the following deficiencies were identified: · The firm used these issuer-prepared schedules in its substantive testing of these revenue disclosures but did not perform any procedures to test or test any controls over the accuracy and completeness of these schedules. (AS 1105.10)

Certain inventory at one of the issuer's segments was subject to cycle counts and the issuer's cycle-count policy required this inventory to be counted at specific frequencies during the year. The firm did not identify and test any controls that addressed (1) whether each inventory item was counted with sufficient frequency in accordance with the issuer's cycle count policy and (2) the issuer's monitoring of the accuracy of the cycle-count results. (AS 2201.39)

The firm selected for testing a control that consisted of the issuer's reviews of the ACL. The firm did not evaluate the specific review procedures that the control owners performed to assess the reasonableness of the ACL including the significant assumptions used. (AS 2201.42 and .44)

The firm did not identify and test any controls over the accuracy and completeness of certain data that the control owners used in the operation of the control. (AS 2201.39)

The issuer recognized certain revenue based on customer contracts that included financing arrangements with the customer. The firm selected for testing a control over this revenue that consisted of the issuer's review and approval of the credit application supporting the customer's ability and intent to pay. The firm did not evaluate the specific review procedures that the control owners performed to assess whether the customer contracts had met the collectability criteria before revenue was recognized. (AS 2201.42 and .44)

The firm's substantive procedures to test this revenue consisted of selecting a sample of transactions for testing. The firm did not evaluate whether these transactions had met the collectability criteria before revenue was recognized beyond reviewing the customer's credit application. (AS 2301.08)

The issuer held certain inventory at external warehouses. The firm did not perform any procedures to test the existence of this inventory. (AS 2510.14)

During the year the issuer recorded revenue from bill-and-hold arrangements with one of its customers. The following deficiencies were identified: · The firm did not perform substantive procedures to evaluate whether the issuer had met certain revenue recognition criteria for these bill-and-hold arrangements beyond reading an issuer-prepared memorandum. (AS 2301.08 and .13)

The issuer classified inventory as current or noncurrent based on its estimate of when it expected to sell the inventory. The firm's approach for substantively testing this estimate was to test the issuer's process. The firm did not perform procedures to evaluate the reasonableness of the significant assumptions that the issuer used to develop this estimate. (AS 2501.16)

The firm did not identify and evaluate a misstatement in a required disclosure under FASB ASC Topic 230 Statement of Cash Flows. (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 held inventory at numerous business units. The firm subjected certain of the issuer's business units that were included within three of the issuer's segments to more extensive audit procedures. The following deficiencies were identified: · Inventory at one of these business units was subject to cycle counts and the issuer used its IT system to determine the frequency with which the items should be counted during the year by assigning a count designation to each inventory item. The firm did not identify and test any controls that addressed whether (1) the issuer's IT system was configured to assign an appropriate count designation to each inventory item and (2) each inventory item was counted with sufficient frequency in accordance with the designated count frequency. (AS 2201.39)

The firm's internal inspection program had inspected this audit reviewed these areas and also identified the deficiencies below. The issuer held inventory at numerous business units. The firm subjected certain of the issuer's business units that were included within three of the issuer's segments to more extensive audit procedures. The following deficiencies were identified: · For a second of these business units the firm identified control deficiencies related to the issuer's cycle counts performed at certain locations including the lack of monitoring of whether the cycle-count results were sufficiently accurate. The firm identified and tested compensating controls that it believed mitigated these deficiencies but did not identify that these compensating controls did not address the accuracy of the cycle-counts results. (AS 2201.68)

The firm's internal inspection program had inspected this audit reviewed these areas and also identified the deficiencies below. The issuer held inventory at numerous business units. The firm subjected certain of the issuer's business units that were included within three of the issuer's segments to more extensive audit procedures. The following deficiencies were identified: · For a third of these business units the firm selected for testing controls over the existence of inventory that included the control owners' use of various system-generated reports in the operation of the controls. The firm did not identify and test any controls that addressed the risk that unauthorized or inappropriate changes could be made to these reports. (AS 2201.39)

The firm's internal inspection program had inspected this audit reviewed these areas and also identified the deficiencies below. The issuer recorded transactions related to revenue at numerous business units. The firm subjected certain of the issuer's business units that were included within three of the issuer's segments to less extensive audit procedures. To address the risks of material misstatement related to revenue for these business units the firm selected for testing various entity-level controls. The following deficiencies were identified: · For one segment the firm selected for testing controls that consisted of the issuer's reviews of the forecasts that were used in its entity-level controls over this segment including the assumptions used in these forecasts. The firm did not evaluate the specific review procedures that the control owners performed to assess the reasonableness of these assumptions. (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 recorded transactions related to revenue at numerous business units. The firm subjected certain of the issuer's business units that were included within three of the issuer's segments to less extensive audit procedures. To address the risks of material misstatement related to revenue for these business units the firm selected for testing various entity-level controls. The following deficiencies were identified: · For a second segment the firm selected for testing a control that consisted of the issuer's monthly comparisons of prior-period results to current-period results. The firm did not evaluate the specific review procedures that the control owners performed to determine whether items identified for follow up had been appropriately resolved. (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 recorded transactions related to revenue at numerous business units. The firm subjected certain of the issuer's business units that were included within three of the issuer's segments to less extensive audit procedures. To address the risks of material misstatement related to revenue for these business units the firm selected for testing various entity-level controls. The following deficiencies were identified: · For a third segment the firm selected for testing a control that consisted of the issuer's quarterly comparisons of prior-period results to current-period results. The firm did not evaluate the review procedures that the control owners performed including the procedures to identify items for follow up and the procedures to determine whether those items were appropriately resolved. (AS 2201.42 and .44)

The issuer performed quantitative assessments of the possible impairment of its intangible assets at an interim date and at year end using cash-flow forecasts. The firm selected for testing a control that consisted of the issuer's review of these cash-flow forecasts. The firm did not evaluate the specific review procedures that the control owner performed to assess the reasonableness of certain assumptions the issuer used in these forecasts. (AS 2201.42 and .44)

The firm's approach for substantively testing the issuer's impairment assessments was to test the issuer's process. The following deficiencies were identified: · For the interim impairment assessment the firm did not sufficiently evaluate the reasonableness of certain significant assumptions because its procedures were limited to inquiring of management and evaluating these assumptions for consistency with the issuer's historical or recent experience. (AS 2501.16)

During the year the issuer recorded revenue from bill-and-hold arrangements with one of its customers. The following deficiencies were identified: · The firm did not identify and evaluate the issuer's omission of a required disclosure under FASB ASC Topic 606 Revenue from Contracts with Customers related to when performance obligations are satisfied under bill-and-hold arrangements. (AS 2810.30 and .31)

The firm's approach for substantively testing the issuer's impairment assessments was to test the issuer's process. The following deficiencies were identified: · For the year-end impairment assessment the firm did not sufficiently evaluate the reasonableness of certain significant assumptions because it did not evaluate the significant differences between these assumptions and the industry information it had obtained. Further the firm did not perform any procedures to evaluate the reasonableness of certain other significant assumptions. (AS 2501.16)