Explorer

The firm did not evaluate whether inventory was recorded at the lower of cost or market. (AS 2501.07)

The firm did not evaluate the assumptions used by the issuer to estimate the reserve for obsolescence. (AS 2501.07)

The firm did not perform sufficient inventory test count procedures because it did not test (1) inventory transactions between the date of the count and year end and (2) the completeness of the issuer's inventory. (AS 2510.09 and .12)

During the year the issuer entered into a transaction. The firm did not evaluate whether the business purpose (or lack thereof) of this transaction indicated that it may have been entered into to engage in fraudulent financial reporting or conceal misappropriation of assets given certain facts regarding the transaction. (AS 2401.67)

The issuer recognized revenue from different sources. The following deficiencies were identified: · The firm did not evaluate the effect of certain sales terms and conditions on the transaction price. (AS 2301.08 and .13)

The issuer recognized revenue from different sources. The following deficiencies were identified: · For certain revenue the firm did not evaluate whether the existence of certain arrangements or terms and conditions affected when performance obligations were satisfied. (AS 2301.08 and .13)

The issuer recognized revenue from different sources. The following deficiencies were identified: · The firm did not perform procedures beyond completing a disclosure checklist to evaluate whether the disclosures in the financial statements met certain requirements of FASB ASC Topic 606 Revenue from Contracts with Customers. (AS 2301.08 and .13)

The issuer recognized revenue from different sources. The following deficiencies were identified: · The firm used certain external information in its substantive procedures to test certain revenue but did not perform any procedures to evaluate the reliability of this information. (AS 1105.04 and .06)

The firm did not perform procedures to address a fraud risk related to the misappropriation of cash beyond (1) obtaining evidence that an individual who had incompatible duties performed a cash count at a date that was not at or near the end of the year in which a difference was identified and (2) obtaining cash logs which included certain transactions that did not appear to have a clear business purpose or evidence of proper authorization. (AS 2301.13; AS 2401.56)

The firm did not identify and select journal entries and other adjustments for testing for evidence of possible material misstatement due to fraud. (AS 2401.58)

The firm did not identify and evaluate a departure from GAAP related to the issuer's misclassification of certain debt as non-current which was not in conformity with FASB ASC Topic 210 Balance Sheet. (AS 2810.30 and .31)

During the year the issuer entered into a transaction. The firm did not take any action in response to a fact regarding this transaction that indicated a possible illegal act. (AS 2405.10)

During the year the issuer recorded an asset. The issuer engaged an external specialist to determine the fair value of this asset. The following deficiencies were identified: · The firm did not evaluate whether the issuer's accounting for this asset was in conformity with GAAP. (AS 2301.08 and .11)

During the year the issuer recorded an asset. The issuer engaged an external specialist to determine the fair value of this asset. The following deficiencies were identified: · The firm did not perform any substantive procedures to evaluate the reasonableness of the significant assumptions developed by the company's specialist. (AS 1105.A8b)

During the year the issuer recorded an asset. The issuer engaged an external specialist to determine the fair value of this asset. The following deficiencies were identified: · The firm did not perform any substantive procedures to evaluate the reasonableness of certain significant assumptions developed by the issuer. (AS 2501.16)

During the year the issuer recorded an asset. The issuer engaged an external specialist to determine the fair value of this asset. The following deficiencies were identified: · The firm did not perform sufficient substantive procedures to evaluate the reasonableness of certain other significant assumptions developed by the issuer because the firm did not evaluate the reliability of certain external information it used. (AS 1105.04 and .06)

During the year the issuer recorded an asset. The issuer engaged an external specialist to determine the fair value of this asset. The following deficiencies were identified: · In evaluating the reasonableness of these significant assumptions the firm did not take into account the issuer's ability to carry out the actions necessary to meet the assumptions. (AS 2501.16 and .17)

During the year the issuer also recorded certain other assets at fair value. The firm did not perform any substantive procedures to evaluate the reasonableness of the issuer's assumption used to determine the fair value. Further the firm did not evaluate the consistency of this assumption with market information it obtained. (AS 2501.16)

The issuer recognized revenue from different sources. The following deficiencies were identified: · The firm did not evaluate whether certain arrangements in its contracts with customers represented performance obligations. (AS 2301.08 and .13)

The firm's approach for substantively testing the ALL included developing an independent expectation of the ALL which included a specific reserve for impaired loans and a general reserve for loans collectively evaluated for impairment. The firm did not perform any procedures to evaluate the reasonableness of certain assumptions used to develop its independent expectation including assumptions provided by the issuer. (AS 2501.09 .10 and .12) [This citation refers to AS 2501 Auditing Accounting Estimates which was in effect for this audit. This standard was replaced by AS 2501 Auditing Accounting Estimates Including Fair Value Measurements which became effective for audits of financial statements for fiscal years ending on or after December 15 2020.]

With respect to the specific reserve the firm used appraisals prepared in previous years by external specialists engaged by the issuer to evaluate the fair value of properties used as collateral for certain loans the firm evaluated for impairment. Given the length of time that had passed since the appraisals were prepared the firm applied a discount rate to the fair value of each property as part of its evaluation. The firm did not perform procedures to evaluate the relevance and reliability of these appraisals. Specifically the firm did not perform procedures to evaluate the reasonableness of the methods assumptions and underlying data used in preparing the appraisals. Further the firm did not perform any procedures to evaluate the reasonableness of the discount rate used to evaluate these loans for impairment. (AS 2502.26 .28 and .31)

The firm's approach to testing deposit liabilities included reliance on controls. The issuer used a service organization to process and record transactions related to deposit liabilities. The firm obtained the service auditor's report which specified complimentary user controls that addressed the accuracy and completeness of information the issuer used in the operation of certain controls. The firm used this information in its testing of controls over deposit liabilities and in its substantive testing of deposit liabilities. The firm did not test beyond inquiring of management the complimentary user controls associated with deposit liabilities that were identified in the service auditor's report. (AS 2601.14)

The sample size the firm used in its substantive procedures to test deposit liabilities 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 various qualitative factors to determine the qualitative component of the ALL. The firm's approach for testing the qualitative reserve was to test the issuer's process. The following deficiencies were identified: · The firm did not perform sufficient procedures to evaluate the reasonableness of the significant assumptions related to the qualitative factors the issuer used to determine the qualitative reserve because it limited its procedures to reading the issuer's ALL methodology and evaluating the consistency of the assumptions with those used in prior periods. (AS 2501.16)

The issuer's ALL also included a specific reserve for impaired loans. The issuer engaged external specialists to determine the fair value of certain property that served as collateral for certain impaired loans. The firm's approach for substantively testing the specific reserve was to develop an independent expectation of the specific reserve that included use of the work of the company's specialists as audit evidence. The following deficiencies were identified: · The firm did not perform procedures to evaluate the reasonableness of another significant assumption that the issuer developed and it used in its independent expectation of the specific reserve. (AS 2501.16)

The issuer used a service organization to process and record transactions related to deposit liabilities. The firm's approach to testing deposit liabilities included reliance on controls. The following deficiencies were identified: · The service auditor's report for the service organization contained a qualified opinion because controls were not operating effectively to achieve a control objective related to logical access to programs data and computer resources. The firm did not perform sufficient procedures to evaluate whether the service auditor's report provided sufficient appropriate audit evidence to support the firm's reliance on the service organization's controls because it concluded that the identified control deficiencies did not have an effect on its reliance on controls without performing procedures to support its conclusion. Further given the length of period under audit not covered by the service auditor's report the firm inappropriately limited its procedures to reading the bridge letter that only addressed a portion of that period of time. (AS 2601.16)

The issuer used a service organization to process and record transactions related to deposit liabilities. The firm's approach to testing deposit liabilities included reliance on controls. The following deficiencies were identified: · The firm did not perform procedures to test beyond inquiring of management certain complementary user controls over deposit liabilities identified in the service auditor's report. (AS 2601.14)

The sample sizes the firm used in its substantive procedures to test deposit liabilities were too small to provide sufficient appropriate audit evidence because the 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 identified characteristics of potentially fraudulent entries or adjustments for testing determined that certain journal entries met those characteristics but limited its testing to haphazardly selected journal entries. (AS 2401.61)

The issuer used various qualitative factors to determine the qualitative component of the ALL. The firm's approach for testing the qualitative reserve was to test the issuer's process. The following deficiencies were identified: · The firm did not perform procedures to evaluate the relevance and reliability of external information that the issuer used to develop the significant assumptions related to qualitative factors. (AS 1105.04 and .06)

The issuer used various qualitative factors to determine the qualitative component of the ALL. The firm's approach for testing the qualitative reserve was to test the issuer's process. The following deficiencies were identified: · The firm did not perform sufficient procedures to test or identify and test any controls over the accuracy and completeness of issuer-produced information that the issuer used to develop the significant assumptions related to the qualitative factors because it limited its procedures to inquiries and performing certain recalculations and comparisons of certain of the information to other issuer-prepared information. (AS 1105.10)

The issuer's ALL also included a specific reserve for impaired loans. The issuer engaged external specialists to determine the fair value of certain property that served as collateral for certain impaired loans. The firm's approach for substantively testing the specific reserve was to develop an independent expectation of the specific reserve that included use of the work of the company's specialists as audit evidence. The following deficiencies were identified: · The firm did not test the accuracy and completeness of issuer-produced information and evaluate the relevance and reliability of external information used by the company's specialists to determine the fair value of the properties used as collateral. (AS 1105.A8a)

The issuer's ALL also included a specific reserve for impaired loans. The issuer engaged external specialists to determine the fair value of certain property that served as collateral for certain impaired loans. The firm's approach for substantively testing the specific reserve was to develop an independent expectation of the specific reserve that included use of the work of the company's specialists as audit evidence. The following deficiencies were identified: · The firm did not perform procedures to evaluate the reasonableness of significant assumptions used by the company's specialists to determine the fair value of the properties used as collateral. (AS 1105.A8b; AS 2501.16)

The issuer's ALL also included a specific reserve for impaired loans. The issuer engaged external specialists to determine the fair value of certain property that served as collateral for certain impaired loans. The firm's approach for substantively testing the specific reserve was to develop an independent expectation of the specific reserve that included use of the work of the company's specialists as audit evidence. The following deficiencies were identified: · The firm did not sufficiently evaluate the relevance and reliability of the work performed by the company's specialists and whether the specialists' findings supported or contradicted the fair value of the collateral because it did not evaluate that the appraisals were not prepared as of the end of the year and perform additional procedures to address the potential effect of the timing difference on the fair value of the collateral. (AS 1105.A9 and .A10)

The issuer's ALL also included a specific reserve for impaired loans. The issuer engaged external specialists to determine the fair value of certain property that served as collateral for certain impaired loans. The firm's approach for substantively testing the specific reserve was to develop an independent expectation of the specific reserve that included use of the work of the company's specialists as audit evidence. The following deficiencies were identified: · The firm did not perform sufficient procedures to demonstrate it had a reasonable basis for certain assumptions it developed because it did not demonstrate how its assumptions took into account its understanding of the company's process that included certain information about the properties used as collateral so that its expectations considered the factors relevant to the estimate. (AS 2501.21 and .22)

The issuer's ALL also included a specific reserve for impaired loans. The issuer engaged external specialists to determine the fair value of certain property that served as collateral for certain impaired loans. The firm's approach for substantively testing the specific reserve was to develop an independent expectation of the specific reserve that included use of the work of the company's specialists as audit evidence. The following deficiencies were identified: · The firm did not perform procedures to evaluate the reliability of external information that the firm used to develop its independent expectation of the specific reserve. (AS 1105.04 and .06)

The issuer's ALL also included a specific reserve for impaired loans. The issuer engaged external specialists to determine the fair value of certain property that served as collateral for certain impaired loans. The firm's approach for substantively testing the specific reserve was to develop an independent expectation of the specific reserve that included use of the work of the company's specialists as audit evidence. The following deficiencies were identified: · The firm did not perform procedures to demonstrate it had a reasonable basis for another assumption it developed and used in its independent expectation of the specific reserve. (AS 2501.22)

The firm selected for testing a control over the review of the entry to record certain revenue and the calculation of that revenue. The firm did not evaluate the specific review procedures that the control owners performed to evaluate the reasonableness of certain assumptions used in the calculation. (AS 2201.42 and .44)

The firm selected for testing a control over the review of certain current-period revenue compared to the prior period. 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 identify and test any controls over the accuracy and completeness of data used in the operation of the above two controls and another control over the review of the reconciliation of revenue. (AS 2201.39)

To test certain revenue the firm selected for testing items that met specific criteria. The firm did not perform any substantive procedures to test the remaining portion of items that did not meet the specific criteria. (AS 1105.27; AS 2301.08)

The issuer exchanged land with an external party during the year. The issuer estimated the fair value of the acquired land based on the nominal value within the agreement and the purchase price of other land during the year (collectively the 'inputs'). The firm selected for testing a control that included a review of accounting and other considerations for this transaction. The firm did not evaluate the specific review procedures that the control owners performed to evaluate the relevance of inputs used to estimate the fair value of the acquired land. (AS 2201.42 and .44)

The firm did not perform substantive procedures to evaluate the relevance of the inputs used to estimate the fair value of the acquired land beyond determining that the acquired land was adjacent to land previously acquired by the issuer during the year. (AS 2502.26 .28 and .31)

The firm did not perform any substantive procedures to test additions to long-lived assets. (AS 2301.08)

The firm's approach for substantively testing certain expenses was to test the issuer's process. The firm did not perform procedures to test or test controls over the accuracy and completeness of data it used to substantively test the expenses. (AS 1105.10)

The firm's approach for substantively testing certain expenses was to test the issuer's process. The firm did not perform procedures to evaluate the reasonableness of the significant assumptions used by the issuer to estimate the expenses. (AS 2501.16)

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

The firm did not identify and select journal entries and other adjustments for testing to address the potential for material misstatements due to fraud. (AS 2401.58)

The firm did not perform procedures to test certain expenses beyond inquiry of the issuer's external accountant. (AS 2301.08; AS 2501.07)

The firm did not perform procedures to test an amount due to a related party beyond reviewing minutes from the Board of Directors meetings. (AS 2301.08)