Explorer

The firm did not perform any procedures to test or test controls over the accuracy and completeness of certain information produced by the issuer that the firm used in its testing of the net realizable value of certain other inventory. (AS 1105.10)

The issuer recorded revenue net of customer discounts returns rebates and other deductions. The firm did not perform any substantive procedures to test these revenue deductions. (AS 2301.08 and .13)

For one type of revenue the firm did not perform any substantive procedures to test whether 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 certain disclosures required under FASB ASC Topic 606. (AS 2810.30 and .31)

The firm performed independent test counts of inventory after year end. The following deficiencies were identified: · The firm did not compare the inventory listing it used to perform its substantive procedures to the recorded balance. (AS 2301.08)

During the year the issuer entered into a merger agreement which included provisions for contingent payments to the sellers upon the satisfaction of certain criteria. The following deficiencies were identified: · The firm's approach to substantively test the fair value of one of these provisions consisted of developing an independent expectation using an auditor-employed specialist. The firm did not identify that the auditor-employed specialist did not perform procedures to demonstrate it had a reasonable basis for a significant assumption it developed. (AS 1201.C6 and .C7; AS 2501.22)

During the year the issuer entered into a merger agreement which included provisions for contingent payments to the sellers upon the satisfaction of certain criteria. The following deficiencies were identified: · The firm did not perform any other procedures to evaluate the issuer's accounting for and presentation and disclosure of this provision. (AS 2301.08 and .11)

During the year the issuer entered into a merger agreement which included provisions for contingent payments to the sellers upon the satisfaction of certain criteria. The following deficiencies were identified: · For another provision the firm did not identify and evaluate the issuer's omission of certain disclosures required under FASB ASC Topic 718 Compensation—Stock Compensation related to the nature and terms of the provision and the potential effects of the provision on shareholders. (AS 2810.30 and .31)

The issuer recognized revenue from certain arrangements as single performance obligations satisfied at a point in time. The firm selected a sample of these revenue transactions for testing. The following deficiencies were identified: · The firm did not perform sufficient procedures to evaluate whether the issuer recognized revenue in conformity with FASB ASC Topic 606 Revenue from Contracts with Customers because it did not evaluate (1) the issuer's identification of the customers in these arrangements and (2) whether the issuer was acting as a principal or as an agent. (AS 2301.08 and .13)

The issuer recognized revenue from certain arrangements as single performance obligations satisfied at a point in time. The firm selected a sample of these revenue transactions for testing. The following deficiencies were identified: · The firm did not perform procedures to test whether the performance obligations had been satisfied before revenue was recognized beyond comparing the transactions selected for testing to an issuer-produced report. (AS 2301.08 and .13)

The firm did not sufficiently evaluate whether the issuer's accounting for certain other transactions as revenue was appropriate because it did not evaluate whether one or more of the scope exceptions under FASB ASC Topic 606 were applicable. (AS 2301.08 and .13)

The issuer engaged a specialist to perform an assessment of its goodwill for possible impairment. The firm's approach to substantively test the issuer's goodwill impairment assessment consisted of developing an independent expectation of the fair value of the issuer's single reporting unit as a range using an auditor-employed specialist. The following deficiencies were identified: · The firm did not evaluate whether the auditor-employed specialist's independent expectation of the fair value as a range encompassed only reasonable outcomes and was supported by sufficient appropriate audit evidence. (AS 1201.C6 and .C7; AS 2501.25)

The issuer engaged a specialist to perform an assessment of its goodwill for possible impairment. The firm's approach to substantively test the issuer's goodwill impairment assessment consisted of developing an independent expectation of the fair value of the issuer's single reporting unit as a range using an auditor-employed specialist. The following deficiencies were identified: · The firm did not identify that the auditor-employed specialist did not perform procedures to evaluate the relevance of data from external sources it used to develop the independent expectation as a range. (AS 1105.04 and .06; AS 1201.C6 and .C7)

The issuer engaged a specialist to perform an assessment of an intangible asset for possible impairment. The firm's approach to substantively test this assessment was to test the issuer's process with the assistance of an auditor-employed specialist. The firm did not identify that the auditor-employed specialist did not perform procedures to evaluate the reasonableness of a significant assumption developed by the company's specialist. (AS 1105.A8b; AS 1201.C6 and .C7)

The issuer recorded a partial valuation allowance against its recorded deferred tax assets based on forecasted taxable income which included significant assumptions developed by the issuer that were also used in the issuer's intangible asset impairment assessment discussed above. The firm did not sufficiently evaluate the reasonableness of these significant assumptions including taking into account the issuer's intent and ability to carry out these assumptions because its procedures were limited to inquiring of management and comparing these assumptions to historical financial information and written plans. Further the firm did not evaluate certain significant differences between the issuer's historical experience and these assumptions. (AS 2501.16 and .17)

The firm performed independent test counts of inventory after year end. The following deficiencies were identified: · The firm did not apply tests of intervening transactions in inventory between year end and the date of its test counts. (AS 2510.12)

The firm did not perform procedures to test the issuer's income tax provision and deferred tax accounts because its procedures were limited to inquiring of management and comparing forecasted taxable income to historical financial information and written plans. (AS 2301.08)

The issuer recorded certain revenue based on transactions that occurred on applications maintained by external parties. The following deficiencies were identified: · For two types of revenue the firm did not perform substantive procedures to evaluate whether the performance obligations had been satisfied before revenue was recognized. (AS 2301.08 and .13)

The issuer recorded certain revenue based on transactions that occurred on applications maintained by external parties. The following deficiencies were identified: · To test a third type of revenue the firm sent positive confirmation requests to the external parties that maintained the applications. The firm's confirmation procedures were not sufficient because the firm did not consider whether the external parties would have the information necessary to confirm that the issuer's performance obligations had been satisfied. (AS 2310.26)

The issuer recorded certain revenue based on transactions that occurred on applications maintained by external parties. The following deficiencies were identified: · To test a third type of revenue the firm sent positive confirmation requests to the external parties that maintained the applications. For the items for which the requested confirmations were not returned the firm did not perform alternative procedures that provided sufficient appropriate audit evidence that the recorded amounts of revenue were accurate as of the confirmation date. (AS 2310.31)

The issuer engaged a specialist to perform assessments of goodwill and intangible assets for possible impairment using various significant assumptions including assumptions related to forecasted cash flows. The firm's approach to evaluate these impairment assessments was to test the issuer's process and the firm used an auditor-employed specialist to evaluate certain significant assumptions the company's specialist used. The following deficiencies were identified: · The firm did not perform procedures to test or test controls over the accuracy and completeness of (1) historical financial information the firm used in evaluating the reasonableness of the significant assumptions related to forecasted cash flows and (2) the carrying value of certain asset groups. (AS 1105.10)

The issuer engaged a specialist to perform assessments of goodwill and intangible assets for possible impairment using various significant assumptions including assumptions related to forecasted cash flows. The firm's approach to evaluate these impairment assessments was to test the issuer's process and the firm used an auditor-employed specialist to evaluate certain significant assumptions the company's specialist used. The following deficiencies were identified: · For the assessments of intangible assets and goodwill the firm did not (1) perform any procedures to evaluate the reasonableness of a significant assumption developed by the company's specialist or (2) identify that the auditor-employed specialist did not perform procedures to evaluate the reasonableness of a component of another significant assumption developed by the company's specialist. (AS 1105.A8b; AS 1201.C6 and .C7)

The issuer engaged a specialist to perform assessments of goodwill and intangible assets for possible impairment using various significant assumptions including assumptions related to forecasted cash flows. The firm's approach to evaluate these impairment assessments was to test the issuer's process and the firm used an auditor-employed specialist to evaluate certain significant assumptions the company's specialist used. The following deficiencies were identified: · For the assessments of intangible assets and goodwill for one reporting unit the firm did not sufficiently evaluate the reasonableness of significant assumptions developed by the issuer related to forecasted cash flows because its procedures were limited to (1) comparing the assumptions for one forecasted period to historical experience and (2) reviewing new revenue contracts that represented a small percentage of forecasted revenue. (AS 2501.16)

The issuer engaged a specialist to perform assessments of goodwill and intangible assets for possible impairment using various significant assumptions including assumptions related to forecasted cash flows. The firm's approach to evaluate these impairment assessments was to test the issuer's process and the firm used an auditor-employed specialist to evaluate certain significant assumptions the company's specialist used. The following deficiencies were identified: · For the assessments of certain intangible assets and goodwill for another reporting unit the firm did not evaluate the relevance and reliability of certain industry information it used in evaluating the reasonableness of the significant assumptions related to forecasted cash flows. (AS 1105.04 and .06)

During the year the issuer disposed of two business units. The firm did not perform sufficient procedures to evaluate whether these business units should have been reported as discontinued operations in conformity with FASB ASC Topic 205 Presentation of Financial Statements because it did not consider certain information in evaluating whether the discontinued operations represented a strategic shift. (AS 2301.08)

The issuer used multiple service organizations to host and/or maintain an information-technology (IT) system that the issuer used to initiate process and record transactions related to revenue and related accounts inventory and long-lived assets at certain business units. In its testing of controls over these accounts the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by this IT system. As a result of the deficiencies in the firm's testing of IT general controls (ITGCs) discussed below the firm's testing of these automated and IT-dependent manual controls was not sufficient. (AS 2201.46)

The firm's substantive procedures to test the unit cost of inventory consisted of (1) selecting a sample of raw materials for testing and (2) testing the issuer's process for allocating labor and overhead costs to inventory. The following deficiencies were identified: · The firm did not perform sufficient procedures to test the raw materials cost because its procedures were limited to comparing the recorded cost to supporting documentation for the most recent purchase. (AS 2301.08)

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. These service organizations used sub-service organizations for certain functions. The following deficiencies were identified: · The firm selected for testing complementary user controls over the issuer's granting and monitoring of user access to this system but did not evaluate the specific review procedures that the control owners performed to determine whether to grant access to users or whether access that had been previously approved continued to be appropriate. (AS 2201.42 .44 and .B22)

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. These service organizations used sub-service organizations for certain functions. The following deficiencies were identified: · The firm selected for testing a complementary user control over change management. The firm did not perform sufficient procedures to test or test controls over the completeness of the population of changes that the firm used in its testing of this control because it did not evaluate whether the system was configured to track all changes made to the production environment. (AS 1105.10)

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. These service organizations used sub-service organizations for certain functions. The following deficiencies were identified: · The firm did not perform procedures beyond inquiry to evaluate whether the issuer had implemented certain other complementary user controls. (AS 2201.39 and .B22)

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. These service organizations used sub-service organizations for certain functions. The following deficiencies were identified: · The firm did not obtain an understanding of or test any relevant controls at certain sub-service organizations. (AS 2201.39 and .B19)

For revenue at three business units which was affected by the ITGC audit deficiencies discussed above the firm selected for testing various controls that addressed the recognition of revenue when performance obligations were satisfied. The firm did not identify and test any controls over the accuracy and completeness of certain information used in the operation of these controls. (AS 2201.39)

For inventory at two business units which was affected by the ITGC audit deficiencies discussed above the following additional deficiencies were identified: · The firm selected for testing controls that consisted of the issuer's performance of physical inventory counts. The firm did not test the aspects of these controls that addressed whether an accurate and complete count had occurred. (AS 2201.42 and .44)

For inventory at two business units which was affected by the ITGC audit deficiencies discussed above the following additional deficiencies were identified: · The firm did not perform any procedures to evaluate the issuer's classification of certain items as inventory. (AS 2301.08)

For long-lived assets at one business unit which was affected by the ITGC audit deficiencies discussed above the following additional deficiencies were identified: · The firm did not identify and test any controls related to the issuer's evaluation of long-lived assets for possible impairment. (AS 2201.39)

For long-lived assets at one business unit which was affected by the ITGC audit deficiencies discussed above the following additional deficiencies were identified: · The firm did not perform any substantive procedures to test long-lived assets for possible impairment. (AS 2301.08)

The issuer recognized revenue from certain contracts related to the development and sale of real estate. In conjunction with these contracts the issuer received deposits from customers that were recorded as deferred revenue. The following deficiencies were identified: · The firm did not identify and evaluate the issuer's omission of certain disclosures required under FASB ASC Topic 606 related to unsatisfied (or partially unsatisfied) performance obligations and when the issuer expects to recognize this revenue. (AS 2810.30 and .31)

The firm's substantive procedures to test the unit cost of inventory consisted of (1) selecting a sample of raw materials for testing and (2) testing the issuer's process for allocating labor and overhead costs to inventory. The following deficiencies were identified: · The firm did not perform procedures to test or test controls over the accuracy and completeness of certain issuer-produced information that it used in its testing of the allocated labor and overhead costs. (AS 1105.10)

The issuer recognized revenue from certain contracts related to the development and sale of real estate. In conjunction with these contracts the issuer received deposits from customers that were recorded as deferred revenue. The following deficiencies were identified: · The firm did not evaluate the appropriateness of the issuer's classification of deferred revenue associated with these contracts as a current liability. (AS 2301.08)

During the year the issuer recorded a credit loss associated with amounts owed by a related party. The firm did not evaluate whether the business purpose (or the 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 this transaction. (AS 2401.67; AS 2410.11)

The firm did not perform any substantive procedures to test certain long-lived assets for possible impairment. (AS 2301.08)

During the year the issuer acquired multiple businesses and engaged specialists to determine the fair values of certain acquired assets using various assumptions. For these business combinations the firm's approach to substantively test the fair values of certain of these acquired assets consisted of (1) testing the issuer's process and (2) developing independent expectations of the fair values as a range and the firm used an auditor-employed specialist in each approach. The following deficiencies were identified: · In testing the issuer's process the firm did not identify that the auditor-employed specialist did not perform procedures to evaluate the reasonableness of certain significant assumptions developed by the company's specialists. (AS 1105.A8b; AS 1201.C6 and .C7)

During the year the issuer acquired multiple businesses and engaged specialists to determine the fair values of certain acquired assets using various assumptions. For these business combinations the firm's approach to substantively test the fair values of certain of these acquired assets consisted of (1) testing the issuer's process and (2) developing independent expectations of the fair values as a range and the firm used an auditor-employed specialist in each approach. The following deficiencies were identified: · In testing the issuer's process the firm did not perform procedures to test the accuracy of certain issuer-produced data that the company's specialists used to develop the fair values of these assets. (AS 1105.A8a)

During the year the issuer acquired multiple businesses and engaged specialists to determine the fair values of certain acquired assets using various assumptions. For these business combinations the firm's approach to substantively test the fair values of certain of these acquired assets consisted of (1) testing the issuer's process and (2) developing independent expectations of the fair values as a range and the firm used an auditor-employed specialist in each approach. The following deficiencies were identified: · In developing its independent expectations the firm did not identify that the work of the auditor-employed specialist did not provide sufficient appropriate audit evidence because it did not evaluate whether the independent expectations of the fair values as a range encompassed only reasonable outcomes and were supported by sufficient appropriate audit evidence. (AS 1201.C6 and .C7; AS 2501.25)

During the year the issuer acquired multiple businesses and engaged specialists to determine the fair values of certain acquired assets using various assumptions. For these business combinations the firm's approach to substantively test the fair values of certain of these acquired assets consisted of (1) testing the issuer's process and (2) developing independent expectations of the fair values as a range and the firm used an auditor-employed specialist in each approach. The following deficiencies were identified: · In developing its independent expectations the firm did not identify that the auditor-employed specialist did not evaluate the relevance and reliability of certain external data that it used to develop its independent expectations. (AS 1105.04 and .06; AS 1201.C6 and .C7)

For one of these business combinations the firm's approach to substantively test the fair values of certain other acquired intangible assets consisted of testing the issuer's process and the firm used an auditor-employed specialist to evaluate certain significant assumptions that the company's specialists used. The following deficiencies were identified: · The firm did not identify that the auditor-employed specialist did not sufficiently evaluate the reasonableness of a significant assumption developed by the company's specialist because the auditor-employed specialist did not perform any procedures to evaluate the reasonableness of a component of this assumption. (AS 1105.A8b; AS 1201.C6 and .C7)

For one of these business combinations the firm's approach to substantively test the fair values of certain other acquired intangible assets consisted of testing the issuer's process and the firm used an auditor-employed specialist to evaluate certain significant assumptions that the company's specialists used. The following deficiencies were identified: · The firm did not identify that the auditor-employed specialist did not evaluate the relevance and reliability of (1) external data that the company's specialist used to develop a significant assumption and (2) other external data that the auditor-employed specialist used to evaluate the reasonableness of other significant assumptions. (AS 1105.04 .06 and .A8a; AS 1201.C6 and .C7)

For one of these business combinations the firm's approach to substantively test the fair values of certain other acquired intangible assets consisted of testing the issuer's process and the firm used an auditor-employed specialist to evaluate certain significant assumptions that the company's specialists used. The following deficiencies were identified: · The firm did not evaluate the reliability of certain other information that the firm used to evaluate the reasonableness of certain significant assumptions developed by the issuer. (AS 1105.04 and .06)

The firm's substantive procedures to test the unit cost of inventory consisted of (1) selecting a sample of raw materials for testing and (2) testing the issuer's process for allocating labor and overhead costs to inventory. The following deficiencies were identified: · The firm did not perform procedures beyond inquiring of management to evaluate the reasonableness of certain significant assumptions used by the issuer to allocate overhead costs. (AS 2501.16)

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