Explorer

The firm selected for testing various controls over payroll expenses but did not identify and test any controls over the accuracy of certain payroll data including employee headcount and cost-center data that were used in the operation of these controls. (AS 2201.39)

The firm's substantive procedures to test payroll expenses included performing substantive analytical procedures. The firm used employee headcount data produced by the issuer to develop its expectations but did not test or test any controls over the accuracy of these data. (AS 2305.16)

The issuer allocated its payroll costs to the various types of expenses it reported based on the cost centers to which its employees were assigned. The firm did not perform any substantive procedures to test whether the issuer's allocation of certain of these payroll costs was appropriate. (AS 2301.08)

The issuer used forecasted financial information in its evaluation of its ability to continue as a going concern and concluded that the substantial doubt was alleviated by its plans. In evaluating management's plans the firm did not evaluate the relevance and reliability of certain forecasted financial information that was particularly significant to those plans. (AS 1105.04 and .06; AS 2415.03 .08 and .09)

The firm selected for testing a control that consisted of the issuer's review of the appropriateness of the ACL but did not test the aspect of the control that addressed the accuracy and completeness of information that was included in an issuer-prepared memorandum that the control owners used in the operation of this control. (AS 2201.42 and .44)

The issuer performed a quantitative assessment of the possible impairment of certain intangible assets. The firm did not perform any substantive procedures to test this assessment. (AS 2501.07)

During the year the issuer completed numerous nonmonetary exchanges of inventory with various counterparties. The firm did not identify and evaluate the issuer's omission of certain disclosures related to these nonmonetary exchanges that were required under FASB ASC Topic 845 Nonmonetary Transactions. (AS 2810.30 and .31)

With respect to the issuer's allowance for doubtful accounts the following deficiencies were identified: · The firm selected for testing a control that consisted of the issuer's review of the allowance for doubtful accounts at one of the issuer's business units. The firm did not evaluate the review procedures that the control owner 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)

With respect to the issuer's allowance for doubtful accounts the following deficiencies were identified: · The firm's approach for substantively testing the allowance for doubtful accounts at this business unit was to test the issuer's process. The firm did not perform any procedures to evaluate the reasonableness of the significant assumptions the issuer used to develop this allowance. (AS 2501.16)

With respect to revenue and accounts receivable at certain other business units that the firm subjected to less extensive audit procedures the following deficiencies were identified: · The firm selected for testing an entity-level control that included the issuer's comparison of forecasts by business unit to actual results including revenue. The firm did not identify and test any controls over the forecasts used in the operation of this control. (AS 2201.39)

With respect to revenue and accounts receivable at certain other business units that the firm subjected to less extensive audit procedures the following deficiencies were identified: · The firm did not perform any substantive procedures to test revenue and accounts receivable for these business units. (AS 2301.08)

The issuer used multiple information-technology (IT) systems to initiate process and record transactions related to certain revenue and the related accounts receivable. 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 (ITGCs) the firm's testing of these automated and IT dependent manual controls was not sufficient. (AS 2201.46)

The issuer reported investment securities that were held within various investment funds managed by external parties. The following deficiency was identified: • The firm selected for testing a control that consisted of the issuer's review of the fair values of these investments. The firm did not identify and test any controls that addressed the reliability of pricing information obtained from the external parties that were used in the operation of this control. (AS 2201.39)

The issuer reported investment securities that were held within various investment funds managed by external parties. The following deficiency was identified: • The firm did not perform substantive procedures to test the valuation of these investments beyond (1) comparing their reported fair values to the statements obtained from the external parties that managed the respective investment funds and (2) for a selection of investment funds testing the fair values of certain underlying investments while excluding others from testing. (AS 2501.07)

The issuer reported investment securities that were held within various investment funds managed by external parties. The following deficiency was identified: • The firm did not identify and evaluate a departure from GAAP related to the issuer's presentation of the fair value and non-fair value amounts of these investments within the same short-term and long-term line items in its balance sheet rather than presenting them as separate line items or parenthetically disclosing the amounts measured at fair value included in the aggregate amounts in conformity with FASB ASC Topic 825 Financial Instruments. (AS 2810.30 and .31)

The issuer reported investment securities that were held within various investment funds managed by external parties. The following deficiency was identified: • The firm did not identify and evaluate another departure from GAAP related to the issuer's inclusion of certain investments within its fair value hierarchy disclosure rather than excluding them in conformity with FASB ASC Topic 820 Fair Value Measurement. (AS 2810.30 and .31)

The issuer reported investment securities that were held within various investment funds managed by external parties. The following deficiency was identified: • The firm did not identify and evaluate other departures from GAAP related to the issuer's omission of and/or misstatements in certain disclosures required under FASB ASC Topic 320 Investments – Debt Securities and FASB ASC Topic 820 regarding the nature of these investments and the methods used to determine their fair values. (AS 2810.30 and .31)

The firm did not identify and test any controls that addressed the appropriateness of the expenses included within cost of sales. (AS 2201.39)

The firm did not perform any procedures to evaluate the appropriateness of the issuer's inclusion of certain compensation expenses within cost of sales. (AS 2301.08)

The firm selected for testing various user access and change management controls over these IT systems that consisted of the issuer's reviews of (1) the granting and monitoring of user access and (2) changes to the production environment of these IT systems. The following deficiency was identified: · The firm did not perform sufficient procedures to test the design of these controls because it did not evaluate whether (1) the controls were designed to satisfy the issuer's control objectives and (2) the control owners possessed the necessary authority and competence to perform the controls. (AS 2201.42)

The firm selected for testing various user access and change management controls over these IT systems that consisted of the issuer's reviews of (1) the granting and monitoring of user access and (2) changes to the production environment of these IT systems. The following deficiency was identified: · The firm did not identify and test any controls over the accuracy and completeness of certain system-generated information that were used in the operation of these controls. (AS 2201.39)

The firm selected for testing various user access and change management controls over these IT systems that consisted of the issuer's reviews of (1) the granting and monitoring of user access and (2) changes to the production environment of these IT systems. The following deficiency was identified: · The firm used certain system-generated information (1) in its testing of these controls and/or (2) to make selections to test certain controls but did not perform procedures to test or test any controls over the accuracy and/or completeness of this information. Further the firm used other information in its testing of certain of these controls but did not sufficiently test or test controls over the accuracy and completeness of this information because it did not test how the information was generated. (AS 1105.10)

The firm selected for testing various user access and change management controls over these IT systems that consisted of the issuer's reviews of (1) the granting and monitoring of user access and (2) changes to the production environment of these IT systems. The following deficiency was identified: · In its testing of a control over user access the firm identified a deviation indicating that an individual may have had inappropriate access to one of these systems. The firm determined that this deviation did not affect its conclusion on the operating effectiveness of this control based on certain system-generated information provided by the issuer. The firm did not sufficiently evaluate the effect of this deviation on the operating effectiveness of this control because it did not test or test controls over the accuracy and completeness of this information. (AS 1105.10; AS 2201.48)

As a result of the firm's ITGC testing deficiencies the firm did not perform sufficient substantive procedures over this revenue and the related accounts receivable as follows: · The sample sizes that the firm used in certain of its substantive procedures to test these accounts 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 ITGC testing deficiencies the firm did not perform sufficient substantive procedures over this revenue and the related accounts receivable as follows: · The firm did not perform sufficient procedures to test or sufficiently test controls over the accuracy and completeness of certain system-generated information that the firm used in its substantive testing. (AS 1105.10)

The following additional deficiency was identified: • The firm selected for testing controls that consisted of the issuer's reviews of the sales return reserve and the allowance for doubtful accounts. 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 following additional deficiency was identified: • The firm's approach to substantively test the allowance for doubtful accounts was to test the issuer's process. The firm did not perform procedures beyond reading an issuer-prepared memorandum to evaluate the reasonableness of the significant assumptions the issuer used to develop this allowance. (AS 2501.16)

The issuer recognized revenue from different sources. For one source of revenue the following deficiencies were identified: · The firm did not perform any procedures to evaluate the relevance and reliability of external information it used to test revenue and accounts receivable. (AS 1105.04 and .06)

During the year the issuer acquired a business. The following deficiencies were identified: · The firm did not identify and evaluate a departure from GAAP related to the issuer's omission of certain disclosures required by FASB ASC Topic 805 Business Combinations. (AS 2810.30 and .31) Unrelated to our review the issuer reevaluated its accounting for this business combination and concluded that material misstatements existed that had not been previously identified. The issuer subsequently corrected these misstatements in a restatement of its financial statements and the firm revised and reissued its report on the financial statements.

During the year the issuer acquired a business. The following deficiencies were identified: · The firm did not perform any procedures to evaluate the reliability of external information used to test accounts receivable at the acquisition date. (AS 1105.04 and .06) Unrelated to our review the issuer reevaluated its accounting for this business combination and concluded that material misstatements existed that had not been previously identified. The issuer subsequently corrected these misstatements in a restatement of its financial statements and the firm revised and reissued its report on the financial statements.

During the year the issuer acquired a business. The following deficiencies were identified: · The firm did not perform procedures to test the fair value of accounts receivable at the acquisition date beyond observing the subsequent collection rate through year-end. (AS 2501.07) Unrelated to our review the issuer reevaluated its accounting for this business combination and concluded that material misstatements existed that had not been previously identified. The issuer subsequently corrected these misstatements in a restatement of its financial statements and the firm revised and reissued its report on the financial statements.

During the year the issuer acquired a business. The following deficiencies were identified: · The sample size the firm used in its substantive procedures to test accounts receivable at the acquisition date was too small to provide sufficient appropriate audit evidence because the firm did not take into account the relevant factors in determining its sample size including tolerable misstatement and the allowable risk of incorrect acceptance. (AS 2315.16 .23 and .23A) Unrelated to our review the issuer reevaluated its accounting for this business combination and concluded that material misstatements existed that had not been previously identified. The issuer subsequently corrected these misstatements in a restatement of its financial statements and the firm revised and reissued its report on the financial statements.

During the year the issuer acquired a business. The following deficiencies were identified: · The firm did not perform any procedures to test the completeness of accrued liabilities at the acquisition date. (AS 2301.08) Unrelated to our review the issuer reevaluated its accounting for this business combination and concluded that material misstatements existed that had not been previously identified. The issuer subsequently corrected these misstatements in a restatement of its financial statements and the firm revised and reissued its report on the financial statements.

The firm did not perform any substantive procedures to test whether the issuer satisfied its performance obligations before revenue was recognized. (AS 2301.08 and .13)

The firm identified fraud criteria for journal entries and obtained a listing of all journal entries that met the criteria. The firm did not perform sufficient substantive procedures to test those journal entries because it limited its procedures to certain journal entries without having an appropriate rationale for limiting its testing to those journal entries. (AS 2401.61)

The issuer recognized revenue from different sources. For one source of revenue the following deficiencies were identified: · The firm did not perform any procedures to test an estimate related to revenue. (AS 2501.07)

The issuer recognized revenue from different sources. For one source of revenue the following deficiencies were identified: · The firm did not perform any procedures to evaluate whether the issuer was acting as either a principal or agent for certain revenue. (AS 2301.08 and .13)

The issuer recognized revenue from different sources. For one source of revenue the following deficiencies were identified: · The firm did not perform any substantive procedures to test the allowance for doubtful accounts. (AS 2501.07)

For another source of revenue the firm did not perform any procedures to test or identify and test controls over the accuracy and completeness of a system-generated report it used to test the issuer's satisfaction of a performance obligation. (AS 1105.10)

The firm did not perform any substantive procedures to examine material adjustments the issuer made to both sources of revenue during the course of preparing the financial statements. (AS 2301.41)

During the year the issuer acquired a business. The following deficiencies were identified: · The firm did not test the fair value of shares transferred to the sellers as part of the consideration related to the business combination. (AS 2501.07) Unrelated to our review the issuer reevaluated its accounting for this business combination and concluded that material misstatements existed that had not been previously identified. The issuer subsequently corrected these misstatements in a restatement of its financial statements and the firm revised and reissued its report on the financial statements.

During the year the issuer acquired a business. The following deficiencies were identified: · The firm did not evaluate whether the issuer should have recognized certain intangible assets acquired. (AS 2301.08) Unrelated to our review the issuer reevaluated its accounting for this business combination and concluded that material misstatements existed that had not been previously identified. The issuer subsequently corrected these misstatements in a restatement of its financial statements and the firm revised and reissued its report on the financial statements.

During the year the issuer acquired a business. The following deficiencies were identified: · The firm did not test the fair value of contingent consideration at the acquisition date and yearend. (AS 2501.07) Unrelated to our review the issuer reevaluated its accounting for this business combination and concluded that material misstatements existed that had not been previously identified. The issuer subsequently corrected these misstatements in a restatement of its financial statements and the firm revised and reissued its report on the financial statements.

The firm did not complete all necessary procedures and obtain sufficient evidence to support the representations in the auditor's report. Specifically the firm did not review the work of engagement team members to evaluate whether the (1) work was performed and documented (2) objectives of the procedures were achieved and (3) results of the procedures performed supported the conclusions reached. (AS 1105.04; AS 1201.05)

The firm did not identify and evaluate departures from GAAP related to the issuer's omission of certain required disclosures related to debt. (AS 2810.30 and .31)

The firm did not evaluate whether the issuer's accounting for debt was in conformity with certain requirements of GAAP. (AS 2301.08)

The firm did not perform any substantive procedures to test an accounting estimate in a significant account. (AS 2501.07)

The firm selected a sample to test revenue transactions. The following deficiencies were identified: · The sample size the firm used to perform these substantive procedures was too small to provide sufficient appropriate audit evidence because the firm did not take into account the relevant factors in determining its sample size including tolerable misstatement for the population the allowable risk of incorrect acceptance and the characteristics of the population. (AS 2315.16 .19 .23 and .23A)

The firm selected a sample to test revenue transactions. The following deficiencies were identified: · For the transactions selected for testing the firm did not perform any procedures to evaluate the terms and conditions of the issuer's contracts with these customers to determine if the revenue was recognized in conformity with FASB ASC Topic 606 Revenue from Contracts with Customers. (AS 2301.08 and .13)

The firm did not perform procedures to identify and test the journal entries that met certain of its fraud criteria. In addition the firm obtained a listing of journal entries and used it to identify journal entries that met certain other of its fraud criteria. The firm did not perform sufficient substantive procedures to test the journal entries that met this other criteria because it (i) limited its procedures to certain journal entries without having an appropriate rationale for limiting its testing to those journal entries and (ii) did not examine the underlying support for those entries it selected for testing. (AS 2401.61)