Explorer

The firm's substantive procedures to test the occurrence and accuracy of this revenue did not provide sufficient appropriate audit evidence because its procedures were designed based on a level of control reliance that was not supported due to the deficiencies in the engagement team's control testing discussed above. (AS 2301.16 .18 and .37)

The issuer recorded the fair value of its available-for-sale securities based on prices it obtained from external pricing services. The firm selected for testing a quarterly control over the valuation of these securities that included the issuer's comparison of its recorded prices to prices obtained from another external pricing service and the investigation of securities with price variances that exceeded both a monetary and a percentage change threshold. The following deficiencies were identified: · The firm did not evaluate whether the monetary threshold the issuer used to identify securities for investigation was sufficiently precise to detect material misstatements. (AS 2201.42)

The issuer recorded the fair value of its available-for-sale securities based on prices it obtained from external pricing services. The firm selected for testing a quarterly control over the valuation of these securities that included the issuer's comparison of its recorded prices to prices obtained from another external pricing service and the investigation of securities with price variances that exceeded both a monetary and a percentage change threshold. The following deficiencies were identified: · In testing the operating effectiveness of this control for the fourth quarter the firm did not identify that the comparison spreadsheet that the issuer used in this quarter contained a formulaic error such that the issuer did not properly calculate the price variances for any of its securities. (AS 2201.44)

The issuer recorded the fair value of its available-for-sale securities based on prices it obtained from external pricing services. The firm selected for testing a quarterly control over the valuation of these securities that included the issuer's comparison of its recorded prices to prices obtained from another external pricing service and the investigation of securities with price variances that exceeded both a monetary and a percentage change threshold. The following deficiencies were identified: · For securities for which a comparative price was unavailable the control owner performed procedures that consisted of comparing the recorded price of these securities to their respective historical prices and investigating securities with price variances that exceeded a monetary threshold. In testing the design of this control the firm did not evaluate whether historical prices were an appropriate basis to allow the issuer to assess the reasonableness of the recorded fair values for these securities. (AS 2201.42)

The firm selected for testing two controls over the issuer's determination of the categorization of the securities within the fair value hierarchy as set forth in FASB ASC Topic 820 Fair Value Measurement. The firm did not identify that these controls were not designed to address whether the pricing inputs used to determine the fair value of certain securities were observable. (AS 2201.42)

The sample size the firm used in certain of its substantive procedures to test the valuation of these securities was 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 issuer used an IT system to process and record transactions including those related to product revenue accounts receivable and certain expenses and related accruals. This system allowed the issuer to create security profiles for users that the issuer used to assign various levels of access privileges to these users including administrative access that allowed users to make changes to this system. The following deficiencies were identified: · The firm selected for testing two ITGCs over administrative access to this system but as part of that testing it did not perform any procedures to assess the control owners' (1) evaluation of certain security profiles and (2) determination of whether the access privileges assigned to those profiles were appropriate. (AS 2201.42 and .44)

The issuer used an IT system to process and record transactions including those related to product revenue accounts receivable and certain expenses and related accruals. This system allowed the issuer to create security profiles for users that the issuer used to assign various levels of access privileges to these users including administrative access that allowed users to make changes to this system. The following deficiencies were identified: · The firm selected for testing certain automated and IT-dependent manual controls over transactions related to these accounts. The firm's approach to testing these controls depended on effective ITGCs. Due to the deficiency in the firm's testing of ITGCs discussed above the firm's testing of these automated and IT-dependent manual controls was not sufficient. (AS 2201.46)

The sample sizes the firm used in certain of its substantive procedures to test product revenue accounts receivable and certain expenses and related accruals 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 issuer used two information-technology (IT) systems to process and record certain revenue transactions related to services provided to its customers; one of these systems was maintained by an external service organization. The following deficiencies were identified: · The firm selected for testing certain automated and IT-dependent manual controls over this revenue. The firm's approach to testing these controls depended on effective IT general controls (ITGCs) including controls over access to the systems. Due to the deficiencies in the firm's testing of these controls discussed above the firm's testing of these automated and IT-dependent manual controls was not sufficient. (AS 2201.46)

The issuer recorded the fair value of its available-for-sale securities based on prices it obtained from an external pricing service. The firm selected for testing a control over the valuation of these securities that consisted of the issuer's comparison of its recorded prices to prices obtained from another external pricing service. The firm did not identify and test any controls over the accuracy and completeness of the list of the issuer's securities used by the control owner in performing the comparison. (AS 2201.39)

The sample sizes the firm used in certain of its substantive procedures to test the valuation of these securities 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 discussed above. (AS 2301.16 .18 and .37; AS 2315.19 .23 and .23A)

The firm selected for testing two controls that included the issuer's validation of certain models that the issuer used to estimate the quantitative component of the ALL for loans collectively evaluated for impairment. The firm did not test the aspects of these controls related to the issuer's (1) evaluation of the mathematical logic of the models; (2) verification of the accuracy and completeness of certain data used in the operation of the controls and (3) tests of the models that included sensitivity analyses and benchmark comparisons to other models. (AS 2201.42 and .44)

The issuer used an IT system to record revenue and accounts receivable transactions related to certain services that the issuer provided to its customers. This system recorded revenue transactions using service codes that the system selected based on various inputs into the system. The following deficiencies were identified: · The firm did not identify and test any controls that addressed whether the system applied the appropriate service codes based on the inputs into the system. (AS 2201.39)

The issuer used an IT system to record revenue and accounts receivable transactions related to certain services that the issuer provided to its customers. This system recorded revenue transactions using service codes that the system selected based on various inputs into the system. The following deficiencies were identified: · The firm used these service codes in its substantive testing of this revenue and accounts receivable but did not perform any substantive procedures to test or in the alternative identify and test any controls over the appropriateness of the service codes. (AS1105.10)

The issuer used an IT system to record revenue and accounts receivable transactions related to certain services that the issuer provided to its customers. This system recorded revenue transactions using service codes that the system selected based on various inputs into the system. The following deficiencies were identified: · The sample sizes the firm used in certain of its substantive procedures to test this revenue and accounts receivable 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 discussed above. (AS 2301.16 .18 and .37; AS 2315.19 .23 and .23A)

The firm selected for testing a control that included the issuer's review of certain assumptions that were used to determine the fair value of the issuer's goodwill and intangible assets for purposes of evaluating these assets for possible impairment. 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)

For one of its reporting units the issuer used a cash flow forecast to evaluate the goodwill and an intangible asset for possible impairment. Based on this evaluation the issuer recorded an impairment charge related to these assets. The firm did not sufficiently evaluate the reasonableness of the issuer's forecast because its procedures were limited to comparing certain amounts from the forecast to the corresponding amounts in a forecast prepared earlier in the year and inquiring of management about the variances. (AS 2502.26 and .28)

The firm selected for testing a control over the existence of certain inventory that consisted of the issuer's review of its cycle-count results to assess the reliability of the cycle-count process. 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)

The sample size the firm used in certain of its substantive procedures to test certain of this inventory was 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 discussed above. (AS 2301.16 .18 and .37; AS 2315.19 .23 and .23A)

The firm used information that was produced by these IT systems in performing certain of its substantive procedures to test this revenue but did not have a basis to rely on this information due to the deficiencies in the firm's testing of access controls discussed above. The firm did not perform any substantive procedures to test or (as discussed above) sufficiently test controls over the accuracy and completeness of this information. (AS 1105.10)

The firm selected for testing a control that consisted of the issuer's review and approval of its annual budget. The issuer used this budget in its qualitative assessment of goodwill for possible impairment. 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)

For each of its health plans the issuer recorded an estimated liability for medical claims that included a component for certain factors such as changes in economic and business conditions. The firm selected for testing five controls that included aspects that addressed the risks related to this component. The following deficiencies were identified: · For three of these controls the firm did not evaluate whether the criteria that the control owners used to identify items for follow up were appropriate. (AS 2201.42)

For each of its health plans the issuer recorded an estimated liability for medical claims that included a component for certain factors such as changes in economic and business conditions. The firm selected for testing five controls that included aspects that addressed the risks related to this component. The following deficiencies were identified: · For the two remaining controls the firm did not identify that these controls were not designed at a level of precision to detect material misstatements. (AS 2201.42)

The issuer recorded the fair value of its available-for-sale securities based on prices it obtained from an external pricing service (primary pricing service). The firm selected for testing a control over the valuation of these securities that consisted of the issuer's comparison of its recorded prices to prices obtained from another external pricing service and the issuer's investigation of (1) price variances that exceeded certain thresholds or (2) securities for which prices were not provided by the primary pricing service. The issuer manually entered the securities and prices obtained from both pricing services into a spreadsheet for this comparison. The following deficiencies were identified: · The firm did not identify and test any controls over a report that the control owner used to assess the accuracy and completeness of the issuer's securities that were manually entered into the comparison spreadsheet. (AS 2201.39)

The issuer recorded the fair value of its available-for-sale securities based on prices it obtained from an external pricing service (primary pricing service). The firm selected for testing a control over the valuation of these securities that consisted of the issuer's comparison of its recorded prices to prices obtained from another external pricing service and the issuer's investigation of (1) price variances that exceeded certain thresholds or (2) securities for which prices were not provided by the primary pricing service. The issuer manually entered the securities and prices obtained from both pricing services into a spreadsheet for this comparison. The following deficiencies were identified: · The firm did not test an aspect of this control that addressed whether the prices from the primary pricing service were accurately entered into the comparison spreadsheet. (AS 2201.42 and .44)

The issuer recorded the fair value of its available-for-sale securities based on prices it obtained from an external pricing service (primary pricing service). The firm selected for testing a control over the valuation of these securities that consisted of the issuer's comparison of its recorded prices to prices obtained from another external pricing service and the issuer's investigation of (1) price variances that exceeded certain thresholds or (2) securities for which prices were not provided by the primary pricing service. The issuer manually entered the securities and prices obtained from both pricing services into a spreadsheet for this comparison. The following deficiencies were identified: · For securities that met the issuer's criteria for investigation the firm did not evaluate the specific review procedures that the control owner performed to evaluate whether the prices used to record the fair values for these securities were appropriate. (AS 2201.42 and .44)

The issuer used an investment adviser to initiate purchases and sales of its investment securities in accordance with the issuer's investment policy. These securities were held by a third-party custodian. The firm did not perform sufficient procedures to test these securities because the firm's procedures were limited to confirming the recorded balances of these securities with the investment adviser without performing any procedures to evaluate the appropriateness of the information provided by the investment adviser. (AS 2503.21 and .22)

The issuer held certain investment securities that it classified based on the maturity date of the security as either cash equivalents or short-term investments in its financial statements. The firm did not perform any substantive procedures that addressed the appropriateness of the classification of these securities. (AS 2301.08)

The issuer used a service organization to process claims for certain benefits that the issuer provided to its employees. The firm selected for testing a control that consisted of the issuer's review of the service auditor's report for (1) control deficiencies identified by the service auditor and (2) complementary user controls that the issuer needed to have in place in order to achieve the control objectives described in the service auditor's report. The firm did not evaluate the review procedures that the control owner performed including the procedures to identify matters for follow up and the procedures to determine whether those matters were appropriately resolved. (AS 2201.42 and .44)

The issuer used a service organization to process claims for certain benefits that the issuer provided to its employees. The firm selected for testing a control that consisted of the issuer's review of the service auditor's report for (1) control deficiencies identified by the service auditor and (2) complementary user controls that the issuer needed to have in place in order to achieve the control objectives described in the service auditor's report. The firm did not perform any procedures to evaluate whether the issuer implemented the appropriate complementary user controls as described in the service auditor's report. (AS 2201.39 and .B22)

The sample size the firm used in certain of its substantive procedures to test this revenue was 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 selected for testing a control that consisted of the issuer's review of the assumptions and qualitative adjustments used to estimate the ALL for loans collectively evaluated for impairment. The firm did not evaluate the specific review procedures that the control owners performed to assess the reasonableness of these assumptions and qualitative adjustments. (AS 2201.42 and .44)

The firm selected for testing two controls that consisted of the issuer's (1) evaluation of its leases for potential implications with respect to the accounting for its leases upon adoption of FASB ASC Topic 842 Leases and (2) review of the disclosures related to that adoption. The firm did not evaluate the specific review procedures that the control owner performed to evaluate the completeness of the population of leases that should have been subject to these controls. (AS 2201.42 and .44)

The firm selected for testing a control that consisted of the issuer's quarterly review of its lease contracts for appropriate accounting treatment subsequent to the issuer's adoption of FASB ASC Topic 842 Leases. The firm did not test the aspect of this control that addressed the completeness of the population of leases used in the operation of the control. (AS 2201.42 and .44)

The firm selected for testing a control that consisted of a reconciliation of the lease asset and liability balances from the lease sub-ledger to the general ledger. The firm did not identify and test any controls over the accuracy of the lease information included in manually-prepared spreadsheets that the control owners used in the operation of this control. (AS 2201.39)

The issuer recorded certain revenue based on information about the quantities sold and delivery dates that was provided by a third-party administrator. The following deficiencies were identified: · The firm did not identify and test any controls over the accuracy and completeness of the information provided by the third-party administrator. (AS 2201.39)

The issuer accounted for certain of its inventory under the first-in first-out (FIFO) method of accounting. The firm selected for testing an automated control over the issuer's inventory management system. The firm did not evaluate and test whether this automated control addressed the risk that the inventory management system was appropriately configured to apply the FIFO method of accounting to the inventory. (AS 2201.42 and .44)

The issuer used a service organization to manage its deferred compensation plan. The firm selected for testing a control that consisted of the issuer's review of the service auditor's report on the operating effectiveness of the service organization's controls. The following deficiencies were identified: · The firm did not evaluate the specific review procedures that the control owner performed to determine whether the sub-service organizations discussed in the service auditor's report were relevant to the issuer. (AS 2201.42 and .44)

The issuer used a service organization to manage its deferred compensation plan. The firm selected for testing a control that consisted of the issuer's review of the service auditor's report on the operating effectiveness of the service organization's controls. The following deficiencies were identified: · The firm did not evaluate which if any of the subservice organizations discussed in the service auditor's report were relevant to the issuer. (AS 2601.07 - .16)

The firm did not perform any substantive procedures to test the issuer's ARO. (AS 2301.08)

The issuer estimated certain of its oil and gas reserves using information provided by the issuer's specialists. The following deficiencies were identified: · The firm did not evaluate (1) the knowledge skill and ability of one company specialist and (2) the relationship of the issuer to this specialist. (AS 1105.A3 and A4)

The issuer estimated certain of its oil and gas reserves using information provided by the issuer's specialists. The following deficiencies were identified: · The firm did not perform any procedures to test the accuracy and completeness of certain issuer-prepared data used by another company specialist. (AS 1105.A8a)

The issuer estimated certain of its oil and gas reserves using information provided by the issuer's specialists. The following deficiencies were identified: · The firm did not perform any procedures to evaluate the relevance and reliability of certain data obtained from external sources and used by this specialist. (AS 1105.A8a)

The issuer developed undiscounted cash flows for its impairment analysis of unproved properties using various assumptions. The firm did not evaluate the reasonableness of certain significant assumptions the issuer used to develop these cash flows including the issuer's intent and ability to execute certain of its plans. (AS 2501.16 and .17)

The issuer developed undiscounted cash flows for its impairment analysis of unproved properties using various assumptions. The firm did not test the accuracy and completeness of certain reports the issuer used to develop these cash flows. (AS 1105.10)

The firm did not evaluate the reasonableness of certain significant assumptions the issuer used to develop undiscounted cash flows for its impairment analyses and calculation of depreciation depletion and amortization (DDA) expenses for certain proved properties. (AS 2501.16)

The firm did not evaluate whether another significant assumption the issuer used to calculate DDA was in conformity with FASB ASC Topic 932 Oil and Gas. (AS 2810.30 and .31)

The issuer performed cycle counts of inventory at certain of the issuer's locations. The firm selected for testing controls that consisted of the issuer's cycle-count procedures and reviews of reports to monitor the frequency and accuracy of the counts. The firm did not identify and test any controls over the accuracy and/or completeness of the system-generated reports the issuer used in the operation of its cycle-count monitoring controls. (AS 2201.39)

The issuer recognized various types of revenue from one of its segments. The following deficiencies were identified: · For one type of revenue the firm did not identify and test any controls that addressed whether the performance obligation was satisfied before revenue was recognized. (AS 2201.39)