Explorer

For certain locations the firm's substantive procedures to test the unit cost of inventory consisted of selecting a sample of items for testing. The following deficiencies were identified: · The firm did not perform procedures to evaluate certain differences it identified in its testing. (AS 2301.08 and .11)

For certain locations the firm's substantive procedures to test the unit cost of inventory consisted of selecting a sample of items for testing. The following deficiencies were identified: · The firm did not perform sufficient procedures to test the labor and overhead costs the issuer capitalized to inventory because its procedures were limited to comparing the costs to those capitalized in the prior year. (AS 2301.08 and .11)

For revenue at three business units one of which was affected by the audit deficiencies discussed above the following additional deficiencies were identified: · For two of these business units the firm's procedures to test this revenue consisted of testing a sample of transactions from certain periods. The firm did not perform any procedures to test the remaining population of this revenue. (AS 2315.24)

For certain locations the firm's substantive procedures to test the unit cost of inventory consisted of selecting a sample of items for testing. The following deficiencies were identified: · The firm did not perform any procedures to test or test controls over the accuracy and completeness of certain issuer-produced information used in its substantive testing. (AS 1105.10)

For certain other locations the firm did not perform any substantive procedures to test the unit cost of inventory. (AS 2301.08 and .11)

The firm did not perform substantive procedures to test the issuer's inventory reserves. (AS 2501.07)

The firm's substantive procedures to test certain revenue included selecting a sample of transactions for testing. The firm's sample was too small to provide sufficient appropriate audit evidence because in determining the sample size the firm did not take into account tolerable misstatement the allowable risk of incorrect acceptance and the characteristics of the population. (AS 2315.16 .23 and .23A)

The firm did not identify and evaluate a misstatement in a disclosure required under FASB ASC Topic 606. (AS 2810.30 and .31)

During the year the issuer acquired a business and engaged a specialist to assist it in determining the fair values of an acquired intangible asset and the consideration transferred using various significant assumptions. The firm's approach for substantively testing the fair values of the acquired intangible asset and the consideration transferred was to test the issuer's process. The following deficiencies were identified: · With respect to the fair value of a portion of the consideration transferred the firm did not evaluate whether the method used by the issuer to determine the fair value was in conformity with FASB ASC Topic 820 Fair Value Measurement. Further the firm did not evaluate certain information provided by the company's specialist that suggested that the issuer's method to determine the fair value of this consideration may not be appropriate. (AS 2501.10; AS 2810.03)

During the year the issuer acquired a business and engaged a specialist to assist it in determining the fair values of an acquired intangible asset and the consideration transferred using various significant assumptions. The firm's approach for substantively testing the fair values of the acquired intangible asset and the consideration transferred was to test the issuer's process. The following deficiencies were identified: · With respect to the fair value of the remaining consideration transferred the firm did not perform procedures beyond inquiring of management to evaluate the reasonableness of certain significant assumptions developed by the company's specialist or by the issuer. (AS 1105.A8b; AS 2501.16)

During the year the issuer acquired a business and engaged a specialist to assist it in determining the fair values of an acquired intangible asset and the consideration transferred using various significant assumptions. The firm's approach for substantively testing the fair values of the acquired intangible asset and the consideration transferred was to test the issuer's process. The following deficiencies were identified: · With respect to the intangible asset the firm used an auditor-employed specialist to evaluate a significant assumption developed by the issuer. The firm did not identify that the auditor-employed specialist did not perform procedures beyond inquiring of management to evaluate the reasonableness of this assumption. (AS 1201.C6 and .C7; AS 2501.16)

During the year the issuer acquired a business and engaged a specialist to assist it in determining the fair values of an acquired intangible asset and the consideration transferred using various significant assumptions. The firm's approach for substantively testing the fair values of the acquired intangible asset and the consideration transferred was to test the issuer's process. The following deficiencies were identified: · With respect to the intangible asset the firm used an auditor-employed specialist to evaluate a significant assumption developed by the issuer. The firm did not perform procedures beyond inquiring of management to evaluate the reasonableness of another significant assumption developed by the issuer. (AS 2501.16)

The firm did not identify and evaluate the issuer's omission of certain disclosures required under FASB ASC Topic 805 Business Combinations and FASB ASC Topic 820 related to certain assets acquired. (AS 2810.30 and .31)

The issuer used multiple service organizations to host and/or maintain IT systems that the issuer used to initiate process and/or record transactions related to various types of revenue at five other business units. The firm obtained the service auditor's reports for these service organizations and identified certain complementary user controls that the service auditor's reports described as necessary. The following deficiencies were identified: · The firm identified control deficiencies related to several complementary user controls that consisted of the issuer's (1) granting and removal of access to these IT systems and/or (2) monitoring of computer operations. The firm did not evaluate the effect of these deficiencies on the issuer's ability to meet control objectives stated in the service auditor's reports. (AS 2201.62 and .B22)

The firm did not identify and evaluate the issuer's omission of a disclosure required under FASB ASC Topic 250 Accounting Changes and Error Corrections related to a change in estimate. (AS 2810.30 and .31)

The issuer acquired multiple businesses which included acquiring intangible assets. In addition during the year events or changes in circumstances existed indicating that the carrying value of these acquired intangible assets may not be recoverable. The issuer engaged a specialist to assist it in (1) determining the initial fair values of these acquired intangible assets and the provision for contingent consideration to be paid to the sellers and (2) performing an assessment of these acquired intangible assets for impairment. The following deficiencies were identified as of the acquisition date and/or at year end: · The firm used an auditor-employed specialist to evaluate certain significant assumptions developed by the company's specialist and used in the measurement or assessment of these acquired intangible assets. The firm did not identify that the auditor-employed specialist did not perform any procedures beyond inquiring of management to evaluate these assumptions. (AS 1105.A8b; AS 1201.C6 and .C7)

The issuer acquired multiple businesses which included acquiring intangible assets. In addition during the year events or changes in circumstances existed indicating that the carrying value of these acquired intangible assets may not be recoverable. The issuer engaged a specialist to assist it in (1) determining the initial fair values of these acquired intangible assets and the provision for contingent consideration to be paid to the sellers and (2) performing an assessment of these acquired intangible assets for impairment. The following deficiencies were identified as of the acquisition date and/or at year end: · The firm did not sufficiently evaluate the reasonableness of certain other significant assumptions developed by the issuer and used in the measurement or assessment of these acquired intangible assets because the firm did not evaluate the relevance and reliability of external information it used. (AS 1105.04 and .06)

The issuer acquired multiple businesses which included acquiring intangible assets. In addition during the year events or changes in circumstances existed indicating that the carrying value of these acquired intangible assets may not be recoverable. The issuer engaged a specialist to assist it in (1) determining the initial fair values of these acquired intangible assets and the provision for contingent consideration to be paid to the sellers and (2) performing an assessment of these acquired intangible assets for impairment. The following deficiencies were identified as of the acquisition date and/or at year end: · The firm did not perform any procedures to evaluate the relevance and reliability of certain of this information used by the company's specialist in determining the fair value of the contingent consideration. (AS 1105.A8a)

The issuer acquired multiple businesses which included acquiring intangible assets. In addition during the year events or changes in circumstances existed indicating that the carrying value of these acquired intangible assets may not be recoverable. The issuer engaged a specialist to assist it in (1) determining the initial fair values of these acquired intangible assets and the provision for contingent consideration to be paid to the sellers and (2) performing an assessment of these acquired intangible assets for impairment. The following deficiencies were identified as of the acquisition date and/or at year end: · The firm did not sufficiently evaluate the reasonableness of certain other significant assumptions developed by the issuer and used in the measurement or assessment of these acquired intangible assets because it did not (1) evaluate a significant difference between one of these assumptions and the issuer's experience or (2) take into account the issuer's intent and ability to carry out certain of these assumptions. (AS 2501.16 and .17)

For these business combinations the firm did not identify and evaluate the issuer's omission of certain required disclosures related to contingent considerations. (AS 2810.30 and .31)

Certain of the issuer's revenue arrangements included multiple performance obligations. The issuer allocated the total transaction price for each of these arrangements to the separate performance obligations based on the relative standalone selling prices. The firm selected a sample of these arrangements for testing. The following deficiencies were identified: · The firm did not perform any substantive procedures to evaluate whether the issuer's identification of performance obligations was in conformity with FASB ASC Topic 606. (AS 2301.08 and .13)

Certain of the issuer's revenue arrangements included multiple performance obligations. The issuer allocated the total transaction price for each of these arrangements to the separate performance obligations based on the relative standalone selling prices. The firm selected a sample of these arrangements for testing. The following deficiencies were identified: · The firm did not perform any substantive procedures to test whether the allocation of the transaction prices was based on standalone selling prices. (AS 2301.08)

Certain of the issuer's revenue arrangements included multiple performance obligations. The issuer allocated the total transaction price for each of these arrangements to the separate performance obligations based on the relative standalone selling prices. The firm selected a sample of these arrangements for testing. The following deficiencies were identified: · For certain of the arrangements selected for testing the firm did not perform any procedures to test whether certain performance obligations had been satisfied before revenue was recognized. (AS 2301.08 and .13)

For certain inventory the firm's approach for substantively testing the reserve for excess and obsolete inventory was to test the issuer's process. The following deficiencies were identified: · The firm did not sufficiently evaluate whether the method used by the issuer to develop the reserve was appropriate because it did not evaluate whether the issuer's reserve took into account the issuer's forecasted sales. (AS 2501.10)

The issuer used multiple service organizations to host and/or maintain IT systems that the issuer used to initiate process and/or record transactions related to various types of revenue at five other business units. The firm obtained the service auditor's reports for these service organizations and identified certain complementary user controls that the service auditor's reports described as necessary. The following deficiencies were identified: · The firm did not perform any procedures to evaluate whether the issuer had implemented certain of these controls. (AS 2201.39 and .B22)

For certain inventory the firm's approach for substantively testing the reserve for excess and obsolete inventory was to test the issuer's process. The following deficiencies were identified: · The firm did not sufficiently evaluate the reasonableness of certain significant assumptions used by the issuer to estimate the reserve for excess and obsolete inventory because its procedures were limited to inquiry of management and performing a sensitivity analysis that indicated that if certain alternative assumptions were used the reserve would change by a significant amount. (AS 2501.16)

For certain inventory the firm's approach for substantively testing the reserve for excess and obsolete inventory was to test the issuer's process. The following deficiencies were identified: · The firm did not perform any procedures to test or test controls over the accuracy and completeness of an issuer-produced report the firm used in its substantive testing of the reserve for excess and obsolete inventory. (AS 1105.10)

For certain other inventory the firm did not perform sufficient substantive procedures to test whether this inventory was recorded at the lower of cost or net realizable value because its procedures were limited to a year over year comparison of product-level gross margins. (AS 2301.08 and .11)

The issuer engaged a valuation specialist to assist in determining the fair value of this derivative asset. The firm's approach for substantively testing the fair value of this derivative asset was to develop an independent expectation using certain assumptions developed by the issuer or the company's specialist. The following deficiencies were identified: · The firm did not sufficiently evaluate the reasonableness of a significant assumption developed by the issuer because the firm did not take into account management's written plans that indicated the issuer may not have the intent and ability to carry out the assumption. (AS 2501.16 and .17)

The issuer engaged a valuation specialist to assist in determining the fair value of this derivative asset. The firm's approach for substantively testing the fair value of this derivative asset was to develop an independent expectation using certain assumptions developed by the issuer or the company's specialist. The following deficiencies were identified: · The firm used an auditor-employed specialist to evaluate the reasonableness of a significant assumption developed by the company's specialist. The firm did not identify that the work of the auditor-employed specialist did not provide sufficient appropriate audit evidence because it did not (1) perform procedures to evaluate the reasonableness of a significant assumption developed by the company's specialist and (2) evaluate the relevance and reliability of information from external sources the company's specialist used to develop this assumption. (AS 1105.A8a and .A8b; AS 1201.C6 and .C7)

During the year the issuer identified events indicating that the carrying value of its long-lived assets may not be recoverable. The issuer performed an impairment analysis using forecasted cash flows that it developed using various assumptions. The following deficiencies were identified: · The firm did not perform any procedures to evaluate the reasonableness of certain significant assumptions. (AS 2501.16)

During the year the issuer identified events indicating that the carrying value of its long-lived assets may not be recoverable. The issuer performed an impairment analysis using forecasted cash flows that it developed using various assumptions. The following deficiencies were identified: · The firm did not perform procedures to evaluate the reasonableness of another significant assumption beyond reviewing the effect that certain external events would have on the assumption. (AS 2501.16)

During the year the issuer identified events indicating that the carrying value of its long-lived assets may not be recoverable. The issuer performed an impairment analysis using forecasted cash flows that it developed using various assumptions. The following deficiencies were identified: · The firm did not perform sufficient procedures to evaluate whether the method used by the issuer to develop its impairment analysis was in conformity with the requirements of FASB ASC Topic 360 because it did not evaluate whether certain assets were (1) assets under development at the time of the impairment analysis and as a result the issuer should have included the carrying value of these assets in its impairment analysis or (2) capital expenditures that would increase the service potential of the long-lived asset group and as a result the issuer should have excluded the cash flows associated with these assets in its impairment analysis. (AS 2501.10)

The firm did not perform any procedures to test or test controls over the accuracy and/or completeness of issuer-produced reports that the firm used in its substantive testing of certain deferred revenue certain commissions expense and certain accrued commissions. (AS 1105.10)

The firm's substantive procedures to test commissions expense included substantive analytical procedures. The firm did not develop expectations at a level of precision that provided the desired level of assurance that differences that could be potential material misstatements individually or in the aggregate would be identified for investigation. (AS 2305.17)

The issuer used multiple service organizations to host and/or maintain IT systems that the issuer used to initiate process and/or record transactions related to various types of revenue at five other business units. The firm obtained the service auditor's reports for these service organizations and identified certain complementary user controls that the service auditor's reports described as necessary. The following deficiencies were identified: · The firm did not identify that certain of these controls were not designed to satisfy the control objectives described in certain of the service auditor's reports. (AS 2201.42 and .B22)

The issuer recorded certain revenue based on data in an electronic environment that were tracked and provided by two service organizations. The firm used information produced by these service organizations in its substantive testing of this revenue but did not test or test any controls over the accuracy and completeness of this information. (AS 2301.08 and .13)

During the year the issuer acquired a business and determined the fair value of a liability assumed in connection with the acquisition using various significant assumptions. The following deficiencies were identified: · The firm did not sufficiently evaluate the reasonableness of a significant assumption because it did not (1) take into account the issuer's intent and ability to carry out this assumption and (2) evaluate a significant difference between this assumption and the issuer's recent experience. (AS 2501.16 and .17)

During the year the issuer acquired a business and determined the fair value of a liability assumed in connection with the acquisition using various significant assumptions. The following deficiencies were identified: · The firm did not perform any procedures to evaluate the reasonableness of another significant assumption. (AS 2501.16)

During the year the issuer acquired a business and engaged specialists to determine the fair values of certain acquired assets using various significant assumptions. The following deficiencies were identified: · The firm selected for testing controls that consisted of the issuer's reviews of the recognition and fair values of acquired assets including the assumptions used. The firm did not evaluate the specific review procedures that the control owners performed to assess (1) the reasonableness of certain assumptions (2) the fair value of acquired inventory and (3) whether all identifiable intangible assets were recognized. (AS 2201.42 and .44)

During the year the issuer acquired a business and engaged specialists to determine the fair values of certain acquired assets using various significant assumptions. The following deficiencies were identified: · The firm did not perform any substantive procedures to test the fair value of acquired inventory. (AS 2501.07)

During the year the issuer acquired a business and engaged specialists to determine the fair values of certain acquired assets using various significant assumptions. The following deficiencies were identified: · The firm used certain issuer-produced reports in its substantive testing of the existence of acquired inventory but did not perform procedures to test or test controls over the accuracy and completeness of these reports. (AS 1105.10)

During the year the issuer acquired a business and engaged specialists to determine the fair values of certain acquired assets using various significant assumptions. The following deficiencies were identified: · The firm's approach for substantively testing the fair value of an acquired intangible asset was to test the issuer's process and the firm used an auditor-employed specialist to evaluate a significant assumption developed by one of the company's specialists. The firm did not identify that the work of the auditor-employed specialist did not provide sufficient appropriate audit evidence because the auditor-employed specialist did not evaluate the relevance and reliability of external information it used in evaluating the reasonableness of this assumption. (AS 1105.04 and .06; AS 1201.C6 and .C7)

During the year the issuer acquired a business and engaged specialists to determine the fair values of certain acquired assets using various significant assumptions. The following deficiencies were identified: · The sample size the firm used in its substantive procedures to test the fair values of certain other acquired assets was too small to provide sufficient appropriate audit evidence because in determining the sample size the firm did not take into account the tolerable misstatement for the population. (AS 2315.16 .23 and .23A)

The firm did not evaluate whether a separately identifiable intangible asset should have been recorded related to certain rights held by the acquired business. (AS 2301.08)

For three types of revenue the firm selected a sample of revenue transactions for testing. The following deficiencies were identified: · For two of these types of revenue the firm did not test whether revenue was recognized according to the contractual terms for certain of the transactions selected for testing. (AS 2301.08 and .13)

The issuer used multiple service organizations to host and/or maintain IT systems that the issuer used to initiate process and/or record transactions related to various types of revenue at five other business units. The firm obtained the service auditor's reports for these service organizations and identified certain complementary user controls that the service auditor's reports described as necessary. The following deficiencies were identified: · The firm did not perform sufficient procedures to test the accuracy and completeness of certain reports produced by the service organizations that the firm used in its substantive testing. (AS 2301.08)

For three types of revenue the firm selected a sample of revenue transactions for testing. The following deficiencies were identified: · For two of these types of revenue the firm did not perform any procedures to test or test controls over the accuracy and completeness of issuer-prepared reports that the firm used in its substantive testing. (AS 1105.10)

For three types of revenue the firm selected a sample of revenue transactions for testing. The following deficiencies were identified: · For one of these types of revenue the firm did not perform any substantive procedures to test whether certain performance obligations had been satisfied before revenue was recognized. (AS 2301.08 and .13)

The firm did not identify and evaluate the issuer's omission of and a misstatement in certain disclosures required under FASB ASC Topic 606. (AS 2810.30 and .31)