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Grant Thornton LLP
United States · Grant Thornton International Limited · Annually Inspected
- Inspection year
- 2018
- Report date
- 28-Apr-2020
- PCAOB release
- 104-2020-010a
- Audits reviewed
- 32
- Audits w/ Part I.A deficiencies
- 8
- Part I.A deficiency rate
- 25%
- Part I.A deficiencies
- 29
- Part I.B deficiencies
- 1
- Report
- View PDF ↗
Deficiencies (29)
Grouped by issuer and in the same order as the PCAOB report, so each item ties back directly to the source.
Issuer A7 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Accounts Receivable | The issuer recorded revenue net of estimated allowances for contractual adjustments. The firm selected for testing controls that consisted of the monthly review of (1) the reasonableness of the estimated allowances for contractual adjustments and (2) the comparison of net revenue to cash collections. The firm did not identify and test any controls over (1) the accuracy and completeness of a report used in the operation of one of these controls and (2) the accuracy and/or completeness of certain data that were used in the operation of both controls. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 2 | Accounts Receivable | The firm did not test the accuracy of the billing rates that the issuer used to determine the allowances for contractual adjustments. Further the firm did not sufficiently test the accuracy and completeness of the cash collection data the issuer used to determine the allowances because the firm limited its procedures to comparing the data to a system-generated report that it had not tested. (AS 2501.11) Both financial statement and ICFR audits | AS 2501.11 | |
| 3 | Accounts Receivable | The issuer reclassified credit balances in accounts receivable to accounts payable at year end. The firm did not identify and test any controls that addressed the risk that these credit balances may have resulted from errors in the allowances for contractual adjustments. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 4 | Accounts Receivable | The firm did not perform any substantive procedures to corroborate management's assertion that the credit balances discussed above represented amounts due to third parties rather than errors in the amounts recorded as allowances for contractual adjustments. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 | |
| 5 | Partnership Interests | During the year the issuer extinguished certain partnership interests through the issuance of new interests. The issuer reported these new interests at fair value which it determined to be equal to the redemption amounts of the extinguished interests. The following deficiencies were identified: · The firm selected for testing a control over the valuation of the new partnership interests that consisted of the review of the appropriateness of the accounting for new unusual or infrequent transactions. The firm did not test the aspect of this control that addressed the control owners' evaluation of the conclusion that the fair value of the new partnership interests was equal to the redemption amounts of the extinguished interests. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 6 | Partnership Interests | During the year the issuer extinguished certain partnership interests through the issuance of new interests. The issuer reported these new interests at fair value which it determined to be equal to the redemption amounts of the extinguished interests. The following deficiencies were identified: · The firm did not perform any substantive procedures to evaluate whether the fair value of the new partnership interests was equal to the redemption amounts of the extinguished interests. (AS 2810.30) Both financial statement and ICFR audits | AS 2810.30 | |
| 7 | Business Combinations | During the year the issuer completed multiple business combinations. The firm selected for testing a control that included a review of the data and assumptions used to value the acquired intangible assets but the firm did not test this aspect of the control for those business combinations for which the issuer had not yet received a final valuation report from an external valuation specialist as of year end. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 |
Issuer B4 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Accounts Receivable | The issuer entered into revenue arrangements with multiple elements including arrangements that contained fees contingent upon the resolution of certain matters that were beyond the issuer's control (“contingent fees”). The issuer's policy was to recognize revenue and the related receivable from certain arrangements that contained contingent fees when services were provided which generally occurred before the resolution of the contingent matters. The following deficiencies were identified: · For certain of the issuer's revenue the firm did not identify and test any controls that addressed whether the issuer's revenue recognition policies for its multiple-element arrangements including those with contingent fees were in conformity with GAAP. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 2 | Accounts Receivable | The issuer entered into revenue arrangements with multiple elements including arrangements that contained fees contingent upon the resolution of certain matters that were beyond the issuer's control (“contingent fees”). The issuer's policy was to recognize revenue and the related receivable from certain arrangements that contained contingent fees when services were provided which generally occurred before the resolution of the contingent matters. The following deficiencies were identified: · The firm did not evaluate whether the issuer's accounting for recognizing revenue for contingent fees prior to the resolution of the contingent matters and the determination of the amount to be collected was in conformity with FASB ASC Topic 605 Revenue Recognition and with GAAP as interpreted by the SEC Codification of Staff Accounting Bulletins Topic 13 Revenue Recognition. (AS 2810.30) Both financial statement and ICFR audits | AS 2810.30 | |
| 3 | Accounts Receivable | The issuer entered into revenue arrangements with multiple elements including arrangements that contained fees contingent upon the resolution of certain matters that were beyond the issuer's control (“contingent fees”). The issuer's policy was to recognize revenue and the related receivable from certain arrangements that contained contingent fees when services were provided which generally occurred before the resolution of the contingent matters. The following deficiencies were identified: · In addition the firm did not identify and appropriately address the inconsistency between the issuer's accounting for this revenue and its disclosure that it recognized revenue when the fee was fixed or determinable and collectability was reasonably assured. (AS 2810.30 and .31) Both financial statement and ICFR audits | AS 2810.30; AS 2810.31 | |
| 4 | Accounts Receivable | The issuer entered into revenue arrangements with multiple elements including arrangements that contained fees contingent upon the resolution of certain matters that were beyond the issuer's control (“contingent fees”). The issuer's policy was to recognize revenue and the related receivable from certain arrangements that contained contingent fees when services were provided which generally occurred before the resolution of the contingent matters. The following deficiencies were identified: · The firm did not evaluate whether (1) the issuer identified all elements in its arrangements and appropriately determined the units of accounting and (2) separate contracts entered into with the same individual customers within a short time frame should have been combined and accounted for as multiple-element arrangements. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 |
Issuer C5 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | For certain revenue the firm selected for testing an automated control within the general ledger system that was designed to generate invoices and recognize revenue once the shipment was confirmed in the general ledger system. The firm did not identify and test any controls over (1) confirmed shipment data that were manually entered into the general ledger system and (2) the completeness and accuracy of the shipment data transferred to the general ledger from the issuer's shipping tracking systems. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 2 | Revenue | The sample sizes the firm used in certain of its substantive procedures to test this revenue 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 due to the deficiencies in the firm's control testing discussed above. (AS 2301.16 .18 and .37; AS 2315.19 .23 and .23A) Both financial statement and ICFR audits | AS 2301.16; AS 2301.18; AS 2301.37; AS 2315.19; AS 2315.23; AS 2315.23A | |
| 3 | Revenue | For revenue at a foreign location the firm selected for testing two entity-level controls. The following deficiencies were identified: · One of these controls consisted of the quarterly review of the financial reporting information for the issuer's segment that included this location. The firm did not evaluate the review procedures 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) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 4 | Revenue | For revenue at a foreign location the firm selected for testing two entity-level controls. The following deficiencies were identified: · The second control consisted of (1) a review of the issuer's consolidated financial statements (2) a review of transactions over a threshold (3) meetings with the controllers for all segments to discuss financial results and (4) a review of revised consolidated financial statements as a result of adjustments identified as part of the review. The firm did not evaluate whether the criteria used by the control owner to identify items for follow up were sufficiently precise to detect misstatements in the revenue for this location that could be material to the consolidated financial statements. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 5 | Inventory | Certain of the issuer's inventory was subject to daily cycle counts and the issuer used a system-generated report that specified which items to count each day. The firm selected for testing a control that consisted of the issuer's daily cycle-count procedures. The firm did not test whether the system was properly configured to achieve the frequency schedule established by management and did not test the aspects of this control that addressed (1) the review and approval of the assignment of the frequency to each item and (2) whether approved frequencies were completely and accurately entered into the system. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 |
Issuer D4 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Environmental Liabilities | The firm selected for testing an annual control that consisted of the review of the valuation models that the issuer used to determine its environmental liabilities including underlying inputs and assumptions. The firm did not test the aspect of this control that consisted of the review of an assumption that the issuer used in these models. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 2 | Environmental Liabilities | The firm did not perform any substantive procedures to evaluate the reasonableness of the assumption discussed above that the issuer used as an input to the valuation models used to determine its environmental liabilities. (AS 2501.11) Both financial statement and ICFR audits | AS 2501.11 | |
| 3 | Business Combinations | During the year the issuer completed multiple business combinations. The firm selected for testing a control that included a review of the cash-flow forecasts and assumptions that the issuer used in determining the fair value of the acquired intangible assets. The firm did not evaluate the review procedures the control owner performed to assess the reasonableness of the prospective financial information and certain assumptions used in determining the fair value of the acquired intangible assets 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) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 4 | Business Combinations | The firm did not perform any substantive procedures to evaluate the reasonableness of the prospective financial information and certain assumptions underlying the valuation of the acquired intangible assets. (AS 2502.26 .28 .31 and .36) Both financial statement and ICFR audits | AS 2502.26; AS 2502.28; AS 2502.31; AS 2502.36 |
Issuer E3 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The issuer recognized certain of its revenue from contracts using the percentage-of-completion method. While the firm performed certain procedures that provided some evidence about historical margins on contracts these procedures provided little to no evidence regarding the estimated costs to complete the specific contracts open at year end. (AS 2501.07) Financial statement audit only | AS 2501.7 | |
| 2 | Inventory | The firm limited its substantive procedures to test inventory at certain of the issuer's locations to analytical procedures because of its reliance on an entity-level control that the firm selected for testing. This entity-level control consisted of the review of the financial statement level information for each of these locations. The firm identified two significant deficiencies and one control deficiency that were relevant to the issuer's controls over inventory. The firm's reliance on the entity-level control was not supported because the firm did not consider the implications of these deficiencies on the effectiveness of the entity-level control. As a result for these locations the firm inappropriately limited its substantive testing to analytical procedures that provided little to no substantive evidence. (AS 2101.11 and .12; AS 2301.16) Financial statement audit only | AS 2101.11; AS 2101.12; AS 2301.16 | |
| 3 | Inventory | At another location the issuer calculated a reserve for excess and obsolete inventory by applying established percentages to each inventory aging category. The firm did not (1) test the accuracy of the inventory aging and (2) evaluate the reasonableness of the established percentages applied to each of the inventory aging categories. (AS 2501.11) Financial statement audit only | AS 2501.11 |
Issuer F2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Oil and Gas Properties | The firm selected for testing a control that included a review of the assumptions underlying the forecasted cash flows that the issuer used in its evaluation of certain proved properties for possible impairment. The firm did not test the aspect of this control that addressed the reasonableness of certain of these assumptions and the accuracy of the historical data that the issuer used in developing these assumptions. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 2 | Oil and Gas Properties | The firm did not test (1) the reasonableness of certain assumptions that the issuer used in its evaluation of these properties beyond inquiry and (2) the accuracy of the historical data that the issuer used in developing one of these assumptions. (AS 2501.11) Both financial statement and ICFR audits | AS 2501.11 |
Issuer G3 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Inventory | The majority of the issuer's inventory was subject to daily cycle counts and the issuer used its inventory system to determine the frequency of cycle counts. The firm selected for testing a control that consisted of the review of an analysis to monitor the frequency and accuracy of the counts. The firm did not evaluate whether items the control owners identified for follow up were appropriately resolved. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 2 | Inventory | In addition the firm did not test whether the system was properly configured to calculate inventory turnover which was used to determine the frequency of cycle counts. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 3 | Inventory | The sample size the firm used in certain of its substantive procedures to test this inventory 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) Both financial statement and ICFR audits | AS 2301.16; AS 2301.18; AS 2301.37; AS 2315.19; AS 2315.23; AS 2315.23A |
Issuer H1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | For two of the issuer's operating units the issuer used the percentage-of-completion method to recognize certain revenue and recognized other revenue upon delivery of its products to its customers or when installation services were rendered. The firm did not identify and test any controls that addressed the risk of improper recognition of this revenue. (AS 2201.39) ICFR audit only | AS 2201.39 |