Explorer

The issuer used a discounted cash flow analysis to test certain assets for impairment at year end. The firm's approach for substantively testing this analysis was to develop an independent expectation of the estimate which included developing overall assumptions for revenue that included several underlying assumptions. The following deficiencies were identified: · The firm did not perform sufficient procedures to demonstrate it had a reasonable basis for an underlying assumption it developed because the firm obtained evidence that did not support the amount of the assumption. (AS 2501.22)

The issuer used a discounted cash flow analysis to test certain assets for impairment at year end. The firm's approach for substantively testing this analysis was to develop an independent expectation of the estimate which included developing overall assumptions for revenue that included several underlying assumptions. The following deficiencies were identified: · The firm did not perform any procedures to demonstrate it had a reasonable basis for a second underlying assumption it developed. (AS 2501.22)

The issuer used an external party to assist in selling its products. In addition the issuer's license to sell certain products expired during the year. The following deficiencies were identified: · The firm did not identify obtain or evaluate the contractual arrangements between the issuer its customers and the external party. (AS 2301.08 and .13)

The issuer used a discounted cash flow analysis to test certain assets for impairment at year end. The firm's approach for substantively testing this analysis was to develop an independent expectation of the estimate which included developing overall assumptions for revenue that included several underlying assumptions. The following deficiencies were identified: · The firm did not perform sufficient procedures to demonstrate it had a reasonable basis for a third underlying assumption it developed because the firm limited its procedures to obtaining evidence that indicated its assumption may not have been accurate. (AS 2501.22)

The issuer used a discounted cash flow analysis to test certain assets for impairment at year end. The firm's approach for substantively testing this analysis was to develop an independent expectation of the estimate which included developing overall assumptions for revenue that included several underlying assumptions. The following deficiencies were identified: · The firm did not perform procedures to evaluate the relevance of historical results of another company that it used to conclude that its overall assumptions for revenue were reasonable. (AS 1105.04 and .06)

The firm developed certain other assumptions that it used in its independent expectation. The firm did not perform sufficient procedures to demonstrate it had a reasonable basis for those assumptions because it used the historical results of another company to substantiate its assumptions without evaluating whether the historical results of the other company were relevant. (AS 1105.04 and .06; AS 2501.22)

The firm received an electronic response to one of its cash confirmation requests. The firm did not consider performing procedures to address the risks associated with the electronic response such as verifying the source and contents of the confirmation response. (AS 2310.29)

The issuer used an external party to assist in selling its products. In addition the issuer's license to sell certain products expired during the year. The following deficiencies were identified: · The firm did not evaluate whether it was appropriate for the issuer to recognize revenue subsequent to the expiration of its related license. (AS 2301.08 and .13)

The issuer used an external party to assist in selling its products. In addition the issuer's license to sell certain products expired during the year. The following deficiencies were identified: · The firm did not perform any procedures to test whether revenue was recognized at the appropriate amount. (AS 2301.08 and .13)

The issuer used an external party to assist in selling its products. In addition the issuer's license to sell certain products expired during the year. The following deficiencies were identified: · The firm did not perform any procedures to test or test any controls over the accuracy and completeness of information produced by the issuer that the firm used in its substantive procedures. (AS 1105.10)

The issuer used an external party to assist in selling its products. In addition the issuer's license to sell certain products expired during the year. The following deficiencies were identified: · The firm did not perform any substantive procedures to test whether delivery had occurred. (AS 2301.08 and .13)

The issuer used an external party to assist in selling its products. In addition the issuer's license to sell certain products expired during the year. The following deficiencies were identified: · The firm did not evaluate the reliability of certain external information that it used in its substantive procedures. (AS 1105.04 and .06)

To test accounts receivable the firm obtained evidence of subsequent cash receipts. The firm did not request the confirmation of accounts receivable or document how it overcame the presumption to perform confirmation procedures. (AS 2310.34 and .35)

To test accounts receivable the firm obtained evidence of subsequent cash receipts. The firm did not evaluate the reliability of the evidence of subsequent cash receipts. (AS 1105.04 and .06)

The issuer used an information technology ('IT') application to initiate process and record transactions related to certain significant accounts. The firm tested IT general controls ('ITGCs') over and application controls within this IT application. The firm identified multiple control deficiencies related to controls over logical access and program changes. The firm concluded that none of the deficiencies rose to the level of a significant deficiency or material weakness individually or in the aggregate. In reaching this conclusion the firm did not sufficiently evaluate the severity of the control deficiencies because it did not evaluate the effect of the deficiencies on the related IT-dependent manual controls and application controls. (AS 2201.62 and .65)

The firm did not identify and test controls over the accuracy and completeness of information used by the firm to test the ITGCs and application controls. (AS 2201.39)

The firm selected for testing controls over the review of aspects of these significant 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) In addition the firm did not test controls over the accuracy and completeness of information used in these controls. (AS 2201.39)

The firm selected for testing controls over the review of aspects of these significant 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) In addition the firm did not test controls over the accuracy and completeness of information used in these controls. (AS 2201.39)

The firm used the work of internal audit to test certain controls over the review of these significant accounts through the second or third quarters of the issuer's year end but did not perform any procedures to update the results of that testing from those interim dates to year end. (AS 2201.55)

The sample size the firm used in a substantive procedure over revenue was too small to achieve the planned objective for the test because it used the methodology for determining the sample size for a test of controls and did not consider factors relevant to determining the sample size for its substantive testing. (AS 2315.16 .23 and .23A)

The issuer engaged an external specialist to perform a quantitative assessment of goodwill for impairment at an interim date. The issuer also performed a qualitative assessment of goodwill for impairment at year-end and concluded that the performance of an additional quantitative assessment of goodwill was unnecessary. The firm's approach for substantively testing goodwill was to review and test management's process. The following deficiencies were identified: · The firm did not perform substantive procedures beyond inquiry of management to evaluate the reasonableness of certain assumptions used by the specialist to perform the quantitative assessment of goodwill including taking into account the issuer's ability to carry out its stated intentions regarding the assumptions. (AS 2501.16 and .17; AS 1105.A8b)

The issuer engaged an external specialist to perform a quantitative assessment of goodwill for impairment at an interim date. The issuer also performed a qualitative assessment of goodwill for impairment at year-end and concluded that the performance of an additional quantitative assessment of goodwill was unnecessary. The firm's approach for substantively testing goodwill was to review and test management's process. The following deficiencies were identified: · The firm did not perform sufficient procedures to evaluate whether a quantitative assessment was required at year-end because it did not evaluate whether relevant events and circumstances were sufficient to offset unfavorable indicators of impairment. (AS 2501.07; AS 2810.03)

The issuer engaged an external specialist to perform a quantitative assessment of goodwill for impairment at an interim date. The issuer also performed a qualitative assessment of goodwill for impairment at year-end and concluded that the performance of an additional quantitative assessment of goodwill was unnecessary. The firm's approach for substantively testing goodwill was to review and test management's process. The following deficiencies were identified: · The firm did not perform any substantive procedures to determine whether the issuer evaluated a portion of goodwill for impairment. (AS 2301.08 and .11)

The issuer identified certain impairment indicators and performed a qualitative assessment of intangible assets for impairment at an interim date and at year-end. The firm did not perform substantive procedures beyond reading a memorandum prepared by the issuer to evaluate whether the issuer should have performed a quantitative assessment of intangible assets for impairment considering the existence of these unfavorable indicators of impairment. (AS 2501.07; AS 2810.03)

The firm identified a significant deficiency related to a lack of review and approval of manual journal entries. To address the fraud risk the firm selected for testing manual journal entries meeting certain fraud criteria. The following deficiencies were identified: · The firm did not perform any procedures to test the completeness of the population of manual journal entries. (AS 1105.10)

The firm identified a significant deficiency related to a lack of review and approval of manual journal entries. To address the fraud risk the firm selected for testing manual journal entries meeting certain fraud criteria. The following deficiencies were identified: · The firm did not perform sufficient procedures to test the selected journal entries because it did not examine the underlying support for the entries and instead limited its procedures to reading the journal entry descriptions. (AS 2401.61)

A service organization provided lease administration and accounting software services to the issuer using a lease application. An unrelated party entered all of the issuer's lease data and assumptions into the lease application and the issuer was responsible for the accuracy and completeness of such information. The firm selected for testing certain controls that consisted of the issuer's review of journal entries used to record lease activity and account reconciliations related to leases. The firm did not identify and test any controls over the accuracy and completeness of the lease information used in the operation of these controls. (AS 2201.39)

The issuer used multiple information-technology (IT) systems to initiate process and record transactions related to revenue and related accounts. In its testing of controls over revenue and related 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 audit deficiencies related to 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 firm identified control deficiencies related to change management for one of the issuer's IT systems. The firm did not evaluate the severity of these control deficiencies individually or in combination to determine whether they represented a material weakness beyond identifying a mitigating factor that did not address the risk that changes could be migrated into production without appropriate approval and testing. (AS 2201.62)

The firm used certain system change reports to select its samples for testing certain ITGCs for these systems but did not test or test any controls over the completeness of these reports. (AS 1105.10)

The firm designed certain of its substantive procedures to test certain revenue as dual-purpose tests. 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 for the substantive procedure because the firm did not use the larger of the sample sizes that would otherwise have been designed for the two separate purposes. (AS 2315.44)

During the year the issuer reevaluated its reclamation and restoration provisions. The firm did not perform substantive procedures to evaluate the reasonableness of certain assumptions the issuer used in its reevaluation. (AS 2502.26 and .28)

During the year the issuer reevaluated its reclamation and restoration provisions. The firm did not identify and evaluate the significance to the issuer's financial statements of a departure from GAAP related to the issuer's use of a discount rate that was not a current credit-adjusted risk-free rate in conformity with FASB ASC Topic 410 Asset Retirement and Environmental Obligations. (AS 2810.30)

The issuer concluded at year end that certain of its oil and gas properties were not impaired. The firm concluded that the issuer's assessment was reasonable without performing any procedures. (AS 2301.08)

The firm's approach for substantively testing the issuer's evaluation of certain other oil and gas properties for possible impairment was to develop an independent expectation of the estimate of undiscounted cash flows. The firm obtained certain data and assumptions from the issuer to develop its expectation. The following deficiencies were identified: · The firm did not test the accuracy and completeness of certain data obtained from the issuer. (AS 1105.10; AS 2501.09 .10 and .12)

The firm's approach for substantively testing the issuer's evaluation of certain other oil and gas properties for possible impairment was to develop an independent expectation of the estimate of undiscounted cash flows. The firm obtained certain data and assumptions from the issuer to develop its expectation. The following deficiencies were identified: · The firm did not evaluate the reasonableness of certain assumptions obtained from the issuer including the reasonableness of those assumptions in light of the firm's conclusion that there was substantial doubt about the issuer's ability to continue as a going concern. (AS 2501.09 .10 and .12; AS 2810.03)

The firm's approach for substantively testing the issuer's evaluation of certain other oil and gas properties for possible impairment was to develop an independent expectation of the estimate of undiscounted cash flows. The firm obtained certain data and assumptions from the issuer to develop its expectation. The following deficiencies were identified: · The firm did not perform any procedures to determine the reasonableness of an assumption it developed and used in its independent expectation. (AS 2501.09 .10 and .12)

In the revenue process the firm selected for testing certain information technology general controls ('ITGCs') automated controls and information technology ('IT') dependent manual controls. The following deficiencies were identified: · The firm did not test the accuracy and completeness of information used in testing controls over access rights and removals. (AS 1105.10)

The firm did not test the fair values of certain investments. (AS 2502.15)

The issuer did not consider unrealized losses on certain investments to be other-than-temporary due to its ability to hold these investments until the recovery of fair values. The firm did not evaluate the issuer's ability to hold the investments for a period of time sufficient to allow for the anticipated recovery in fair value. (AS 2503.48)

The issuer's revenue transactions can be initiated by customers through electronic data interchange ('EDI') email or phone call. The issuer used a system to process credit card orders. The firm did not obtain an understanding of (1) how revenue transactions were initiated authorized processed and recorded; (2) how IT systems affected the flow of transactions; and (3) the likely sources of potential misstatements necessary to identify and test controls that would prevent or detect a material misstatement in the financial statements. (AS 2201.30)

The firm did not identify and test the controls over the (1) revenue recognition method; (2) review and approval of the prices; (3) processing of EDI orders; and (4) processing and recording of credit card sales. (AS 2201.39)

The firm selected for testing controls related to management's reviews of monthly and quarterly revenue and accounts receivable balances. 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 had an agreement to market products sold by another party and recognized revenue when the other party sold those products. The firm did not test when the products were sold by the other party. (AS 2301.08)

The issuer had an agreement to market products sold by another party and recognized revenue when the other party sold those products. The firm did not evaluate whether revenue was recognized in accordance with FASB ASC Topic 606 including whether the issuer had satisfied its performance obligations under the terms of the agreement. (AS 2810.30)

The issuer reversed certain liabilities and recognized a gain on extinguishment. The firm did not evaluate whether the issuer met the criteria under FASB ASC Topic 405 Extinguishment of Liabilities to be considered legally released as the primary obligor of the liabilities either judicially or by the creditor. (AS 2810.30)

The issuer leased equipment that it then subleased to its customers. The issuer issued common stock to the lessor as payment on the lease with an opportunity for the lessor to earn additional shares of the issuer's stock if revenue milestones were met. The issuer recognized revenue from the sublease agreements net of payments to its lessor. The firm did not test the reduction of revenue related to the payments made by the issuer to the lessor of the equipment. (AS 2301.08)

The issuer leased equipment that it then subleased to its customers. The issuer issued common stock to the lessor as payment on the lease with an opportunity for the lessor to earn additional shares of the issuer's stock if revenue milestones were met. The issuer recognized revenue from the sublease agreements net of payments to its lessor. The firm did not test the terms of customer subleases to determine whether the amount and timing of gross billings to customers were appropriate. (AS 2301.08)

In the revenue process the firm selected for testing certain information technology general controls ('ITGCs') automated controls and information technology ('IT') dependent manual controls. The following deficiencies were identified: · The firm selected for testing an automated control that was designed to calculate and record revenue. The firm did not obtain an understanding of or test how the control was configured. (AS 2201.34)

The issuer leased equipment that it then subleased to its customers. The issuer issued common stock to the lessor as payment on the lease with an opportunity for the lessor to earn additional shares of the issuer's stock if revenue milestones were met. The issuer recognized revenue from the sublease agreements net of payments to its lessor. The firm did not evaluate the agreements between the issuer and the lessor and the issuer and its customers to determine whether the issuer had an obligation to (1) its customer if the lessor canceled the lease agreement or (2) the lessor if the revenue milestones were met in accordance with FASB ASC Topic 606. (AS 2810.30)