Explorer

The firm did not evaluate whether the issuer complied with certain aspects of GAAP in recording the balances within the significant account. (AS 2301.08 and .11)

During the current and prior years the issuer granted stock options that vested based on a calculation. The firm did not perform any procedures to test the calculation that the issuer used to record stock-based compensation expense related to stock options that vested during the year. (AS 2301.08)

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

The firm did not perform substantive procedures to test the debt beyond recalculating the balance based on an agreement that specified that the balance was past due. (AS 2301.08)

The firm did not perform substantive procedures to test certain expenses beyond comparing the amounts to bank statements. (AS 2301.08)

The firm did not perform any procedures to evaluate whether the issuer appropriately accounted for certain expenses. (AS 2301.08)

For the remaining types of expenses the firm selected items for testing from all types of expenses except for one. The following deficiencies were identified: · The firm did not perform substantive procedures to test certain selected expenses beyond comparing the amounts to a bank statement. (AS 2301.08)

For the remaining types of expenses the firm selected items for testing from all types of expenses except for one. The following deficiencies were identified: · The firm did not perform any procedures to evaluate whether the issuer appropriately accounted for certain of the selected expenses. (AS 2301.08)

For the remaining types of expenses the firm selected items for testing from all types of expenses except for one. The following deficiencies were identified: · The firm did not perform any substantive procedures to test the one type of expense for which it did not select any items for testing. (AS 2301.08)

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

The firm did not establish a materiality level for the financial statements as a whole and determine the related amount of tolerable misstatement. (AS 2105.06 and .08)

The firm did not perform any procedures to evaluate the relevance and reliability of external information it used to test certain balances in the significant account. (AS 1105.04 and .06)

The issuer recorded the issuance of common stock in exchange for services rendered. The firm did not sufficiently evaluate whether the issuer's use of the share price on the date of issuance to measure stock-based compensation was in conformity with FASB ASC Topic 718 Compensation - Stock Compensation because it did not evaluate whether there was an active market for the issuer's shares. (AS 2301.08)

The issuer reported certain assets and performed an evaluation of whether the assets were impaired. The following deficiencies were identified: · The firm did not perform any procedures to establish whether the issuer had control of the assets. (AS 2301.08)

The issuer reported certain assets and performed an evaluation of whether the assets were impaired. The following deficiencies were identified: · The firm did not perform any procedures to test the reliability of external information it used to test these assets. (AS 1105.04 and .06)

The issuer reported certain assets and performed an evaluation of whether the assets were impaired. The following deficiencies were identified: · The firm did not perform procedures to test the issuer's impairment analysis beyond testing its clerical accuracy. (AS 2501.07)

The issuer reported certain other assets. The following deficiencies were identified: · The firm did not perform any procedures to test the recoverability of these assets. (AS 2501.07)

The issuer reported certain other assets. The following deficiencies were identified: · The firm did not perform any procedures to evaluate the presentation of these assets. (AS 2301.08)

The issuer reported certain other assets. The following deficiencies were identified: · The firm did not perform any procedures to test certain disclosures related to these assets. (AS 2301.08)

During the year the issuer issued equity instruments. The firm did not perform procedures to test certain of these issuances beyond comparing the number of shares to the purchase agreements. (AS 2301.08)

The firm's internal inspection program inspected this audit and reviewed this area but did not identify the deficiencies below. The firm did not evaluate the reasonableness of certain significant assumptions used by the issuer to develop the qualitative component of the allowance for loan losses. (AS 2501.16)

During the year the issuer acquired certain businesses and used an external specialist to determine the fair value of acquired intangible assets. The firm selected for testing three controls that consisted of reviews over (1) management's assumptions used by the external specialist (2) the valuation reports prepared by the external specialist and (3) acquisition accounting memoranda. 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 approach for testing the fair value of acquired intangible assets was to review and test management's process. The firm did not sufficiently evaluate the reasonableness of certain significant assumptions and issuer-developed projected revenue provided to the external specialist and used in the valuation of the acquired intangible assets because its procedures were limited to inquiry of management reading the issuer-prepared acquisition accounting memoranda and comparing projected revenue to current year results without performing procedures to evaluate whether the issuer's current year results would be representative of the issuer's projected revenue. (AS 1210.12; AS 2502.26 .28 and .31)

The issuer recorded a reserve for excess and obsolete inventory. The firm did not evaluate the reasonableness of the reserve percentages and product lives used in the issuer's determination of the portion of the reserve for excess inventory. Further the firm did not evaluate the appropriateness of fully reserving for certain items at the end of their assumed product lives when those items continued to be sold during the year. (AS 2501.11; AS 2810.03)

With respect to the portion of the reserve for obsolete inventory the firm did not evaluate the reasonableness of the issuer's policy to fully reserve for items with no sales in the past 24 months. Further the firm did not evaluate the effect of fully reserved items that were sold during the year on that policy. (AS 2501.11; AS 2810.03)

During the year the issuer acquired a business and used an external specialist to determine the fair value of acquired intangible assets. The firm's approach for testing the fair values was to review and test management's process. The firm did not sufficiently evaluate the reasonableness of the issuer-developed projected revenue provided to the external specialist and used in the valuation of the acquired intangible assets because it limited its procedures to comparing the projected revenue to (1) the issuer's sales for two products and (2) revenue growth for a competitor without performing procedures to evaluate whether these results would be representative of the issuer's projected revenue. (AS 1210.12)

The firm selected for testing controls over inventory that consisted of (1) the performance of at least a certain number of counts per year for inventory at one location (2) annual testing of inventory at a second location at a point in time during the year and (3) inventory cycle counting that requires 100 percent coverage for inventory at the second location that began after the annual testing was completed. The firm did not test whether these controls were appropriately designed to ensure that the procedures over inventory quantities were sufficiently reliable to produce results substantially the same as those which would be obtained by a count of all items each year. (AS 2201.42 and .44)

The issuer recognized revenue from certain contracts primarily based on sales data. The firm selected controls over revenue for testing that included the use of sales data. The firm's work papers included an adjustment the issuer recorded to previously recognized revenue due to inaccurate sales data. In evaluating the design of the controls selected for testing the firm did not assess the effect of inaccurate sales data on whether the controls could effectively prevent or detect a material misstatement. (AS 2201.42)

The sample size the firm used in its substantive procedures to test revenue was too small to provide sufficient appropriate audit evidence because these procedures were designed based on a level of control reliance that was not supported due to the deficiencies in the firm's control testing discussed above. (AS 2301.16 .18 and .37; AS 2315.19 .23 and .23A)

The issuer reported a reserve for excess and obsolete inventory. The firm selected for testing a control consisting of the issuer's review of the reserve for the inventory. The firm did not evaluate the specific review procedures that the control owners performed to evaluate the reasonableness of the assumptions used to determine the reserve for excess inventory. (AS 2201.42 and .44)

The issuer reported a reserve for excess and obsolete inventory. The firm selected for testing a control consisting of the issuer's review of the reserve for the inventory. The firm did not identify and test any controls over the accuracy and completeness of inventory items included in the obsolescence reserve. (AS 2201.39)

The firm's approach for substantively testing the excess and obsolete inventory reserve for certain inventory was to test the issuer's process used to develop the reserve. The firm did not evaluate whether the issuer had a reasonable basis for significant assumptions used to develop the reserve for excess inventory and whether those assumptions were consistent with historical or recent experience taking into account changes if any in conditions affecting the issuer. (AS 2501.16)

The firm's approach for substantively testing the excess and obsolete inventory reserve for certain inventory was to test the issuer's process used to develop the reserve. The firm did not perform substantive procedures to test or identify and test any controls over the accuracy and completeness of inventory items included in in the obsolescence reserve. (AS 1105.10)

The firm used certain participant data in its substantive testing of participant distributions. For a sample of participants selected for testing the firm did not sufficiently test the accuracy of certain of the data because it limited its procedures to comparing the data from one system to another system. (AS 1105.10)

The firm used certain participant data in its substantive testing of participant distributions. The firm did not test or in the alternative test any controls over the completeness of the system-generated reports used to make its selections for testing certain participant data. (AS 1105.10)

The firm used data from external sources in its substantive testing of certain revenue but did not perform any substantive procedures to evaluate whether this data was reliable. (AS 1105.04 and .06)

The firm selected revenue transactions for testing. The following deficiency was identified: · The firm did not perform any procedures to test or test any controls over the completeness of the listing from which revenue transactions were selected for testing. (AS 1105.10)

The firm selected revenue transactions for testing. The following deficiency was identified: · The firm did not perform procedures to evaluate whether (1) performance obligations were appropriately identified (2) the allocation of revenue between performance obligations was appropriate and (3) appropriate amounts were deferred. (AS 2301.08 and .13)

The firm did not sufficiently test the completeness of deferred revenue because the firm selected transactions for testing from items recorded as deferred revenue. (AS 2301.08 and .13)

The firm did not evaluate whether the accounting for inventory was in conformity with GAAP including whether capitalizable costs were allocated to ending inventory in conformity with FASB ASC Subtopic 330-10-30 Inventory — Overall — Initial Measurement. (AS 2301.08)

The firm did not perform any procedures beyond inquiry of management to test the existence of certain inventory held in offsite locations. (AS 2301.08)

The firm tested IT general controls ('ITGCs') for an application used to process transactions related to an income statement account and certain assets and identified deficiencies related to access and change management controls. The firm did not evaluate the severity of these deficiencies to determine whether these deficiencies individually or in combination with other deficiencies constituted a material weakness. (AS 2201.62)

The firm tested the design effectiveness of ITGCs for two applications used to process revenue transactions. The firm's substantive procedures to test certain revenue transactions consisted of testing the automated calculation for a sample of transactions. The sample sizes the firm used were too small to provide sufficient appropriate audit evidence because these procedures were designed based on a level of control reliance that was not supported because the firm did not test the operating effectiveness of ITGCs for the two applications discussed above. (AS 2301.16 .18 .21 and .37; AS 2315.19 .23 and .23A)

The firm did not test the accuracy and completeness of data included in certain reports used by the firm in its substantive procedures. (AS 1105.10)

The firm selected for testing a control over an income statement account that consisted of (1) the review of certain transactions in an application and (2) the automated generation of transaction documentation upon approval of those transactions. The firm did not test the transaction review attribute of the control. Further the firm did not sufficiently test the automated attribute of the control because it only tested one instance which was not appropriate due to the deficiencies in access and change management controls described above. (AS 2201.42 and .44)

The firm selected for testing a control over a component of this income statement account that consisted of the review of transaction documentation. The firm did not evaluate the 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 selected for testing a control over a certain asset that consisted of the automated calculation of the recorded value for two portions of this asset and relied on its testing of the control from prior years' audits. The firm did not support its reliance on testing performed in the prior years' audits because (1) of the deficiencies in access and change management controls described above and (2) it did not verify that the control had not changed since it was last tested. (AS 2201.42 .44 and .B29)

The firm selected for testing a control that consisted of management's review of the reserve over certain portions of this asset. The firm did not evaluate the 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 selected for testing a control that consisted of management's review of the reserve over certain portions of this asset. The firm did not identify and test any controls over the reserve for other portions of this asset. (AS 2201.39)

The firm did not test the recorded value for one portion of the asset. Further the firm did not test or (as discussed above) sufficiently test controls over the calculation of the recorded value for both portions of the asset. (AS 2301.08)