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Deloitte & Touche LLP
United States · Deloitte Touche Tohmatsu Limited · Annually Inspected
- Inspection year
- 2019
- Report date
- 17-Dec-2020
- PCAOB release
- 104-2021-002a
- Audits reviewed
- 58
- Audits w/ Part I.A deficiencies
- 6
- Part I.A deficiency rate
- 10%
- Part I.A deficiencies
- 16
- Part I.B deficiencies
- 2
- Report
- View PDF ↗
Deficiencies (16)
Grouped by issuer and in the same order as the PCAOB report, so each item ties back directly to the source.
Issuer A4 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue, including Allowances | The issuer recorded a chargeback accrual and used a one-month settlement-period assumption to estimate a portion of this accrual. The firm selected for testing a control that consisted of the review of the chargeback accrual including the reasonableness of the settlement-period assumption. 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 | |
| 2 | Revenue, including Allowances | The firm's approach for substantively testing the chargeback accrual was to review and test management's process. The firm did not perform procedures beyond inquiry to assess the reasonableness of the settlement-period assumption that the issuer used to estimate a portion of the chargeback accrual. (AS 2501.11) Both financial statement and ICFR audits | AS 2501.11 | |
| 3 | Contingent Liability | The issuer determined the fair value of a contingent liability using forecasted EBITDA and other assumptions. The firm selected for testing a control that consisted of the review of the issuer's annual forecast including the forecasted EBITDA assumption. The firm did not evaluate the specific review procedures that the control owners performed to assess the reasonableness of the forecasted EBITDA assumption. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 4 | Inventory | The firm did not identify and test any controls over the existence of inventory at certain of the issuer's locations. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 |
Issuer B4 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Derivatives | The firm selected for testing a control that consisted of reviews of the appropriateness of the models the issuer used to determine the fair values of investments and derivatives. 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) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 2 | Derivatives | The firm selected for testing a control over the valuation of the issuer's investments and derivatives that consisted of reviews of the recorded fair values. The firm did not evaluate the specific review procedures that the control owners performed to assess the reasonableness of certain assumptions used to determine these fair values. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 3 | Derivatives | The sample sizes the firm used in certain of its substantive procedures to test these investments and derivatives 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 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 | |
| 4 | Derivatives | The firm did not perform any substantive procedures to test investments and derivatives at certain of the issuer's business units. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 |
Issuer C2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Oil and Gas Properties | The firm selected for testing a control that included the assessment of the issuer's properties that had no assigned oil and gas reserves ('unevaluated properties') for possible impairment. The firm did not evaluate the specific review procedures that the control owners performed to assess the reasonableness of the assumptions management used to conclude that there was no impairment for these properties. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 2 | Oil and Gas Properties | The issuer concluded at year end that its unevaluated properties were not impaired primarily based on management's plans to drill or otherwise extend the expiring leases on certain of these properties. The firm concluded that the issuer's assessment was reasonable without performing procedures beyond inquiry to evaluate management's intent to extend these expiring leases. Further the firm did not evaluate information that it obtained that appeared to be inconsistent with management's intent including that the issuer's budget for the following year did not include any capital expenditures for these properties. (AS 2501.11; AS 2810.03) Both financial statement and ICFR audits | AS 2501.11; AS 2810.3 |
Issuer D4 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Inventory | The issuer performed cycle counts of inventory at certain of the issuer's locations. The firm selected for testing controls that consisted of the issuer's cycle-count procedures and reviews of reports to monitor the frequency and accuracy of the counts. The following deficiencies were identified: · The issuer designed its cycle-count procedures to exclude up to half of the inventory at each location from the cycle counts. In evaluating the design of these controls the firm did not assess the effect of the issuer excluding this portion of inventory on the controls' ability to effectively prevent or detect a material misstatement. (AS 2201.42) Both financial statement and ICFR audits | AS 2201.42 | |
| 2 | Inventory | The issuer performed cycle counts of inventory at certain of the issuer's locations. The firm selected for testing controls that consisted of the issuer's cycle-count procedures and reviews of reports to monitor the frequency and accuracy of the counts. The following deficiencies were identified: · The firm did not evaluate whether these controls were appropriately designed to monitor the accuracy of the cycle counts and address whether sufficient inventory items were counted with sufficient frequency because the firm did not identify that the reports the control owners reviewed did not include information related to the frequency with which each item was counted and the accuracy of the cycle counts for each of these items. (AS 2201.42) Both financial statement and ICFR audits | AS 2201.42 | |
| 3 | Inventory | The issuer performed cycle counts of inventory at certain of the issuer's locations. The firm selected for testing controls that consisted of the issuer's cycle-count procedures and reviews of reports to monitor the frequency and accuracy of the counts. The following deficiencies were identified: · The issuer's cycle-count procedures were designed to have the same person responsible for generating count sheets performing the cycle counts entering the results into the system following up on identified differences and posting certain adjustments. The firm did not identify and evaluate whether this resulted in a lack of segregation of duties. (AS 2201.42) Both financial statement and ICFR audits | AS 2201.42 | |
| 4 | Inventory | Due to the deficiencies discussed above the firm did not obtain sufficient appropriate audit evidence that the cycle-count procedures the issuer used for this inventory were sufficiently reliable to produce results substantially the same as those that would have been obtained by a count of all items each year. (AS 2510.11) Both financial statement and ICFR audits | AS 2501.11 |
Issuer E1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Intangible Assets | The firm did not perform any procedures to evaluate certain intangible assets for possible impairment despite the issuer's deteriorating financial results and the issuer recording an impairment of other intangible assets during the year. (AS 2301.08) Financial statement audit only | AS 2301.8 |
Issuer F1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The firm's sample for testing certain revenue was too small to provide sufficient appropriate audit evidence because in determining its sample size the firm inappropriately used a risk of material misstatement that was lower than its assessed risk of material misstatement for this revenue. (AS 2315.23 and .23A) Financial statement audit only | AS 2315.23; AS 2315.23A |