Explorer

The issuer used various models and assumptions to determine the estimate. The following deficiencies were identified: · The firm's approach for substantively testing the estimate was to review and test management's process. The firm did not sufficiently evaluate the reasonableness of the estimate because the firm did not (1) obtain an understanding of the issuer's process for determining certain assumptions and (2) perform procedures to test certain factors and assumptions used by the issuer to determine the estimate. (AS 2501.09 .10 and .11)

The issuer used various models and assumptions to determine the estimate. The following deficiencies were identified: · The sample sizes the firm used in certain of its substantive procedures to test the estimate 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 deficiencies in the firm's control testing discussed above. (AS 2301.16 .18 and .37; AS 2315.19 .23 and .23A)

The firm did not identify and test any controls over the (1) approval of prices (2) entry of customer orders for both domestic and export sales into the general ledger (3) accuracy of the bills of lading information entered into the general ledger used to initially recognize revenue for export sales and (4) deferral of revenue at year end related to certain export sales. (AS 2201.39)

At the end of each year the issuer calculated and recorded an adjustment to defer a portion of revenue related to domestic and certain export sales for which the revenue recognition criteria had not been met. The firm did not identify and test any controls over the accuracy and completeness of the reports used by the issuer to identify sales transactions related to domestic and certain other export sales for which the revenue recognition criteria had not been met. (AS 2201.39)

The firm selected for testing controls that consisted of the issuer's reviews of (1) additions to property plant and equipment (PP&E) and whether those costs were allocated to the appropriate project within the issuer's accounting system and (2) PP&E write-offs and whether those write-offs were appropriately supported and approved. The firm did not identify and test any controls over the completeness of the system-generated reports used in the operation of these controls. (AS 2201.39)

The issuer recognized certain revenue upon delivery of the sold product to the customer. Pursuant to the customer contracts the quantity of products sold and delivered was measured using measuring equipment at the issuer's locations. The following deficiency was identified: · The firm selected for testing a control that consisted of the issuer's evaluation of the equipment used to measure inventory quantity on hand and inventory quantity delivered to each customer to determine whether it was appropriately maintained and operating correctly. The firm did not evaluate the specific review procedures that the control owners performed to determine whether the equipment was accurately measuring the quantity of products delivered to each customer. (AS 2201.42 and .44)

The issuer recognized certain revenue upon delivery of the sold product to the customer. Pursuant to the customer contracts the quantity of products sold and delivered was measured using measuring equipment at the issuer's locations. The following deficiency was identified: · The firm selected for testing another control that consisted of management's review of the reconciliation of the quantity of products sold in the revenue system to the quantity of products delivered in the issuer's inventory management system. The firm did not identify and test any controls over the accuracy and completeness of the system-generated reports used in the operation of this control. (AS 2201.39)

The sample sizes the firm used in certain of its substantive procedures to test revenue 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 deficiencies in the firm's control testing discussed above. (AS 2301.16 .18 and .37; AS 2315.19 .23 and .23A)

The sample sizes the firm used in certain of its substantive procedures to test additions to and write-offs of PP&E 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 deficiencies in the firm's control testing discussed above. (AS 2301.16 .18 and .37; AS 2315.19 .23 and .23A)

The firm did not identify and evaluate a departure from IFRS related to the issuer's use of (1) post-tax future cash flows and a post-tax discount rate (2) future cash flows that included cash flows of certain forecasted divestments and (3) for the cash-generating units ('CGUs') of one segment estimated future cash flows occurring subsequent to the expiration of lease contracts that were not reasonably certain of being renewed to estimate the value-in-use ('VIU') of its CGUs to evaluate long-lived assets for impairment which was not in conformity with International Accounting Standard 36 Impairment of Assets. (AS 2810.30)

The firm's approach for substantively testing the valuation of long-lived assets was to test the issuer's process. With respect to the inputs methods and assumptions used in the issuer's VIU and depreciation and amortization rate calculations for one of its segments the following additional deficiency was identified: · The firm selected for testing controls that consisted of the issuer's reviews of certain issuer-produced data and assumptions used by a (1) company-employed specialist to develop certain inputs and (2) company-engaged specialist to evaluate certain of those inputs. The firm did not identify and test any controls over the completeness of certain reports and the accuracy and completeness of certain other reports used in the operation of these controls. (AS 2201.39)

The firm's approach for substantively testing the valuation of long-lived assets was to test the issuer's process. With respect to the inputs methods and assumptions used in the issuer's VIU and depreciation and amortization rate calculations for one of its segments the following additional deficiency was identified: · The firm did not identify and test any controls over the (1) accuracy and completeness of certain issuer-produced data (2) reasonableness of certain assumptions and (3) appropriateness of the methods used by the (1) company-employed specialist to develop certain inputs and (2) company-engaged specialist to evaluate certain of those inputs. (AS 2201.39)

The firm's approach for substantively testing the valuation of long-lived assets was to test the issuer's process. With respect to the inputs methods and assumptions used in the issuer's VIU and depreciation and amortization rate calculations for one of its segments the following additional deficiency was identified: · The firm did not perform procedures beyond inquiry of management to evaluate the appropriateness of an input including taking into consideration the issuer's ability to carry out its stated intentions. (AS 2301.08)

The firm's approach for substantively testing the valuation of long-lived assets was to test the issuer's process. With respect to the inputs methods and assumptions used in the issuer's VIU and depreciation and amortization rate calculations for one of its segments the following additional deficiency was identified: · The firm did not test the accuracy and completeness of certain issuer-produced data used by the (1) company-employed specialist to develop certain inputs and (2) company-engaged specialist to evaluate certain of those inputs. (AS 1105.A8a)

The firm's approach for substantively testing the valuation of long-lived assets was to test the issuer's process. With respect to the inputs methods and assumptions used in the issuer's VIU and depreciation and amortization rate calculations for one of its segments the following additional deficiency was identified: · The firm did not perform any procedures to evaluate the reasonableness of significant assumptions used by the (1) company-employed specialist to develop certain inputs and (2) company-engaged specialist to evaluate certain of those inputs. (AS 2501.16; AS 1105.A8b)

The firm's approach for substantively testing the valuation of long-lived assets was to test the issuer's process. With respect to the inputs methods and assumptions used in the issuer's VIU and depreciation and amortization rate calculations for one of its segments the following additional deficiency was identified: · The firm did not evaluate whether the methods used by the (1) company-employed specialist to develop certain inputs and (2) company-engaged specialist to evaluate certain of those inputs were appropriate under the circumstances taking into consideration the requirements of IFRS. (AS 1105.A8c)

Deficiency testing the accuracy and completeness of an issuer-prepared schedule used in substantive revenue testing.

The firm did not perform sufficient procedures to evaluate whether the issuer recognized revenue in conformity with certain aspects of International Financial Reporting Standard 15 Revenue from Contracts with Customers because the firm did not consider certain inputs that would have affected the recognition of revenue for certain sales transactions selected for testing. (AS 2810.30)

The firm did not perform any substantive procedures to test certain other sales transactions. (AS 2301.08)

The issuer acquired certain intangible assets through business combinations. The following deficiencies were identified: - The firm did not test any controls over the determination of the estimated useful lives assigned to these intangible assets. (AS 2201.39)

For certain CGUs the firm also did not perform procedures to evaluate whether: - The estimated future cash outflows related to corporate expenses the issuer allocated to the CGUs and used to estimate their VIU could be attributed directly or were appropriately allocated on a reasonable and consistent basis to the use of the CGUs' assets in conformity with IAS 36. (AS 2810.30)

For certain CGUs the firm also did not perform procedures to evaluate whether: - The estimated future cash outflows related to certain duties should be included in the issuer's estimation of the CGUs' VIU in conformity with IAS 36 (AS 2810.30).

For certain CGUs the firm did not sufficiently test the accuracy and completeness of certain data used by the issuer to estimate the CGUs' VIU because its procedures were limited to agreeing the data to certain systems for which the firm did not test information technology general controls. (AS 1105.10)

The firm did not test or in the alternative identify and test controls over the accuracy and completeness of certain issuer-produced data used by company-employed specialists to develop certain inputs used in the D&A and VIU calculations. (AS 1105.A8a)

The firm did not perform any procedures to identify the significant assumptions used by the issuer in its VIU calculations of certain CGUs. (AS 2501.15)

The firm did not perform sufficient procedures to evaluate the reasonableness of certain assumptions included in the VIU calculations including taking into account the issuer's ability to carry out its stated intentions regarding the assumptions because its procedures were limited to comparing those assumptions to historical information. (AS 2501.16 and .17)

The issuer acquired certain intangible assets through business combinations. The following deficiencies were identified: - The firm did not identify and evaluate the significance to the financial statements of the issuer's recording of these assets as indefinite lived intangible assets rather than finite lived intangible assets with estimated useful lives based on their remaining contractual terms in conformity with International Accounting Standard (IAS) 38 Intangible Assets. (AS 2810.30 and .31)

The issuer estimated the value-in-use (VIU) of its cash-generating units ('CGUs') to evaluate goodwill for impairment. For two of the issuer's CGUs the firm did not evaluate the significance to the financial statements of the issuer's use of estimated post-tax future cash flows and a post-tax discount rate to estimate the VIU of the CGUs rather than using estimated pre-tax future cash flows and a pre-tax discount rate in the VIU calculations in conformity with IAS 36 Impairment of Assets ('IAS 36'). (AS 2810.30)

The firm sent positive confirmation requests to the issuer's customers for a sample of certain revenue transactions. For positive confirmations that were not returned the firm did not perform alternative procedures that provided sufficient appropriate audit evidence that the delivery of services had occurred for those selections. (AS 2310.31)

The issuer calculated depreciation and amortization ('D&A') of its long-lived assets based on their economic lives without consideration of any legal or other limits on the use of the assets. The firm did not identify and evaluate the significance to the financial statements of the issuer's use of the economic life of certain long-lived assets to calculate D&A rather than using the contractual terms of the assets which for certain properties were shorter in duration than their respective economic lives in conformity with IAS 16 Property Plant and Equipment. (AS 2810.30 and .31)

The issuer estimated the VIU of its CGUs to evaluate long-lived assets for impairment. For certain CGUs the firm did not identify and evaluate the significance to the financial statements of the issuer's: - Exclusion of the valuation of land associated with the CGUs in the determination of their carrying amounts rather than including such amounts in the determination in conformity with IAS 36. (AS 2810.30)

The issuer estimated the VIU of its CGUs to evaluate long-lived assets for impairment. For certain CGUs the firm did not identify and evaluate the significance to the financial statements of the issuer's: - Exclusion of the estimated net cash flows if any to be received (or paid) from the disposal of the CGUs at the end of their useful life when estimating their VIU rather than including such amounts in the VIU calculations in conformity with IAS 36. (AS 2810.30)

The issuer estimated the VIU of its CGUs to evaluate long-lived assets for impairment. For certain CGUs the firm did not identify and evaluate the significance to the financial statements of the issuer's: - Use of a 25-year remaining life of the assets of the CGUs in estimating their future cash flows for purposes of estimating their VIU rather than using the shorter of the economic life or contractual term of the assets in the VIU calculations in conformity with IAS 36. (AS 2810.30)

The issuer estimated the VIU of its CGUs to evaluate long-lived assets for impairment. For certain CGUs the firm did not identify and evaluate the significance to the financial statements of the issuer's: - Inclusion in its estimation of the CGUs' VIU of estimated future cash flows related to planned major maintenance that would result in improvements or enhancements to the CGUs' performance rather than excluding such cash flows from the VIU calculations in conformity with IAS 36. (AS 2810.30)

The issuer recognized revenue from multiple revenue streams. The following deficiency was identified: • The firm selected for testing a control over the disclosure of certain revenue that consisted of the issuer's review and approval of its financial statement disclosures. The firm did not identify and test any controls over the accuracy of certain data used in the operation of this control. (AS 2201.39)

The issuer recognized revenue from multiple revenue streams. The following deficiency was identified: • The firm used certain issuer-prepared data to substantively test one of the issuer's revenue disclosures but did not perform any procedures to test or test any controls over the accuracy of this data. (AS 1105.10)

The issuer engaged an external specialist to assist in performing its annual impairment analysis for certain goodwill and intangible assets with indefinite lives. The issuer with the assistance of the company's specialist used various inputs and assumptions some of which the engagement team considered to be significant to prepare the valuation models used in the impairment analysis. Certain of these assumptions were developed using data derived from comparable companies. The company's specialist also prepared a sensitivity analysis using certain assumptions based on the statistical data points of the assumptions. The firm's approach for testing the goodwill and indefinite lived intangible assets for impairment was to test the issuer's process and the firm used an auditor-employed specialist to assist it with testing the valuation models used by the issuer. The following deficiency was identified: • The firm selected for testing a control over the valuation of the goodwill and indefinite lived intangible assets that consisted of the issuer's review of key assumptions used in the valuation models. The firm did not evaluate the specific review procedures the control owner performed to assess the reasonableness of certain assumptions used in the valuation models including the relevance of the comparable companies used to develop those assumptions. (AS 2201.42 and .44)

The issuer engaged an external specialist to assist in performing its annual impairment analysis for certain goodwill and intangible assets with indefinite lives. The issuer with the assistance of the company's specialist used various inputs and assumptions some of which the engagement team considered to be significant to prepare the valuation models used in the impairment analysis. Certain of these assumptions were developed using data derived from comparable companies. The company's specialist also prepared a sensitivity analysis using certain assumptions based on the statistical data points of the assumptions. The firm's approach for testing the goodwill and indefinite lived intangible assets for impairment was to test the issuer's process and the firm used an auditor-employed specialist to assist it with testing the valuation models used by the issuer. The following deficiency was identified: • The firm did not sufficiently evaluate the work of the auditor-employed specialist and identify that the auditor-employed specialist's work did not provide sufficient appropriate audit evidence regarding whether the goodwill and indefinite lived intangible assets were impaired because the auditor-employed specialist did not perform sufficient procedures to evaluate the reasonableness of certain significant assumptions used in the valuation models including the relevance of the comparable companies used to develop certain of those assumptions. (AS 1201.C6 and .C7)

The issuer engaged an external specialist to assist in performing its annual impairment analysis for certain goodwill and intangible assets with indefinite lives. The issuer with the assistance of the company's specialist used various inputs and assumptions some of which the engagement team considered to be significant to prepare the valuation models used in the impairment analysis. Certain of these assumptions were developed using data derived from comparable companies. The company's specialist also prepared a sensitivity analysis using certain assumptions based on the statistical data points of the assumptions. The firm's approach for testing the goodwill and indefinite lived intangible assets for impairment was to test the issuer's process and the firm used an auditor-employed specialist to assist it with testing the valuation models used by the issuer. The following deficiency was identified: • The auditor-employed specialist did not perform procedures to evaluate the reasonableness of certain significant assumptions used in the valuation models beyond reperforming the sensitivity analysis prepared by the company's specialist. (AS 2501.16)

The issuer engaged an external specialist to assist in performing its annual impairment analysis for certain goodwill and intangible assets with indefinite lives. The issuer with the assistance of the company's specialist used various inputs and assumptions some of which the engagement team considered to be significant to prepare the valuation models used in the impairment analysis. Certain of these assumptions were developed using data derived from comparable companies. The company's specialist also prepared a sensitivity analysis using certain assumptions based on the statistical data points of the assumptions. The firm's approach for testing the goodwill and indefinite lived intangible assets for impairment was to test the issuer's process and the firm used an auditor-employed specialist to assist it with testing the valuation models used by the issuer. The following deficiency was identified: • The auditor-employed specialist did not perform procedures to evaluate the relevance of the comparable companies used to develop these significant assumptions beyond determining whether those companies operated in the same industry as the issuer. (AS 1105.04 and .06)

To test the existence of certain inventory the firm virtually observed the inventory at selected locations through video calls as of an interim date confirming only that inventory was present and performed certain roll forward procedures from the interim date to year-end. The following deficiency was identified: • The firm did not identify and test any controls over the existence of this inventory. (AS 2201.39)

To test the existence of certain inventory the firm virtually observed the inventory at selected locations through video calls as of an interim date confirming only that inventory was present and performed certain roll forward procedures from the interim date to year-end. The following deficiency was identified: • The firm did not perform sufficient procedures to test the existence of this inventory because the firm's observation procedures were not suitable as the firm did not perform any test count procedures during the observations. Therefore these observations did not provide any evidence of the quantity and physical condition of the inventory. (AS 2510.09)

The issuer used multiple information-technology (IT) systems to initiate process and/or record transactions related to (1) certain revenue and unearned revenue (2) certain liabilities and (3) long-lived assets. 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 certain of 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 controls was not sufficient. (AS 2201.46)

With respect to Revenue which was affected by the audit deficiencies related to change management and user access the following additional deficiencies were identified: · The firm selected for testing other controls over certain revenue. The firm tested these controls through an interim date but did not perform any procedures to update the results of its testing from that interim date to year end. (AS 2201.55)

With respect to Revenue which was affected by the audit deficiencies related to change management and user access the following additional deficiencies were identified: · The performed other substantive analytical procedures as part of its testing of certain revenue. The firm used data derived from the recorded amounts of revenue to develop its expectations but did not evaluate whether this data was sufficiently reliable for purposes of achieving its audit objectives. (AS 2305.16)

With respect to Long-Lived Assets which was affected by the audit deficiencies related to change management and user access the following additional deficiencies were identified: · The firm selected for testing a control that consisted of the issuer's review of an assessment of long-lived assets for potential impairment including the underlying cash-flow forecasts. The firm did not evaluate the specific review procedures that the control owner performed to assess the reasonableness of the significant assumptions underlying these cash-flow forecasts. (AS 2201.42 and .44)

With respect to Long-Lived Assets which was affected by the audit deficiencies related to change management and user access the following additional deficiencies were identified: · The firm selected for testing certain other IT-dependent manual controls over long-lived assets. The firm tested these controls through an interim date but did not perform any procedures to update the results of its testing from that interim date to year end. (AS 2201.55)

With respect to Long-Lived Assets which was affected by the audit deficiencies related to change management and user access the following additional deficiencies were identified: · The firm's approach for substantively testing the impairment of certain long-lived assets was to test the issuer's process. The firm did not sufficiently evaluate whether the method the issuer used to perform its impairment analyses was in conformity with the applicable financial reporting framework including the requirements of International Accounting Standard 36 Impairment of Assets because the firm did not evaluate evidence that indicated whether the recoverable amount of the individual assets was estimable and available. (AS 2501.10; AS 2810.03)

With respect to Long-Lived Assets which was affected by the audit deficiencies related to change management and user access the following additional deficiencies were identified: · The issuer engaged a specialist to perform a quantitative assessment of certain long-lived assets for the purpose of determining whether the carrying amounts of those assets were recoverable as of the end of the prior year. The firm did not perform procedures to test the recoverable amounts of these long-lived assets as of the end of the current year beyond obtaining the issuer's impairment schedule and the valuation report prepared by the company's specialist in the prior year. Further the firm did not perform any procedures to use the work of the company's specialist as audit evidence. (AS 1105.A1 - .A10; AS 2501.07)

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 from the listing of entries that met the fraud criteria without having an appropriate rationale for limiting its testing to those journal entries. (AS 2401.61)