- Inspection year
- 2019
- Report date
- 17-Dec-2020
- PCAOB release
- 104-2021-004a
- Audits reviewed
- 58
- Audits w/ Part I.A deficiencies
- 17
- Part I.A deficiency rate
- 29%
- Part I.A deficiencies
- 67
- Part I.B deficiencies
- 4
- Report
- View PDF ↗
Deficiencies (67)
Grouped by issuer and in the same order as the PCAOB report, so each item ties back directly to the source.
Issuer A3 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The firm did not identify that at the time of the audit the issuer's recognition of certain revenue from arrangements with multiple elements that consisted of software license and maintenance deliverables was not in conformity with FASB ASC Subtopic 985-605 Software Revenue Recognition. (AS 2810.30) In connection with our review the issuer reevaluated its accounting for these arrangements and concluded that a material misstatement existed that had not been previously identified. The issuer subsequently restated its financial statements and the firm revised and reissued its report on the financial statements. The issuer also reevaluated its controls over the accounting for these arrangements 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 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 | Incorrect opinion |
| 2 | Revenue | The issuer recognized revenue from certain other types of arrangements based on the amount of time incurred to provide professional services and the rates in the agreements with its customers. The firm did not identify and test any controls over the accuracy of the time information that the issuer used to calculate this revenue. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | Incorrect opinion |
| 3 | Revenue | The firm used the issuer's time information in its substantive testing of this revenue. The firm did not test or (as discussed above) test controls over the accuracy of this information. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 | Incorrect opinion |
Issuer B9 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Inventory | The issuer designed its cycle-count procedures at one of its locations to exclude a portion of the inventory from the cycle counts. In evaluating the design of this control the firm did not assess the effect of the issuer excluding this portion of inventory on the control's ability to effectively prevent or detect a material misstatement. (AS 2201.42) In connection with our review the issuer reevaluated its control over this inventory and concluded that a material weakness existed that had not been previously identified. The issuer disclosed the material weakness in a subsequent filing and noted that the material weakness existed as of the date covered by the firm's audit that was subject to our review. Both financial statement and ICFR audits | AS 2201.42 | Incorrect opinion |
| 2 | Inventory | Due to the deficiency 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 2510.11 | Incorrect opinion |
| 3 | Revenue | The issuer recognized certain revenue from contracts using the percentage-of-completion method. The following deficiencies were identified: · The firm selected for testing a control over this revenue that consisted of the review of an analysis of estimated gross margin by contract. 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 | Incorrect opinion |
| 4 | Revenue | The issuer recognized certain revenue from contracts using the percentage-of-completion method. The following deficiencies were identified: · The firm selected for testing a control over this revenue that consisted of the review of an analysis of estimated gross margin by contract. The firm did not test the aspect of this control related to the control owner's assessment of whether the costs incurred to date included in the analysis were accurate complete and allowable under the contracts. (AS 2201.42 and. 44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | Incorrect opinion |
| 5 | Revenue | The issuer recognized certain revenue from contracts using the percentage-of-completion method. The following deficiencies were identified: · The firm did not perform any substantive procedures to evaluate the reasonableness of the estimated costs to complete open contracts. (AS 2501.07) Both financial statement and ICFR audits | AS 2501.7 | Incorrect opinion |
| 6 | Revenue | The issuer recognized certain revenue from contracts using the percentage-of-completion method. The following deficiencies were identified: · The firm did not perform any substantive procedures to test the completeness of the costs incurred to date and whether the costs incurred were allowable under the contracts. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 | Incorrect opinion |
| 7 | Revenue | The issuer recognized certain revenue from contracts using the percentage-of-completion method. The following deficiencies were identified: · The sample sizes the firm used in certain of its substantive procedures to test certain contracts 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 | Incorrect opinion |
| 8 | Revenue | The issuer recognized certain other revenue from contracts based on costs incurred. The following deficiencies were identified: · The firm did not identify and test any controls over the costs incurred to date for these contracts including whether these costs were allowable under the contracts. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | Incorrect opinion |
| 9 | Revenue | The issuer recognized certain other revenue from contracts based on costs incurred. The following deficiencies were identified: · The firm did not perform any substantive procedures to test the completeness of the costs incurred to date and whether the costs incurred were allowable under the contracts. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 | Incorrect opinion |
Issuer C3 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Business Combinations | During the year the issuer acquired a business. The firm did not identify and test controls that addressed the valuation of certain assets acquired and liabilities assumed. (AS 2201.39) In connection with our review the issuer reevaluated its controls over the valuation of these assets acquired and liabilities assumed 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 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 | Incorrect opinion |
| 2 | Business Combinations | The firm did not test or in the alternative test any controls over the completeness of a system-generated report that it used to make its selections to test the operating effectiveness of a control over the allocation of acquisition-related costs. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 | Incorrect opinion |
| 3 | Business Combinations | The firm did not perform any substantive procedures to assess the reasonableness of management's assertion that the book value of the acquired property plant and equipment approximated its fair value. (AS 2502.26 and .28) Both financial statement and ICFR audits | AS 2502.26; AS 2502.28 | Incorrect opinion |
Issuer D8 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The issuer recognized revenue from certain contracts that provided for the reimbursement of (1) employee-related costs which the issuer calculated using the time incurred by its employees to perform certain services under these contracts and (2) other expenses incurred by the issuer. The following deficiencies were identified: · The firm selected for testing a control that included a review of the employee-related costs and other expenses. The firm did not evaluate the specific review procedures the control owners performed to assess (1) the appropriateness of the time used to calculate the employee-related costs and (2) whether the other expenses were reimbursable under these contracts. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 2 | Revenue | The issuer recognized revenue from certain contracts that provided for the reimbursement of (1) employee-related costs which the issuer calculated using the time incurred by its employees to perform certain services under these contracts and (2) other expenses incurred by the issuer. The following deficiencies were identified: · The firm selected for testing a control that included a review of the employee-related costs and other expenses. The firm did not identify and test any controls over the accuracy and completeness of the time and expense information that the control owners used in the performance of this control. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 3 | Revenue | The issuer recognized revenue from certain contracts that provided for the reimbursement of (1) employee-related costs which the issuer calculated using the time incurred by its employees to perform certain services under these contracts and (2) other expenses incurred by the issuer. The following deficiencies were identified: · The firm did not perform any substantive procedures to evaluate whether the amounts recorded as revenue were reimbursable under these contracts. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 | |
| 4 | Revenue | The issuer recognized revenue from certain contracts that provided for the reimbursement of (1) employee-related costs which the issuer calculated using the time incurred by its employees to perform certain services under these contracts and (2) other expenses incurred by the issuer. The following deficiencies were identified: · The firm used the issuer's time information in its substantive testing of this revenue. The firm did not test or (as discussed above) test controls over the accuracy and completeness of this information. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 | |
| 5 | Research and development Expenses | The firm identified a significant deficiency related to the absence of controls over the completeness of purchase order information that the issuer used to calculate accrued expenses. The firm identified and tested one of the controls discussed below to address this significant deficiency. The firm did not identify that this control was not designed to address the completeness of the purchase order information. (AS 2201.68) Both financial statement and ICFR audits | AS 2201.68 | |
| 6 | Research and development Expenses | The firm selected for testing controls over one type of research and development expenses that consisted of reviews of the calculation of accrued expenses. 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 | |
| 7 | Research and development Expenses | The sample sizes the firm used in certain of its substantive procedures to test this type of research and development expenses 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 | |
| 8 | Payroll Expenses | The firm selected for testing a control over payroll expenses but did not identify and test any controls over the completeness and in some instances the accuracy of certain payroll information that the issuer used in the performance of this control. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 |
Issuer E5 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | For one business unit the firm selected for testing a control that consisted of the comparison of the invoice price for the sale of a product to the issuer's supporting documentation of the approved price for that product. The firm identified exceptions in the operation of this control and concluded without evaluating the effect of these exceptions on the operating effectiveness of the control that these exceptions did not result in a control deficiency. (AS 2201.48) Both financial statement and ICFR audits | AS 2201.48 | |
| 2 | Revenue | For the other business unit the firm did not identify and test any controls that addressed whether customer orders were processed using approved prices. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 3 | Revenue | For each of these business units the firm selected for testing a control that consisted of reviews of manual journal entries related to revenue. The firm did not test the operating effectiveness of these controls beyond inspecting documents that included signatures or other notations that indicated reviews performed as part of the controls had occurred. (AS 2201.44) Both financial statement and ICFR audits | AS 2201.44 | |
| 4 | Inventory | The firm selected for testing certain controls over the existence of this inventory. The firm identified exceptions in the operation of these controls and concluded without evaluating the effect of these exceptions on the operating effectiveness of the controls that these exceptions did not result in a control deficiency. (AS 2201.48) Both financial statement and ICFR audits | AS 2201.48 | |
| 5 | 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 deficiency 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 F4 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The issuer entered into contracts with customers at certain of its locations that required revenue to be recognized over time based on costs incurred to date relative to total estimated costs to complete these contracts. The firm excluded from the scope of its audits a large number of these locations. The firm did not (1) evaluate whether the risks of material misstatement the firm identified related to revenue recognized over time for the in-scope locations also applied to the excluded locations and (2) consider whether specific risks of material misstatement related to the issuer's use of centralized service centers to determine the amount of revenue to be recognized over time existed at the excluded locations. (AS 2101.11 and .12; AS 2201.B10) Both financial statement and ICFR audits | AS 2101.11; AS 2101.12; AS 2201.B10 | |
| 2 | Revenue | The issuer entered into contracts with customers at certain of its locations that required revenue to be recognized over time based on costs incurred to date relative to total estimated costs to complete these contracts. For two locations the firm selected for testing controls that included the review of the estimated costs to complete. The firm did not evaluate the specific review procedures the control owners performed to assess the reasonableness of the estimated costs to complete. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 3 | Revenue | The issuer entered into contracts with customers at certain of its locations that required revenue to be recognized over time based on costs incurred to date relative to total estimated costs to complete these contracts. For the two locations discussed above the firm did not evaluate the reasonableness of the estimated costs to complete for contracts open at year end beyond (1) comparing in the aggregate for all contracts estimated costs to complete at year end to the estimated costs at the subsequent month end and (2) comparing the gross margin for certain contracts completed during the year to the initial estimated margin for these contracts. (AS 2501.07) Both financial statement and ICFR audits | AS 2501.7 | |
| 4 | Journal Entries | The firm identified a fraud risk related to the potential for management to use manual journal entries to override controls at certain of the issuer's locations. For some of these locations the firm did not perform journal-entry testing to address the risk. (AS 2401.58) Both financial statement and ICFR audits | AS 2401.58 |
Issuer G7 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Allowance for Credit/Loan Losses | For loans that the issuer assessed collectively for impairment the issuer estimated the ALL using a model that included various loan data as inputs into the model. The issuer's independent loan review group identified numerous discrepancies in the loan data subject to its review during the year and reported these discrepancies to the issuer's ALL committee. The firm did not identify and test any controls that addressed the issuer's evaluation and resolution of these discrepancies. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 2 | Allowance for Credit/Loan Losses | The sample size the firm used in certain of its substantive procedures to test the accuracy of the loan data input into the model 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 deficiency 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 | Deposit Liabilities | The issuer placed items in deposit clearing or suspense accounts when the items required further evaluation. The firm selected for testing controls that included reviews of daily reconciliations of the issuer's deposit clearing and suspense accounts. The firm did not evaluate the specific review procedures that the control owners performed to understand the nature of reconciling items and assess whether items that had been cleared from those accounts had been appropriately resolved. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 4 | Deposit Liabilities | To substantively test deposit liabilities the firm tested certain deposit clearing and suspense account reconciliations. The firm did not test the reconciling items and whether items that had been cleared from those accounts had been appropriately resolved. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 | |
| 5 | Business Combinations | During the year the issuer acquired multiple businesses including commercial loan portfolios that consisted of various subtypes. The following deficiencies were identified: · The firm selected for testing a control that consisted of the review of the external valuation reports that the issuer used to determine the fair value of the loans acquired in these business combinations. The firm did not evaluate the specific review procedures that the control owner performed to assess the reasonableness of the prepayment rate assumptions that the external valuation specialist used to estimate the fair value of the acquired commercial loans. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 6 | Business Combinations | During the year the issuer acquired multiple businesses including commercial loan portfolios that consisted of various subtypes. The following deficiencies were identified: · To substantively test the acquired commercial loans the firm selected certain loans and for each loan selected evaluated the reasonableness of the prepayment rate the loss given default and the annual loss rate assumptions used to estimate the fair value of these loans by comparing these assumptions to market-based ranges for commercial loans. The firm did not perform procedures to obtain evidence that this market information was precise enough to enable the firm to identify potential material misstatements in the valuation of the various subtypes of the acquired commercial loans. (AS 2502.26 .28 and .31) Both financial statement and ICFR audits | AS 2502.26; AS 2502.28; AS 2502.31 | |
| 7 | Business Combinations | During the year the issuer acquired multiple businesses including commercial loan portfolios that consisted of various subtypes. The following deficiencies were identified: · In determining its sample sizes used to test the acquired commercial loans the firm did not take into account tolerable misstatement. As a result the samples that the firm used to test the valuation of these loans were too small to provide sufficient appropriate evidence. (AS 2315.16 .23 and .23A) Both financial statement and ICFR audits | AS 2315.16; AS 2315.23; AS 2315.23A |
Issuer H5 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Accounts Receivable | The firm did not identify and test any controls that addressed the accuracy of the prices and quantities that were used to record revenue at two of the issuer's business units. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 2 | Accounts Receivable | The sample sizes the firm used in certain of its substantive procedures to test revenue and accounts receivable at these business units 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 deficiency 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 | Derivatives | The issuer determined the recorded fair value of its derivatives based on valuations provided by an external valuation specialist. The firm selected for testing a control that consisted of the review of the valuation report prepared by the external valuation specialist including underlying inputs and assumptions. 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 | |
| 4 | Derivatives | The issuer determined the recorded fair value of its derivatives based on valuations provided by an external valuation specialist. The firm selected for testing a control that consisted of the review of the valuation report prepared by the external valuation specialist including underlying inputs and assumptions. The firm did not identify and test any controls over the accuracy and completeness of the information that was used in the operation of this control. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 5 | Derivatives | The firm selected for testing a control that consisted of the issuer's review of the appropriateness of the accounting treatment for a convertible debt transaction and related derivatives that the issuer entered into during the year. 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 |
Issuer I3 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | Revenue for certain of the issuer's sales transactions was processed by one of the issuer's information-technology ('IT') systems. This system automatically assigned predefined codes to each transaction based on the customer and type of service being provided. These codes were used by the issuer's billing system to record the related revenue. The firm did not identify and test any controls that addressed whether these codes were appropriately assigned by the IT system. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 2 | Revenue | The firm did not identify and test any controls over the accuracy and completeness of certain sales transactions that were manually entered into the IT system for processing. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 3 | 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 |
Issuer J2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | For certain of the issuer's operations the firm selected for testing a control that consisted of the review of monthly comparisons of actual revenue by distribution channel and by product category to budgeted amounts. In testing the operating effectiveness of this control the firm did not evaluate the specific review procedures that the control owner performed to investigate identified variances and determine whether items identified for follow up had been appropriately resolved. (AS 2201.44) Both financial statement and ICFR audits | AS 2201.44 | |
| 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 deficiency 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 K2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Allowance for Credit/Loan Losses | A portion of the issuer's loans had payment terms that allowed borrowers to make interest-only payments for a fixed period with the repayment of the outstanding principal balance due at a later date. The following deficiencies were identified: · The firm did not identify and test any controls that addressed the timely identification and evaluation of any indicators of deterioration in a borrower's ability to repay the principal associated with these loans. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 2 | Allowance for Credit/Loan Losses | A portion of the issuer's loans had payment terms that allowed borrowers to make interest-only payments for a fixed period with the repayment of the outstanding principal balance due at a later date. The following deficiencies were identified: · The firm did not perform procedures to evaluate whether any impairment indicators existed for these loans beyond testing the collateral valuation for one loan. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 |
Issuer L3 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Investment Securities | The issuer recorded the fair values of available-for-sale ('AFS') securities based on the prices it obtained from external pricing services. The firm selected for testing a control that consisted of meetings that the issuer held with the external pricing services to assess the appropriateness of the methods and assumptions used by the external pricing services to price those securities. The firm did not evaluate the specific procedures that the control owner performed to obtain an understanding of the methods and assumptions underlying the prices obtained from the pricing services. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 2 | Investment Securities | The firm selected for testing a control that consisted of the review of the categorization of AFS securities within the fair value hierarchy as set forth in FASB ASC Topic 820 Fair Value Measurement. The firm did not evaluate the specific procedures that the control owner performed to assess the appropriateness of the categorization within the fair value hierarchy. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 3 | Investment Securities | The firm's approach for testing the valuation of certain AFS securities was to develop an independent estimate of the fair values for a sample of these AFS securities using prices the firm obtained from various other external pricing services. For purposes of evaluating the reasonableness of the differences between its independent estimates and the issuer's estimates the firm did not obtain an understanding of the assumptions used by the issuer's external pricing services for the individual securities selected for testing. (AS 2502.40) Both financial statement and ICFR audits | AS 2502.40 |
Issuer M3 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Investment Securities | The issuer held investment securities that it classified based on original maturity as either cash equivalents or short-term investments in its financial statements. The firm did not identify and test any controls that addressed the appropriateness of the classification of these investments. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 2 | Investment Securities | The firm did not perform any substantive procedures that addressed the appropriateness of the classification of these investments. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 | |
| 3 | Intangible Assets | The firm did not identify and test any controls over the quantitative impairment analysis that the issuer performed over certain finite-lived intangible assets. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 |
Issuer N2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The firm did not perform any substantive procedures to evaluate whether this revenue was appropriately recognized based on the contractual terms and conditions. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 | |
| 2 | Post-Retirement Benefit Obligations | The firm selected for testing a control that consisted of the review of the assumptions used to estimate post-retirement benefit obligations. 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 |
Issuer O2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Business Combinations | During the year the issuer acquired a portfolio of loans and leases and accounted for the transaction as a business combination. The firm did not identify and test any controls over the valuation of the loans and leases acquired in this business combination. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 2 | Business Combinations | The firm did not perform any substantive procedures to test the valuation of the loans and leases acquired in this business combination. (AS 2502.15) Both financial statement and ICFR audits | AS 2502.15 |
Issuer P5 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Derivatives | The firm selected for testing a control that consisted of the review of the price curves that the issuer used to determine the value of commodity derivatives. 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 | Derivatives | The firm did not identify and test any controls that addressed the reasonableness of a significant assumption that the issuer used to value commodity derivatives for which monthly price quotes were not available. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 3 | Derivatives | The firm did not perform any substantive procedures to evaluate the reasonableness of the significant assumption discussed above. (AS 2502.26 and .28) Both financial statement and ICFR audits | AS 2502.26; AS 2502.28 | |
| 4 | Derivatives | The issuer's determination of whether to present gains and losses on derivative trades on a gross or net basis in the issuer's income statement was dependent on how the derivative trades were designated in the issuer's derivatives system. The firm did not identify and test any controls that addressed whether derivative trades had been appropriately designated in the system by the issuer's traders. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 5 | Derivatives | The sample sizes the firm used in certain of its substantive procedures to test the presentation and disclosure of derivative trades 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 deficiency 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 Q1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Long-Lived Assets | The issuer had determined during the first and second quarters that one of its properties was not impaired based on the results of analyses that it had performed in those quarters to determine whether the carrying value of the property was recoverable. The firm did not identify and test any controls over these analyses. (AS 2201.39) ICFR audit only | AS 2201.39 |