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Grant Thornton LLP
United States · Grant Thornton International Limited · Annually Inspected
- Inspection year
- 2019
- Report date
- 17-Dec-2020
- PCAOB release
- 104-2021-001a
- Audits reviewed
- 31
- Audits w/ Part I.A deficiencies
- 7
- Part I.A deficiency rate
- 23%
- Part I.A deficiencies
- 58
- Part I.B deficiencies
- 5
- Report
- View PDF ↗
Deficiencies (58)
Grouped by issuer and in the same order as the PCAOB report, so each item ties back directly to the source.
Issuer A30 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Accounts Receivable | The firm identified deficiencies in the information technology general controls ('ITGCs') related to security administration for the issuer's general ledger system and two of its revenue systems and concluded that these deficiencies in the aggregate represented a significant deficiency. The firm also identified a deficiency in the ITGCs related to program maintenance over these revenue systems. The following audit deficiencies were identified: · With respect to the security administration control deficiencies the firm identified compensating controls but did not evaluate whether these controls would mitigate the risks including fraud risks posed by the ITGC deficiencies. Further in performing its testing of the identified compensating controls the firm did not (1) identify that the control owners used data and reports in the performance of certain of these controls that were produced by the systems that were subject to the ITGC deficiencies and (2) as discussed below sufficiently test certain of these controls. (AS 2201.68) Unrelated to our review the issuer reevaluated its controls over security administration and program maintenance ITGCs and concluded that a material weakness existed that had not been previously identified. The issuer subsequently revised its report on ICFR to reflect this material weakness and the other material weaknesses discussed herein and the firm modified its opinion on the effectiveness of the issuer's ICFR to express an adverse opinion and reissued its report. Both financial statement and ICFR audits | AS 2201.68 | |
| 2 | Accounts Receivable | The firm identified deficiencies in the information technology general controls ('ITGCs') related to security administration for the issuer's general ledger system and two of its revenue systems and concluded that these deficiencies in the aggregate represented a significant deficiency. The firm also identified a deficiency in the ITGCs related to program maintenance over these revenue systems. The following audit deficiencies were identified: · In its testing of controls over revenue accounts receivable goodwill and certain long-lived assets the firm tested certain automated controls and IT-dependent manual controls that used data and reports generated or maintained by these systems. As a result of the deficiencies discussed above the firm's testing of these automated and IT-dependent manual controls was not sufficient. (AS 2201.46) Unrelated to our review the issuer reevaluated its controls over security administration and program maintenance ITGCs and concluded that a material weakness existed that had not been previously identified. The issuer subsequently revised its report on ICFR to reflect this material weakness and the other material weaknesses discussed herein and the firm modified its opinion on the effectiveness of the issuer's ICFR to express an adverse opinion and reissued its report. Both financial statement and ICFR audits | AS 2201.46 | |
| 3 | Accounts Receivable | The firm identified deficiencies in the information technology general controls ('ITGCs') related to security administration for the issuer's general ledger system and two of its revenue systems and concluded that these deficiencies in the aggregate represented a significant deficiency. The firm also identified a deficiency in the ITGCs related to program maintenance over these revenue systems. The following audit deficiencies were identified: · The firm did not appropriately evaluate whether the ITGC deficiencies individually or in combination represented a material weakness. (AS 2201.62) Unrelated to our review the issuer reevaluated its controls over security administration and program maintenance ITGCs and concluded that a material weakness existed that had not been previously identified. The issuer subsequently revised its report on ICFR to reflect this material weakness and the other material weaknesses discussed herein and the firm modified its opinion on the effectiveness of the issuer's ICFR to express an adverse opinion and reissued its report. Both financial statement and ICFR audits | AS 2201.62 | |
| 4 | Revenue | For two types of revenue the following deficiencies were identified: · The firm selected for testing a control that consisted of the issuer's review of its billing rates for authorized approval. The firm did not test or in the alternative test any controls that addressed the completeness of the report that it used to make its selections when testing this control. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 | |
| 5 | Revenue | For two types of revenue the following deficiencies were identified: · The firm's substantive procedures to test this revenue consisted of recalculating the invoices it selected for testing using the billing rates in one of the revenue systems that was subject to the ITGC deficiencies discussed above. The firm did not perform sufficient substantive procedures to test or (as a result of the control testing and ITGC deficiencies discussed above) sufficiently test controls over the accuracy of these billing rates. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 | |
| 6 | Revenue | For two types of revenue the following deficiencies were identified: · For one of these types of revenue the firm did not identify and test any controls that addressed whether the performance obligation was satisfied before revenue was recognized. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 7 | Revenue | For two types of revenue the following deficiencies were identified: · For this same type of revenue the firm did not perform any substantive procedures to test whether the performance obligation was satisfied before revenue was recognized. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 | |
| 8 | Revenue | For a third type of revenue consisting of three categories the following deficiencies were identified: · The firm did not identify and test any controls over the identification and evaluation of contract terms that would affect revenue recognition. (AS 2201.39) Unrelated to our review the issuer reevaluated its controls over revenue and concluded that a material weakness existed that had not been previously identified. The issuer subsequently revised its report on ICFR to reflect this material weakness and the other material weaknesses discussed herein and the firm modified its opinion on the effectiveness of the issuer's ICFR to express an adverse opinion and reissued its report. Both financial statement and ICFR audits | AS 2201.39 | |
| 9 | Revenue | For a third type of revenue consisting of three categories the following deficiencies were identified: · For two categories of this revenue the firm selected for testing two controls that consisted of the (1) approval of standard billing rates and (2) review of standard billing rates after they are input into the system. The firm did not identify and test any controls over the completeness of the report the issuer used in the operation of these controls. (AS 2201.39) Unrelated to our review the issuer reevaluated its controls over revenue and concluded that a material weakness existed that had not been previously identified. The issuer subsequently revised its report on ICFR to reflect this material weakness and the other material weaknesses discussed herein and the firm modified its opinion on the effectiveness of the issuer's ICFR to express an adverse opinion and reissued its report. Both financial statement and ICFR audits | AS 2201.39 | |
| 10 | Revenue | For a third type of revenue consisting of three categories the following deficiencies were identified: · For two categories of this revenue the firm selected for testing two controls that consisted of the (1) approval of standard billing rates and (2) review of standard billing rates after they are input into the system. For these two controls and two other controls the firm selected for testing over this type of revenue the firm did not test or in the alternative test any controls that addressed the completeness of certain reports it used to make its selections when testing these controls. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 | |
| 11 | Revenue | For a third type of revenue consisting of three categories the following deficiencies were identified: · For one of these two categories of this revenue the issuer used external parties to provide the service for the issuer's customer. The firm selected for testing a control that included the issuer obtaining delivery reports from the external parties as evidence that the performance obligation was met. The firm did not identify and test any controls over the accuracy and completeness of certain of these reports. (AS 2201.39) Unrelated to our review the issuer reevaluated its controls over revenue and concluded that a material weakness existed that had not been previously identified. The issuer subsequently revised its report on ICFR to reflect this material weakness and the other material weaknesses discussed herein and the firm modified its opinion on the effectiveness of the issuer's ICFR to express an adverse opinion and reissued its report. Both financial statement and ICFR audits | AS 2201.39 | |
| 12 | Revenue | For a third type of revenue consisting of three categories the following deficiencies were identified: · For the third category of this revenue the firm selected for testing a control that consisted of the issuer's monthly review of pricing. 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. (AS 2201.42 and .44) Unrelated to our review the issuer reevaluated its controls over revenue and concluded that a material weakness existed that had not been previously identified. The issuer subsequently revised its report on ICFR to reflect this material weakness and the other material weaknesses discussed herein and the firm modified its opinion on the effectiveness of the issuer's ICFR to express an adverse opinion and reissued its report. Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 13 | Revenue | For a third type of revenue consisting of three categories the following deficiencies were identified: · The firm did not perform substantive procedures to test or (as a result of the control testing and the ITGC deficiencies discussed above) sufficiently test controls over the completeness of system-generated reports that the firm used in its substantive testing of this type of revenue. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 | |
| 14 | Revenue | The sample sizes the firm used in certain of its substantive procedures to test 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 | |
| 15 | Accounts Receivable | The firm selected for testing a control over the issuer's review of the allowance for doubtful accounts. The following deficiencies were identified: · 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. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 16 | Accounts Receivable | The firm selected for testing a control over the issuer's review of the allowance for doubtful accounts. The following deficiencies were identified: · The firm did not identify and test any controls that addressed the reasonableness of the reserve percentage the issuer applied to certain past-due accounts receivable to determine the allowance for doubtful accounts during the operation of this control. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 17 | Accounts Receivable | The firm selected for testing a control over the issuer's review of the allowance for doubtful accounts. The following deficiencies were identified: · While performing its substantive procedures the firm identified an error in the issuer's estimate of the allowance for doubtful accounts. As a result of this error the firm identified that an aspect of this control was deficient but concluded that the remaining aspects of the control served as a compensating control. The firm did not perform procedures to evaluate whether the remaining aspects of this control would accomplish the control's objectives. (AS 2201.68) Both financial statement and ICFR audits | AS 2201.68 | |
| 18 | Accounts Receivable | The firm did not perform substantive procedures to test or (as a result of the ITGC deficiencies discussed above) sufficiently test controls over the accuracy of certain system-generated data it used in its substantive testing of the valuation of accounts receivable. (AS 2501.11) Both financial statement and ICFR audits | AS 2501.11 | |
| 19 | Income Taxes | The firm selected for testing a control that consisted of the issuer's review of the provision for income taxes including the valuation of deferred tax assets. The firm did not evaluate the specific review procedures that the control owner performed to evaluate the reasonableness of the valuation of deferred tax assets. (AS 2201.42 and .44) Unrelated to our review the issuer reevaluated its accounting for the income tax provision and concluded that a material misstatement existed that had not been previously identified. The issuer subsequently restated its financial statements to correct this and other material misstatements and the firm revised and reissued its report on the financial statements. The issuer also reevaluated its controls over the income tax provision and concluded that a material weakness existed that had not been previously identified. The issuer subsequently revised its report on ICFR to reflect this material weakness and the other material weaknesses discussed herein and the firm modified its opinion on the effectiveness of the issuer's ICFR to express an adverse opinion and reissued its report. Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 20 | Income Taxes | The issuer recorded a partial valuation allowance against recorded deferred tax assets based on an estimate of forecasted taxable income that included the expected sale of a certain asset. The firm did not evaluate whether the issuer considered all available evidence both positive and negative and the reasonableness of the issuer's weighting of that evidence as it related to the valuation of the asset held for sale. (AS 2501.11) Unrelated to our review the issuer reevaluated its accounting for the income tax provision and concluded that a material misstatement existed that had not been previously identified. The issuer subsequently restated its financial statements to correct this and other material misstatements and the firm revised and reissued its report on the financial statements. The issuer also reevaluated its controls over the income tax provision and concluded that a material weakness existed that had not been previously identified. The issuer subsequently revised its report on ICFR to reflect this material weakness and the other material weaknesses discussed herein and the firm modified its opinion on the effectiveness of the issuer's ICFR to express an adverse opinion and reissued its report. Both financial statement and ICFR audits | AS 2501.11 | |
| 21 | Goodwill | The firm did not identify and/or test controls related to the issuer's (1) determination of the reporting units it used in its goodwill impairment analysis and (2) assignment of assets and liabilities to its reporting units in conformity with FASB ASC Topic 350 Intangibles - Goodwill and Other. (AS 2201.39) Unrelated to our review the issuer reevaluated its accounting related to the identification of reporting units and evaluation of the possible impairment of goodwill and concluded that a material misstatement existed that had not been previously identified. The issuer subsequently restated its financial statements to correct this and other material misstatements and the firm revised and reissued its report on the financial statements. In conjunction with its reevaluation of controls over long-lived assets discussed below the issuer also reevaluated its controls over the identification of reporting units and evaluation of the possible impairment of goodwill. The issuer concluded that a material weakness related to goodwill and long-lived assets existed that had not been previously identified. The issuer subsequently revised its report on ICFR to reflect this material weakness and the other material weaknesses discussed herein and the firm modified its opinion on the effectiveness of the issuer's ICFR to express an adverse opinion and reissued its report. Both financial statement and ICFR audits | AS 2201.39 | |
| 22 | Goodwill | The firm did not perform substantive procedures to evaluate the appropriateness of the issuer's reporting units and the issuer's assignment of assets and liabilities to its reporting units. (AS 2810.30) Unrelated to our review the issuer reevaluated its accounting related to the identification of reporting units and evaluation of the possible impairment of goodwill and concluded that a material misstatement existed that had not been previously identified. The issuer subsequently restated its financial statements to correct this and other material misstatements and the firm revised and reissued its report on the financial statements. In conjunction with its reevaluation of controls over long-lived assets discussed below the issuer also reevaluated its controls over the identification of reporting units and evaluation of the possible impairment of goodwill. The issuer concluded that a material weakness related to goodwill and long-lived assets existed that had not been previously identified. The issuer subsequently revised its report on ICFR to reflect this material weakness and the other material weaknesses discussed herein and the firm modified its opinion on the effectiveness of the issuer's ICFR to express an adverse opinion and reissued its report. Both financial statement and ICFR audits | AS 2810.30 | |
| 23 | Goodwill | The issuer performed an analysis to assess the possible impairment of goodwill using a combination of the income approach and the market approach. The firm selected for testing controls that consisted of the issuer's reviews of this analysis including the significant inputs and assumptions. The firm did not evaluate the specific review procedures that the control owners performed to assess the reasonableness of the EBITDA multiples used in the market approach and the issuer's cash-flow forecast used in the income approach. (AS 2201.42 and .44) Unrelated to our review the issuer reevaluated its accounting related to the identification of reporting units and evaluation of the possible impairment of goodwill and concluded that a material misstatement existed that had not been previously identified. The issuer subsequently restated its financial statements to correct this and other material misstatements and the firm revised and reissued its report on the financial statements. In conjunction with its reevaluation of controls over long-lived assets discussed below the issuer also reevaluated its controls over the identification of reporting units and evaluation of the possible impairment of goodwill. The issuer concluded that a material weakness related to goodwill and long-lived assets existed that had not been previously identified. The issuer subsequently revised its report on ICFR to reflect this material weakness and the other material weaknesses discussed herein and the firm modified its opinion on the effectiveness of the issuer's ICFR to express an adverse opinion and reissued its report. Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 24 | Goodwill | The forecast the issuer used in its analysis to assess the possible impairment of goodwill for one of the issuer's reporting units assumed significant revenue growth in the early years of the forecast. The firm concluded that the forecasted revenue growth rates were reasonable without performing any substantive procedures beyond inquiring of management to evaluate the issuer's ability to carry out its planned strategies to achieve the forecast. (AS 2502.26 .28 .31 and .36) Unrelated to our review the issuer reevaluated its accounting related to the identification of reporting units and evaluation of the possible impairment of goodwill and concluded that a material misstatement existed that had not been previously identified. The issuer subsequently restated its financial statements to correct this and other material misstatements and the firm revised and reissued its report on the financial statements. In conjunction with its reevaluation of controls over long-lived assets discussed below the issuer also reevaluated its controls over the identification of reporting units and evaluation of the possible impairment of goodwill. The issuer concluded that a material weakness related to goodwill and long-lived assets existed that had not been previously identified. The issuer subsequently revised its report on ICFR to reflect this material weakness and the other material weaknesses discussed herein and the firm modified its opinion on the effectiveness of the issuer's ICFR to express an adverse opinion and reissued its report. Both financial statement and ICFR audits | AS 2502.26; AS 2502.28; AS 2502.31; AS 2502.36 | |
| 25 | Goodwill | The forecast the issuer used in its analysis to assess the possible impairment of goodwill for one of the issuer's reporting units assumed significant revenue growth in the early years of the forecast. The firm did not perform substantive procedures to test or (as a result of the ITGC deficiencies discussed above) sufficiently test controls over the accuracy and completeness of certain system-generated data it used to test the issuer's goodwill impairment analysis. (AS 2502.39) Unrelated to our review the issuer reevaluated its accounting related to the identification of reporting units and evaluation of the possible impairment of goodwill and concluded that a material misstatement existed that had not been previously identified. The issuer subsequently restated its financial statements to correct this and other material misstatements and the firm revised and reissued its report on the financial statements. In conjunction with its reevaluation of controls over long-lived assets discussed below the issuer also reevaluated its controls over the identification of reporting units and evaluation of the possible impairment of goodwill. The issuer concluded that a material weakness related to goodwill and long-lived assets existed that had not been previously identified. The issuer subsequently revised its report on ICFR to reflect this material weakness and the other material weaknesses discussed herein and the firm modified its opinion on the effectiveness of the issuer's ICFR to express an adverse opinion and reissued its report. Both financial statement and ICFR audits | AS 2502.39 | |
| 26 | Long-Lived Assets | The firm selected for testing a control that consisted of the issuer's review of possible impairment indicators for its finite-lived intangible assets. 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. (AS 2201.42 and .44) Unrelated to our review the issuer reevaluated its accounting related to the identification of possible impairment indicators and evaluation of impairment of finite-lived intangible assets and concluded that a material misstatement existed that had not been previously identified. The issuer subsequently restated its financial statements to correct this and other material misstatements and the firm revised and reissued its report on the financial statements. In conjunction with its reevaluation of controls over goodwill discussed above the issuer also reevaluated its controls over the identification of possible impairment indicators and evaluation of impairment of long-lived assets. As discussed above the issuer concluded that a material weakness related to goodwill and long-lived assets existed that had not been previously identified. The issuer subsequently revised its report on ICFR to reflect this material weakness and the other material weaknesses discussed herein and the firm modified its opinion on the effectiveness of the issuer's ICFR to express an adverse opinion and reissued its report. Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 27 | Long-Lived Assets | In performing its substantive testing of customer-relationship finite-lived intangible assets the firm did not appropriately evaluate whether the attrition of certain customers represented events that indicated the assets' carrying value may not be recoverable. (AS 2301.08) Unrelated to our review the issuer reevaluated its accounting related to the identification of possible impairment indicators and evaluation of impairment of finite-lived intangible assets and concluded that a material misstatement existed that had not been previously identified. The issuer subsequently restated its financial statements to correct this and other material misstatements and the firm revised and reissued its report on the financial statements. In conjunction with its reevaluation of controls over goodwill discussed above the issuer also reevaluated its controls over the identification of possible impairment indicators and evaluation of impairment of long-lived assets. As discussed above the issuer concluded that a material weakness related to goodwill and long-lived assets existed that had not been previously identified. The issuer subsequently revised its report on ICFR to reflect this material weakness and the other material weaknesses discussed herein and the firm modified its opinion on the effectiveness of the issuer's ICFR to express an adverse opinion and reissued its report. Both financial statement and ICFR audits | AS 2301.8 | |
| 28 | Long-Lived Assets | The firm did not perform substantive procedures to test or (as a result of the ITGC deficiencies discussed above) sufficiently test controls over the accuracy and completeness of certain system-generated data it used in its substantive testing of the valuation of finite-lived intangible assets. (AS 2502.39) Unrelated to our review the issuer reevaluated its accounting related to the identification of possible impairment indicators and evaluation of impairment of finite-lived intangible assets and concluded that a material misstatement existed that had not been previously identified. The issuer subsequently restated its financial statements to correct this and other material misstatements and the firm revised and reissued its report on the financial statements. In conjunction with its reevaluation of controls over goodwill discussed above the issuer also reevaluated its controls over the identification of possible impairment indicators and evaluation of impairment of long-lived assets. As discussed above the issuer concluded that a material weakness related to goodwill and long-lived assets existed that had not been previously identified. The issuer subsequently revised its report on ICFR to reflect this material weakness and the other material weaknesses discussed herein and the firm modified its opinion on the effectiveness of the issuer's ICFR to express an adverse opinion and reissued its report. Both financial statement and ICFR audits | AS 2502.39 | |
| 29 | Long-Lived Assets | The firm selected for testing a control that included the issuer's review of possible impairment indicators for property plant and equipment at one of the issuer's subsidiaries. The firm did not evaluate (1) whether the control was appropriately designed to identify the impairment indicators that were present and (2) 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. (AS 2201.42 and .44) Unrelated to our review the issuer reevaluated its accounting related to the identification of possible impairment indicators and evaluation of impairment of finite-lived intangible assets and concluded that a material misstatement existed that had not been previously identified. The issuer subsequently restated its financial statements to correct this and other material misstatements and the firm revised and reissued its report on the financial statements. In conjunction with its reevaluation of controls over goodwill discussed above the issuer also reevaluated its controls over the identification of possible impairment indicators and evaluation of impairment of long-lived assets. As discussed above the issuer concluded that a material weakness related to goodwill and long-lived assets existed that had not been previously identified. The issuer subsequently revised its report on ICFR to reflect this material weakness and the other material weaknesses discussed herein and the firm modified its opinion on the effectiveness of the issuer's ICFR to express an adverse opinion and reissued its report. Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 30 | Long-Lived Assets | In performing its substantive procedures related to the issuer's assessment of the possible impairment of this property plant and equipment the firm did not evaluate the issuer's determination that there were no indicators of potential impairment beyond inquiring of management. (AS 2301.08) Unrelated to our review the issuer reevaluated its accounting related to the identification of possible impairment indicators and evaluation of impairment of finite-lived intangible assets and concluded that a material misstatement existed that had not been previously identified. The issuer subsequently restated its financial statements to correct this and other material misstatements and the firm revised and reissued its report on the financial statements. In conjunction with its reevaluation of controls over goodwill discussed above the issuer also reevaluated its controls over the identification of possible impairment indicators and evaluation of impairment of long-lived assets. As discussed above the issuer concluded that a material weakness related to goodwill and long-lived assets existed that had not been previously identified. The issuer subsequently revised its report on ICFR to reflect this material weakness and the other material weaknesses discussed herein and the firm modified its opinion on the effectiveness of the issuer's ICFR to express an adverse opinion and reissued its report. Both financial statement and ICFR audits | AS 2301.8 |
Issuer B9 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The firm selected for testing a control that consisted of the issuer's review of new or amended customer contracts for terms and conditions that may affect revenue recognition. The firm did not evaluate the specific review procedures that the control owner performed to identify and evaluate all relevant terms and conditions. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 2 | Revenue | The firm did not perform substantive procedures to evaluate contract modifications variable consideration and equity-based incentives included in certain customer contracts when evaluating whether the issuer recognized revenue in conformity with FASB ASC Topic 606 Revenue from Contracts with Customers. (AS 2810.30) Both financial statement and ICFR audits | AS 2810.30 | |
| 3 | Revenue | The issuer recognized revenue over time for custom products. The firm selected for testing a control that included the issuer's review of a listing of custom products for appropriate revenue recognition. The firm did not evaluate the specific procedures that the control owners performed to determine whether (1) these products had an alternative use to the issuer and (2) the issuer had an enforceable right to payment for performance completed to date for these products. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 4 | Revenue | The firm did not perform substantive procedures to evaluate (1) whether the issuer's custom products had an alternative use to the issuer and (2) whether the issuer had an enforceable right to payment for performance completed to date when evaluating whether the issuer recognized revenue for custom products in conformity with FASB ASC Topic 606. (AS 2810.30) Both financial statement and ICFR audits | AS 2810.30 | |
| 5 | Revenue | The firm did not identify and evaluate the significance to the financial statements of the issuer's omission of certain required disclosures under FASB ASC Topic 606. (AS 2810.30 and .31) Both financial statement and ICFR audits | AS 2810.30; AS 2810.31 | |
| 6 | Inventory | The firm selected for testing a control that consisted of the issuer's review of the reserve for excess and obsolete inventory. The firm did not identify and test any controls over the accuracy and completeness of the system-generated reports used in the operation of this control. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 7 | Inventory | The firm selected for testing a control that consisted of the issuer's review of the reserve for excess and obsolete inventory. The firm did not identify and test any controls that addressed the reasonableness of the sales forecast the issuer used to develop the reserve for excess and obsolete inventory. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 8 | Inventory | The firm did not perform substantive procedures to test or in the alternative test any controls over the accuracy and completeness of the system-generated reports it used to test the issuer's reserve for excess and obsolete inventory. (AS 2501.11) Both financial statement and ICFR audits | AS 2501.11 | |
| 9 | Inventory | The firm did not perform any substantive procedures to evaluate the reasonableness of the sales forecast the issuer used to develop the reserve for excess and obsolete inventory. (AS 2501.11) Both financial statement and ICFR audits | AS 2501.11 |
Issuer C7 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The issuer offered various forms of sales incentives to customers that were recorded as a reduction of revenue with a corresponding liability for sales incentives earned but not yet settled. The following deficiencies were identified: · The firm did not identify and test any controls over the (1) identification and evaluation of sales incentives that may affect revenue recognition and (2) presentation and disclosure of sales incentives in the financial statements. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 2 | Revenue | The issuer offered various forms of sales incentives to customers that were recorded as a reduction of revenue with a corresponding liability for sales incentives earned but not yet settled. The following deficiencies were identified: · The firm did not perform sufficient substantive procedures to identify and evaluate the issuer's sales incentive programs because the firm's procedures consisted of (1) inquiring of certain issuer personnel about the population of sales incentives; (2) performing analytical procedures which as designed did not provide sufficient appropriate audit evidence; and (3) selecting a sample of the issuer's sales incentive programs and tracing them to the issuer's sales incentive accrual without performing any procedures to test the accuracy and completeness of the population of sales incentive programs from which the sample was selected. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 | |
| 3 | Revenue | The issuer offered various forms of sales incentives to customers that were recorded as a reduction of revenue with a corresponding liability for sales incentives earned but not yet settled. The following deficiencies were identified: · The firm did not perform substantive procedures to evaluate the appropriateness of the issuer's (1) presentation of accrued sales incentives as a liability and (2) disclosures related to sales incentives in order to evaluate whether the issuer's presentation and disclosures conformed with GAAP. (AS 2810.30 and .31) Both financial statement and ICFR audits | AS 2810.30; AS 2810.31 | |
| 4 | Goodwill | The firm selected for testing a control that included the issuer's reviews of analyses of the possible impairment of goodwill and indefinite-lived intangible assets. The firm did not evaluate the specific review procedures that the control owners performed to assess the reasonableness of certain inputs and assumptions the issuer used in these analyses. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 5 | Goodwill | The firm did not identify and test any controls that addressed whether corporate assets and liabilities were appropriately allocated to the issuer's reporting units. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 6 | Goodwill | The firm did not perform sufficient substantive procedures to evaluate whether corporate assets and liabilities were appropriately allocated to the issuer's reporting units because its procedures were limited to reading the general ledger descriptions for the unallocated corporate assets and liabilities. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 | |
| 7 | Inventory | The firm did not identify and test any controls that addressed whether inventory items held at certain warehouses owned by external parties were counted with sufficient frequency. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 |
Issuer D6 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Business Combinations | During the year the issuer acquired multiple businesses and determined the fair value of the acquired intangible assets using cash-flow forecasts. The following deficiencies were identified: · The firm did not perform sufficient substantive procedures to evaluate the reasonableness of the period of cash flows the issuer used to determine the fair value of customer-relationship intangible assets because the firm did not evaluate differences among the period of cash flows the useful lives that the issuer used to amortize such assets and the length of the issuer's historical customer relationships. (AS 2502.26 .28 .31 and .36) Financial statement audit only | AS 2502.26; AS 2502.28; AS 2502.31; AS 2502.36 | |
| 2 | Business Combinations | During the year the issuer acquired multiple businesses and determined the fair value of the acquired intangible assets using cash-flow forecasts. The following deficiencies were identified: · The firm did not perform substantive procedures beyond reading a small number of customer contracts to evaluate the reasonableness of certain other assumptions underlying these cash flow forecasts including customer attrition rates for one of these acquisitions. (AS 2502.26 and .28) Financial statement audit only | AS 2502.26; AS 2502.28 | |
| 3 | Business Combinations | During the year the issuer acquired multiple businesses and determined the fair value of the acquired intangible assets using cash-flow forecasts. The following deficiencies were identified: · For one of these business combinations the firm did not perform substantive procedures to test the accuracy and completeness of the historical data it used to evaluate the reasonableness of the revenue growth-rate assumptions beyond vouching amounts to unaudited financial information and reading certain customer contracts. (AS 1105.10) Financial statement audit only | AS 1105.10 | |
| 4 | Business Combinations | During the year the issuer acquired multiple businesses and determined the fair value of the acquired intangible assets using cash-flow forecasts. The following deficiencies were identified: · For one of these business combinations the firm did not perform substantive procedures to test the accuracy and completeness of the historical data it used to evaluate the reasonableness of the revenue growth-rate assumptions beyond vouching amounts to unaudited financial information and reading certain customer contracts. (AS 1105.10) In addition the firm did not evaluate the appropriateness of the peer companies the firm used in its evaluation of the reasonableness of the forecasted revenue. (AS 2502.26 and .28) Financial statement audit only | AS 2502.26; AS 2502.28 | |
| 5 | Business Combinations | During the year the issuer acquired multiple businesses and determined the fair value of the acquired intangible assets using cash-flow forecasts. The following deficiencies were identified: · For one of these business combinations the firm identified the issuer's omission of certain pro forma disclosures that were required under FASB ASC Topic 805 Business Combinations but did not evaluate the significance of the omitted disclosures from the notes to the financial statements. (AS 2810.30 and .31) Financial statement audit only | AS 2810.30; AS 2810.31 | |
| 6 | Journal Entries | The firm identified fraud risks related to the potential for management override of controls and undisclosed related party transactions. To address these fraud risks the firm identified manual journal entries that met certain criteria but it inspected the supporting documentation for only a small number of those journal entries without having a basis for limiting its testing to these journal entries. For the remaining journal entries that met these criteria the firm limited its procedures to inquiring of management and/or evaluating the journal entry descriptions. (AS 2401.61) Financial statement audit only | AS 2401.61 |
Issuer E3 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The firm identified a significant deficiency in certain ITGCs over source code change management for the system that the issuer used to process revenue. The issuer implemented a control intended to mitigate the significant deficiency. This control consisted of the issuer's review of a report of source code changes to the system. The firm did not identify and test any controls over the accuracy and completeness of this report. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 2 | Revenue | The firm selected for testing various automated controls over the recording of revenue related to loans receivable. The firm designed its procedures including its sample sizes to test the operating effectiveness of these automated controls based on effective ITGCs. As a result of the ITGC deficiency discussed above these sample sizes were too small to provide sufficient appropriate audit evidence. (AS 2201.44) Both financial statement and ICFR audits | AS 2201.44 | |
| 3 | Revenue | The sample sizes the firm used in certain of its substantive procedures to test 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 |
Issuer F2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The firm did not identify and test any controls over the review of distributor and dealer arrangements to determine that relevant terms and conditions were identified and evaluated for appropriate revenue recognition. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 2 | Revenue | The firm did not perform sufficient substantive procedures to evaluate the issuer's identification of performance obligations in conformity with FASB ASC Topic 606 because it did not identify and evaluate certain relevant terms and conditions in the distributor and dealer arrangements that could affect revenue recognition. (AS 2810.30) Both financial statement and ICFR audits | AS 2810.30 |
Issuer G1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | With respect to the firm's substantive testing of one type of revenue the firm did not perform any procedures to test or in the alternative test any controls that addressed the accuracy and completeness of certain system-generated reports used in its testing. (AS 1105.10) Financial statement audit only | AS 1105.10 |