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The issuer recognized revenue from multiple business entities. The following deficiencies were identified: · The firm did not test or identify and test any controls over the completeness of a system-generated report used in its substantive procedures to test revenue for this business entity. (AS 1105.10)

The firm selected for testing certain controls that included the review of goodwill and intangible assets for potential impairment. The firm did not evaluate the specific review procedures performed by the control owners to assess the reasonableness of the methodologies and assumptions used in the issuer's goodwill and indefinite-lived intangible assets impairment analyses. (AS 2201.42 and .44)

The firm did not perform any procedures to test (1) the appropriateness of the issuer's determination that it operated as a single reporting unit for purposes of its impairment analysis in accordance with FASB ASC Topic 350 Intangibles – Goodwill and Other and (2) whether the issuer's conclusion that the customer relationship intangible asset had an indefinite life was in accordance with FASB ASC Topic 350. (AS 2301.08 and .11)

The firm did not (1) appropriately consider the characteristics of potentially fraudulent journal entries when identifying and selecting journal entries for testing and (2) examine the underlying support for journal entries selected for testing. (AS 2401.61)

The firm identified corrected and uncorrected misstatements during its substantive audit procedures. The firm did not evaluate whether the uncorrected misstatements were material individually or in combination with other misstatements. (AS 2810.17)

The firm identified corrected and uncorrected misstatements during its substantive audit procedures. The firm did not evaluate the effects of the corrected and uncorrected misstatements on its conclusions regarding the effectiveness of ICFR. (AS 2201.B8)

The issuer recognized revenue from multiple business entities. The following deficiencies were identified: · The firm did not perform any procedures to test the occurrence and allocation of certain revenue for another business entity. (AS 2301.08 and .11)

The issuer recognized revenue from multiple business entities. The following deficiencies were identified: · The firm did not perform sufficient procedures to test certain revenue for the above business entity and a third business entity because its procedures were limited to (1) agreeing revenue to sales invoices and (2) documenting the terms of the agreement with customers for certain transactions. (AS 2301.08 and .11)

The issuer recognized revenue from multiple business entities. The following deficiencies were identified: · The sample sizes the firm used in its substantive procedures to test revenues for each of the three above business entities were 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 populations the allowable risk of incorrect acceptance and the characteristics of the populations. (AS 2315.16 .19 .23 and .23A)

The issuer recognized revenue from multiple business entities. The following deficiencies were identified: · The firm did not perform sufficient procedures to test revenue for a fourth business entity because it did not test the adjustment of revenue for the redemption of gift cards. (AS 2301.08 and .11)

The issuer recognized revenue from multiple business entities. The following deficiencies were identified: · The firm did not perform sufficient procedures to test revenue for a fifth business entity because its procedures were limited to agreeing revenue to issuer-produced sales invoices. (AS 2301.08 and .11)

The firm selected for testing a control over the review of a revenue variance analysis but 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)

The firm did not perform any procedures to test the disclosure related to revenue allocated to remaining performance obligations. (AS 2301.08 and .11)

The issuer acquired intangible assets from a related party. The firm did not perform any procedures to test the fair value of these intangible assets. (AS 2502.15)

The firm did not perform procedures to evaluate whether the intangible assets were acquired in a transaction between entities under common control in conformity with FASB ASC Topic 805 Business Combinations. (AS 2810.30)

The firm did not identify or appropriately address a GAAP departure related to the omission of certain disclosures required by FASB ASC Topic 850 Related Party Disclosures regarding the nature of the relationship between the issuer and the related party. (AS 2410.17)

The issuer entered into an agreement ('acquisition agreement') to acquire a license that granted it the rights to sell certain products and it recorded the license agreement ('license agreement') as an intangible asset. The acquisition and license agreements required the issuer to among other terms pay royalty fees on future net sales (with guaranteed minimum royalty fees) pay an external party for future advisory services and issue convertible preferred stock. The issuer recorded certain of the payments to the external party as part of accounting for the transaction. The firm did not evaluate whether the future royalty payments should have been recorded as part of accounting for the transaction in conformity with FASB ASC Topic 805 Business Combinations. In addition the firm did not evaluate whether it was appropriate to recognize certain of the payments to the external party as part of the accounting for the transaction and not recognize the remaining payments in conformity with FASB ASC Topic 805. (AS 2810.30)

The issuer entered into an agreement ('acquisition agreement') to acquire a license that granted it the rights to sell certain products and it recorded the license agreement ('license agreement') as an intangible asset. The acquisition and license agreements required the issuer to among other terms pay royalty fees on future net sales (with guaranteed minimum royalty fees) pay an external party for future advisory services and issue convertible preferred stock. The issuer recorded certain of the payments to the external party as part of accounting for the transaction. The firm's approach for substantively testing the valuation of the convertible preferred stock that was issued was to test the issuer's process. The firm did not evaluate whether the method used by the issuer to determine the value of the convertible preferred stock was appropriate. (AS 2501.10)

The issuer entered into an agreement ('acquisition agreement') to acquire a license that granted it the rights to sell certain products and it recorded the license agreement ('license agreement') as an intangible asset. The acquisition and license agreements required the issuer to among other terms pay royalty fees on future net sales (with guaranteed minimum royalty fees) pay an external party for future advisory services and issue convertible preferred stock. The issuer recorded certain of the payments to the external party as part of accounting for the transaction. The firm did not perform procedures to evaluate the reasonableness of a significant assumption the issuer used to determine the fair value of the convertible preferred stock. (AS 2501.16)

The firm sent positive confirmation requests to the issuer's borrowers for a sample of loans receivable as of an interim date. For positive confirmations that were not returned the firm did not perform alternative procedures that provided sufficient appropriate audit evidence that the recorded amounts of the receivables were accurate as of the confirmation date. (AS 2310.31)

The firm sent positive confirmation requests to the issuer's borrowers for a sample of loans receivable as of an interim date. The firm did not perform sufficient procedures to extend its audit conclusions on the existence of loans receivable for the period between its interim testing and year end because the firm limited its procedures to agreeing loan activity from the issuer's system between the interim date and year end to borrower statements generated from the same system. (AS 2301.45)

The firm selected for testing journal entries meeting certain fraud criteria. The firm did not perform sufficient procedures to test these journal entries because it did not examine the underlying support for the entries and instead limited its procedures to inquiring of management and reading the journal entry descriptions. (AS 2401.61)

The firm selected for testing a control over certain assets that consisted of the issuer's review of the assets including their presentation and disclosure in the financial statements. The firm did not evaluate the specific review procedures that the control owner performed to assess the appropriateness of the presentation and disclosure of these assets. (AS 2201.42 and .44)

For certain subsidiaries the firm did not (1) obtain a sufficient understanding of the likely sources of potential misstatements associated with revenue processes and (2) identify and test controls over revenue recognition. (AS 2201.34 and .39)

The issuer completed private placement agreements that provided for the issuance and sale of common stock and warrants. The firm did not identify and assess the risks of material misstatement for relevant assertions related to the private placement transactions and perform procedures to address those risks. (AS 2110.59)

The firm did not (1) obtain an understanding of the likely sources of potential misstatements associated with the contractual terms and conditions of the private placement agreements; and (2) identify and test any controls over the evaluation of the presentation and disclosure of these agreements. (AS 2201.34 and .39)

The firm did not evaluate whether the warrants issued in connection with the private placement transactions included embedded derivatives that should have been presented and disclosed in accordance with FASB ASC Topic 815 Derivatives and Hedging. (AS 2810.30 and .31) Unrelated and prior to our review the issuer reevaluated its accounting treatment for the warrants issued in connection with the private placement transactions and concluded that a material misstatement existed that had not been previously identified. The issuer subsequently corrected this misstatement in a restatement of its financial statements and the firm revised and reissued its report on the financial statements. The issuer also reevaluated its controls over financial reporting and concluded that a material weakness existed that had not been previously identified. The issuer subsequently reflected this material weakness in a revision to its report on ICFR and the firm revised and reissued its report to include an additional material weakness.

The issuer's main information technology ('IT') system processed revenue transactions and maintained revenue related data. A service organization provided data center hosting services related to the IT system. The firm did not identify and test any relevant complementary user controls described in the service auditor's report. (AS 2201.B22)

The issuer's main information technology ('IT') system processed revenue transactions and maintained revenue related data. A service organization provided data center hosting services related to the IT system. The service organization used several sub-service organizations to host the issuer's IT system and the controls for the sub-service organizations were not addressed in the service auditor's report. The firm did not (1) obtain an understanding of how the use of sub-service organizations affected the issuer's revenue process; and (2) evaluate whether it was necessary to obtain an understanding of or test any relevant controls at the sub-service organizations. (AS 2201.B19 and .B21)

The issuer's main information technology ('IT') system processed revenue transactions and maintained revenue related data. A service organization provided data center hosting services related to the IT system. The service organization used several sub-service organizations to host the issuer's IT system and the controls for the sub-service organizations were not addressed in the service auditor's report. The firm did not evaluate the effect of exceptions identified in the service auditor's report on the issuer's revenue process. (AS 2201.B25)

The firm identified a material weakness related to an employee having responsibilities for financial statement review controls and administrator access to the issuer's IT system discussed above. The firm selected for testing an automated control that restricts the recording of sales to authorized customers. The firm did not evaluate whether its test of one approach for this control was appropriate in light of the identified material weakness. (AS 2201.65)

The firm determined that a control over management's assessment of the effect on revenue recognition of FASB ASC Topic 606 Revenue from Contracts with Customers was deficient. The firm concluded that this represented a significant deficiency after identifying and testing two compensating controls. The firm did not sufficiently evaluate the severity of the control deficiency because the firm did not evaluate whether and if so how either of the controls identified as compensating controls addressed the effect of ASC Topic 606 on revenue recognition. (AS 2201.68)

The firm selected for testing a control over the review of accounts receivable collectability 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 firm did not sufficiently evaluate the reasonableness of the allowance for doubtful accounts because its procedures were limited to testing the subsequent collection of certain accounts receivable without obtaining an understanding of how the issuer developed the allowance and evaluating whether the allowance was reasonable. (AS 2501.09 .10 and .13)

The firm did not test the accuracy of the accounts receivable aging report that was used in testing the subsequent collection of certain accounts receivable. (AS 1105.10)

The issuer issued convertible notes during the current and prior year. For certain convertible notes the issuer recorded both a derivative liability and beneficial conversion feature associated with the same conversion option of each convertible note. The following deficiencies were identified: • The firm did not identify and evaluate the significance to the issuer's financial statements of a GAAP departure related to the issuer's accounting treatment for and disclosure of these transactions. Specifically the firm did not evaluate whether the conversion options related to certain convertible notes should have been either (1) separated and accounted for as derivatives in conformity with FASB ASC Subtopic 815-15 Derivatives and Hedging — Embedded Derivatives; or (2) accounted for as beneficial conversion features in conformity with FASB ASC Subtopic 470¬20 Debt — Debt with Conversion and Other Options. (AS 2810.03 .30 and .31)

The issuer issued convertible notes during the current and prior year. For certain convertible notes the issuer recorded both a derivative liability and beneficial conversion feature associated with the same conversion option of each convertible note. The following deficiencies were identified: • The firm did not evaluate the appropriateness of the model the issuer used to value certain of the derivative liabilities given the complexity of the conversion options associated with the related convertible notes. (AS 2501.10)

The issuer issued convertible notes during the current and prior year. For certain convertible notes the issuer recorded both a derivative liability and beneficial conversion feature associated with the same conversion option of each convertible note. The following deficiencies were identified: • For certain convertible notes the firm did not test at inception the fair value of the derivative liabilities and associated debt discounts and the allocation of the proceeds to all of the features associated with the convertible notes. (AS 2501.07)

The firm did not test the valuation of a certain asset including whether the write off of that asset at year end was appropriate. (AS 2502.15)

The issuer recognized several types of revenue. The following deficiencies were identified: · For one type of revenue the firm selected a sample of transactions for testing. The firm did not perform procedures to test whether revenue was appropriately recognized for the sampled transactions beyond obtaining issuer-produced sales orders. (AS 2301.08 and .13)

The issuer reported a loan receivable from a related party. The firm did not perform procedures to evaluate the financial capability of this related party. (AS 2410.12)

The issuer recognized several types of revenue. The following deficiencies were identified: · For a second type of revenue the firm did not evaluate the appropriateness of the issuer's identification of performance obligations. (AS 2301.08 and .13)

The issuer recognized several types of revenue. The following deficiencies were identified: · For the second type of revenue the firm selected a sample of transactions for testing. The firm did not perform procedures to test whether revenue was appropriately recognized for the sampled transactions beyond obtaining cash receipts. (AS 2301.08 and .13)

The issuer recognized several types of revenue. The following deficiencies were identified: · For a third type of revenue the firm did not perform procedures to evaluate whether the issuer had satisfied its performance obligations beyond obtaining cash receipts for certain transactions. (AS 2301.08 and .13)

The firm did not identify and evaluate a departure from GAAP related to the issuer's presentation and disclosure of a significant transaction. (AS 2810.30 and .31)

During the year the issuer entered into several transactions with a related party. The following deficiencies were identified: · The firm did not perform sufficient procedures to evaluate the presentation and disclosure of one of these transactions because it did not evaluate audit evidence that indicated that the nature of the transaction was contradictory to the issuer's presentation and disclosure in its financial statements. (AS 2410.17; AS 2810.03)

During the year the issuer entered into several transactions with a related party. The following deficiencies were identified: · The firm did not evaluate whether the business purpose (or lack thereof) of certain of these transactions indicated that they may have been entered into to engage in fraudulent financial reporting or to conceal misappropriation of assets given certain facts regarding the transactions. (AS 2401.67)

During the year the issuer entered into several transactions with a related party. The following deficiencies were identified: · The firm did not take any action in response to information regarding certain transactions that indicated possible illegal acts. (AS 2405.07 and .10)

The firm did not perform substantive procedures to test an estimate related to revenue beyond recalculating the amount. (AS 2501.07)

The firm's internal inspection program had inspected this audit and reviewed these areas but did not identify the deficiencies below. To test certain revenue the firm relied on confirmations from customers. The issuer's sales personnel directly contacted the customers and obtained customer signatures as proof of customer receipt of goods purchased. The issuer provided the firm with the signed confirmations. 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)