Explorer

The firm did not perform any procedures to identify and select journal entries and other adjustments for testing. (AS 2401.58)

The issuer performed an impairment analysis for its long-lived asset groups using estimates of future undiscounted cash flows to evaluate whether the carrying value of each asset group was recoverable. These estimates were based on a weighted average of historical cash flows for each asset group. The firm's approach for substantively testing this analysis was to review and test management's process and for certain asset groups to develop an independent expectation of the estimate. The following deficiencies were identified: • The firm did not evaluate whether certain assumptions the issuer used in this analysis were in conformity with FASB ASC Topic 360 Property Plant and Equipment. (AS 2810.30)

The issuer performed an impairment analysis for its long-lived asset groups using estimates of future undiscounted cash flows to evaluate whether the carrying value of each asset group was recoverable. These estimates were based on a weighted average of historical cash flows for each asset group. The firm's approach for substantively testing this analysis was to review and test management's process and for certain asset groups to develop an independent expectation of the estimate. The following deficiencies were identified: • The firm did not evaluate the reasonableness of the weighting that the issuer assigned to the historical cash flows including consideration of the significant adverse events that affected the issuer's business during the year beyond concluding that it was reasonable to weigh the more recent results more heavily. (AS 2501.09 .10 and .11;3 AS 2810.03) [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.]

The issuer performed an impairment analysis for its long-lived asset groups using estimates of future undiscounted cash flows to evaluate whether the carrying value of each asset group was recoverable. These estimates were based on a weighted average of historical cash flows for each asset group. The firm's approach for substantively testing this analysis was to review and test management's process and for certain asset groups to develop an independent expectation of the estimate. The following deficiencies were identified: • The firm used certain information from external sources to develop its independent expectations but did not perform any procedures to evaluate the relevance and reliability of this information. (AS 1105.04 and .06)

The issuer engaged an external specialist to estimate the fair value of certain investment securities. The securities had a publicly available quoted price on the last business day prior to year end. The firm did not evaluate the difference between the estimated fair value of the securities determined by the external specialist and the publicly quoted price. (CAS3 500.11; CAS 540.15 and 18)

The issuer engaged an external specialist to determine the fair value of intangible assets acquired in a business combination. The firm did not sufficiently evaluate the financial projections used to value the acquired intangible assets because it limited its procedures to (1) inquiring of management (2) comparing projected sales prices to current sales prices without performing procedures to evaluate whether the current sales prices represented a reasonable expectation of future sales prices and (3) comparing the projected sales quantities to certain industry information without performing procedures to evaluate the relevance and reliability of that industry information. (CAS 500.07 and 08; CAS 540.15 and 18)

For revenue from certain services the firm's testing of revenue consisted primarily of vouching cash receipts. The firm however did not evaluate whether revenue was appropriately recognized under FASB IFRS 15 Revenue from Contracts with Customers. (AS 2301.08; AS 2810.30)

The issuer had a contract dispute with a vendor who provided certain services to the issuer's customers on behalf of the issuer. The firm did not perform procedures to (1) understand and evaluate the nature of the dispute and (2) obtain evidence to support the issuer's conclusion on recognizing revenue based on its assessment that the vendor continued to provide the underlying service to the issuer's customers even though the issuer had stopped paying the vendor for such services due to the dispute. (AS 2301.08)

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 perform procedures to test the assumptions related to forecasts of future economic conditions used by the issuer to determine the estimate. Further the firm did not evaluate the issuer's omission of recent information from the assumptions beyond obtaining representation from management that the activity from that period was not representative of conditions at year end. (AS 2501.09 .10 and .11)

The firm selected for testing controls that consisted of the issuer's review of revenue recognized over time. The firm did not identify and test any controls over the accuracy and completeness of the reports that the control owners used in the operation of these controls. (AS 2201.39)

The firm selected for testing controls that consisted of the issuer's review of inventory. The firm did not identify and test any controls over the accuracy and completeness of the reports that the control owners used in the operation of these controls. (AS 2201.39)

The firm selected for testing controls that consisted of the issuer's review of inventory. The firm did not identify and test any controls to address whether inventory was recorded at the lower of cost or net realizable value. (AS 2201.39)

The issuer recognized an allowance for slow-moving and obsolete inventories that included a general reserve. The firm did not evaluate the reasonableness of the significant assumptions the issuer used to develop the general reserve. (AS 2501.16)

The issuer reported a significant account at fair value. The firm's approach to substantively testing the fair value of this account was to test the issuer's process and the firm engaged an external specialist to evaluate certain of the significant assumptions that the issuer used to develop the fair value. The following deficiency was identified: · The firm did not identify that the auditor-engaged specialist did not perform procedures beyond inquiry to evaluate the reasonableness of certain significant assumptions the issuer used to develop the fair value of this account and perform additional procedures or request the auditor-engaged specialist to perform additional procedures to address the issue. (AS 1210.09 and .12; AS 2501.16)

The issuer reported a significant account at fair value. The firm's approach to substantively testing the fair value of this account was to test the issuer's process and the firm engaged an external specialist to evaluate certain of the significant assumptions that the issuer used to develop the fair value. The following deficiency was identified: · The firm did not perform procedures to test or in the alternative identify and test controls over the accuracy and completeness of certain issuer-produced information the issuer used to develop the fair value of this account. (AS 1105.10)

The issuer reported a significant account at fair value. The firm's approach to substantively testing the fair value of this account was to test the issuer's process and the firm engaged an external specialist to evaluate certain of the significant assumptions that the issuer used to develop the fair value. The following deficiency was identified: · The firm did not perform procedures to evaluate the relevance and reliability of certain information from external sources the issuer used to develop the fair value of this account. (AS 1105.04 and .06)

The issuer reported a significant account at fair value. The firm's approach to substantively testing the fair value of this account was to test the issuer's process and the firm engaged an external specialist to evaluate certain of the significant assumptions that the issuer used to develop the fair value. The following deficiency was identified: · The firm did not perform procedures beyond a comparison to prior year amounts to evaluate the reasonableness of certain components of a significant assumption the issuer used to develop the fair value of this account. (AS 2501.16)

The firm did not perform substantive procedures beyond certain recalculations to test the valuation of certain other significant accounts. (AS 2501.07)

The issuer generally recognized revenue for two categories of revenue. The firm selected for testing controls over one category of revenue that consisted of a monthly review of revenue recognition and a quarterly review over financial statement line items. For the monthly review control the firm did not evaluate whether the control was designed to ensure all relevant revenue recognition criteria had been met. (AS 2201.42 and .44)

The issuer generally recognized revenue for two categories of revenue. The firm selected for testing controls over one category of revenue that consisted of a monthly review of revenue recognition and a quarterly review over financial statement line items. For the quarterly review control the firm did not evaluate the review procedures that the control owner performed including the criteria that the control owner used to identify items for follow up and whether those items were appropriately resolved. (AS 2201.42 and .44)

For the second category of revenue the firm did not identify and test any controls over revenue recognition. (AS 2201.39)

The firm selected for testing a control over management's review of long-lived assets for potential impairment. The firm did not evaluate the review procedures that the control owner performed including the criteria that the control owner used to identify items for follow up and whether those items were appropriately resolved. (AS 2201.42 and .44)

The firm did not evaluate the effect of certain impairment indicators on whether the carrying value of long-lived assets was recoverable. (AS 2301.08; AS 2810.03)

The firm selected for testing certain review controls over long-lived assets. 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's internal inspection program had inspected this audit and reviewed these areas but did not identify the deficiencies below. The firm did not perform any procedures to evaluate whether the issuer's recognition of certain revenue was in conformity with FASB ASC Topic 606 Revenue from Contracts with Customers. (AS 2301.08 and .13)

The firm's internal inspection program had inspected this audit and reviewed these areas but did not identify the deficiencies below. The issuer reported intangible assets and evaluated them for impairment using undiscounted cash flow analyses. The firm's approach to test the issuer's impairment analyses was to test the issuer's process. The firm did not perform procedures beyond inquiry to evaluate the reasonableness of significant assumptions related to the undiscounted cash flow projections used by the issuer to develop the impairment analyses. (AS 2501.16)

The firm selected for testing a control that consisted of management's review of a reconciliation related to revenue. The firm did not (1) evaluate the specific 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 selected for testing a control that consisted of management's review of a reconciliation related to revenue. The firm did not identify and test any controls over the accuracy and completeness of the data used in the operation of the control. (AS 2201.39)

The firm selected for testing a control over sales invoices. The firm did not perform procedures to test or identify and test controls over the completeness of the issuer-produced sales invoice listing used in its testing of the control. (AS 1105.10)

The firm selected for testing a review control over purchases and disposals of long-lived assets. The firm did not test the aspect of this control related to the control owner's review of the summary of activity or transaction details supporting the control. (AS 2201.42 and .44)

The issuer developed undiscounted cash flows to evaluate certain long-lived assets for potential impairment. The following deficiency was identified: · The firm did not perform procedures to evaluate the reasonableness of significant assumptions related to daily revenue rates beyond comparing the rates used by the issuer to rates obtained from the external source that the issuer used to develop the assumptions. (AS 2501.16)

The issuer developed undiscounted cash flows to evaluate certain long-lived assets for potential impairment. The following deficiency was identified: · The firm did not perform procedures to evaluate the relevance and reliability of the rates obtained from the external source. (AS 1105.04 and .06)

The issuer developed undiscounted cash flows to evaluate certain long-lived assets for potential impairment. The following deficiency was identified: · The firm did not perform sufficient procedures to evaluate the reasonableness of significant assumptions related to certain expense rates because it limited its procedures to comparing the rates to the actual operating expenses during the year and the issuer's budget without evaluating whether the issuer had a reasonable basis for the assumptions in the budget. (AS 2501.16)

The firm identified control deficiencies related to significant accounts and in areas of significant risk. The firm did not provide a reasonable basis to support its conclusion that the magnitude of the potential misstatements resulting from the control deficiencies was not material. (AS 2201.62)

The firm identified deficiencies in the design and operating effectiveness of controls related to revenue and long-lived assets. The firm identified and tested two review controls that it believed would mitigate the deficiencies ('compensating controls'). The following deficiency was identified: · For one control the firm did not perform procedures to evaluate the review procedures that the control owner performed to be able to conclude that the compensating control mitigated the identified control deficiency. (AS 2201.68)

The firm's internal inspection program had inspected this audit and reviewed these areas but did not identify the deficiencies below. With respect to certain revenue recognized over time the firm did not evaluate whether there were significant judgments used by the issuer in determining the timing of satisfaction of performance obligations and whether all applicable required disclosures were made. (AS 2301.08 and .13)

The firm identified deficiencies in the design and operating effectiveness of controls related to revenue and long-lived assets. The firm identified and tested two review controls that it believed would mitigate the deficiencies ('compensating controls'). The following deficiency was identified: · The firm did not identity and test any controls over the accuracy and completeness of the supporting documentation used in the performance of this control. (AS 2201.68)

The firm identified deficiencies in the design and operating effectiveness of controls related to revenue and long-lived assets. The firm identified and tested two review controls that it believed would mitigate the deficiencies ('compensating controls'). The following deficiency was identified: · For another control the firm did not identify that this control did not address the identified control deficiencies related to revenues and long-lived assets. (AS 2201.68)

The firm's internal inspection program had inspected this audit and reviewed these areas but did not identify the deficiencies below. The firm sent positive confirmation requests to a sample of customers as part of its testing of revenue. The following deficiency was identified: · The firm did not perform procedures to determine whether certain of the confirmation requests were directed to third parties who were knowledgeable about the information to be confirmed. (AS 2310.26)

The firm's internal inspection program had inspected this audit and reviewed these areas but did not identify the deficiencies below. The firm sent positive confirmation requests to a sample of customers as part of its testing of revenue. The following deficiency was identified: · The firm received an electronic response to one confirmation request. The firm did not consider performing procedures to address the risks associated with an electronic response such as verifying the source and contents of the confirmation response. (AS 2310.29)

The firm's internal inspection program had inspected this audit and reviewed these areas but did not identify the deficiencies below. The issuer recorded an allowance for expected credit losses related to accounts receivable which was based in part on significant assumptions regarding default rates. The issuer assigned credit rating categories to each receivable based on whether or not the customer had made payments and assigned a default rate to each customer's receivable based on that assigned category which was based on information from an external source. The firm's approach to test the allowance for expected credit losses was to test the issuer's process. The following deficiency was identified: · The firm did not perform procedures to evaluate the reasonableness of the significant assumption used by the issuer related to default rates beyond comparing the rates to data from the external source that the issuer used to develop the rates. (AS 2501.16)

The firm's internal inspection program had inspected this audit and reviewed these areas but did not identify the deficiencies below. The issuer recorded an allowance for expected credit losses related to accounts receivable which was based in part on significant assumptions regarding default rates. The issuer assigned credit rating categories to each receivable based on whether or not the customer had made payments and assigned a default rate to each customer's receivable based on that assigned category which was based on information from an external source. The firm's approach to test the allowance for expected credit losses was to test the issuer's process. The following deficiency was identified: · The firm did not perform procedures to evaluate the relevance of the credit rating categories from the external source that the issuer used in determining the default rates. (AS 1105.04 and .06)

The firm's internal inspection program had inspected this audit and reviewed these areas but did not identify the deficiencies below. The issuer recorded an allowance for expected credit losses related to accounts receivable which was based in part on significant assumptions regarding default rates. The issuer assigned credit rating categories to each receivable based on whether or not the customer had made payments and assigned a default rate to each customer's receivable based on that assigned category which was based on information from an external source. The firm's approach to test the allowance for expected credit losses was to test the issuer's process. The following deficiency was identified: · The firm did not perform procedures to test or test any controls over the accuracy of certain information used by the issuer in calculating a component of its allowance for expected credit losses. (AS 1105.10)

The firm's internal inspection program had inspected this audit and reviewed these areas but did not identify the deficiencies below. The issuer recorded an allowance for expected credit losses related to accounts receivable which was based in part on significant assumptions regarding default rates. The issuer assigned credit rating categories to each receivable based on whether or not the customer had made payments and assigned a default rate to each customer's receivable based on that assigned category which was based on information from an external source. The firm's approach to test the allowance for expected credit losses was to test the issuer's process. The following deficiency was identified: · The firm did not perform procedures beyond comparison to an issuer-prepared schedule to test the issuer's presentation of certain items related to accounts receivable and the allowance for expected credit losses in the statement of cash flows. (AS 2301.08)

The firm's internal inspection program had inspected this audit and reviewed these areas but did not identify the deficiencies below. The issuer reported intangible assets and evaluated them for impairment using undiscounted cash flow analyses. The firm's approach to test the issuer's impairment analyses was to test the issuer's process. The firm did not sufficiently evaluate whether the method used by the issuer to develop the impairment analyses was in conformity with GAAP as it did not evaluate whether the method was in conformity with certain applicable requirements of FASB ASC Topic 350 Intangibles—Goodwill and Other and FASB ASC Topic 360 Property Plant and Equipment. (AS 2501.10)

The issuer generated certain revenues from the sale of products licenses and royalties collaborations and grants. The following deficiency was identified: · The firm selected for testing controls over the issuer's review of revenue and related 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 issuer generated certain revenues from the sale of products licenses and royalties collaborations and grants. The following deficiency was identified: · The firm selected for testing a control over the issuer's review of the accounting treatment for certain revenue contracts to address a fraud risk associated with the related revenue. 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. Further the firm did not evaluate whether this control was designed to address the fraud risk it identified. (AS 2201.42 and .44)

The issuer used a service organization to initiate and process certain of its revenue transactions related to the sale of products. 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 issuer used another service organization to ship the products and record these transactions. The firm did not perform any procedures to obtain evidence regarding the controls over the activities performed by this service organization. (AS 2201.39 and .B19)

During the year the issuer acquired several businesses. The firm selected for testing controls that included the issuer's review of the business combinations. The firm did not evaluate the specific review procedures that the control owners performed over the appropriateness of the accounting treatment the fair value of the acquired intangible assets and the allocation of the purchase price. (AS 2201.42 and .44)