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PricewaterhouseCoopers LLP
United States · PricewaterhouseCoopers International Limited · Annually Inspected
- Inspection year
- 2019
- Report date
- 17-Dec-2020
- PCAOB release
- 104-2021-005a
- Audits reviewed
- 60
- Audits w/ Part I.A deficiencies
- 18
- Part I.A deficiency rate
- 30%
- Part I.A deficiencies
- 96
- Part I.B deficiencies
- 4
- Report
- View PDF ↗
Deficiencies (96)
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 | Inventory | The issuer held certain inventory at numerous warehouses that were subject to cycle counts. The issuer's cycle-count program required this inventory to be counted at specific frequencies during the year. The following deficiencies were identified: The firm did not identify and test any controls that addressed whether all locations in each of these warehouses were counted during the year and whether each location was counted with sufficient frequency in accordance with the issuer's cycle-count program. (AS 2201.39) In addition the firm did not identify and test any controls over the accuracy and completeness of the system-generated reports the issuer used in the operation of its cycle-count controls. (AS 2201.39). In connection with our review the issuer reevaluated its controls over its inventory cycle-count program 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 material weakness discussed below 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 | Inventory | The issuer held certain inventory at numerous warehouses that were subject to cycle counts. The issuer's cycle-count program required this inventory to be counted at specific frequencies during the year. The following deficiencies were identified: In addition the firm did not identify and test any controls over the accuracy and completeness of the system-generated reports the issuer used in the operation of its cycle-count controls. (AS 2201.39). In connection with our review the issuer reevaluated its controls over its inventory cycle-count program 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 material weakness discussed below 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 |
| 3 | Inventory | The sample sizes the firm used in certain of its substantive procedures to test this inventory 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 |
| 4 | Inventory | The issuer used an information-technology ('IT') application to calculate its reserve for excess and obsolete ('E&O') inventory and then made manual adjustments to this calculation to determine the reserve. The following deficiencies were identified: The firm did not identify and test any controls over the application's calculation of the E&O reserve. (AS 2201.39). Both financial statement and ICFR audits | AS 2201.39 | Incorrect opinion |
| 5 | Inventory | The firm selected for testing controls that included the issuer's reviews of the assumptions that were entered into the application and the manual adjustments that the issuer made to the calculation. The firm did not evaluate the review procedures that the control owners performed including the procedures to identify matters for follow up and the procedures to determine whether those matters were appropriately resolved. (AS 2201.42 and .44). In connection with our review the issuer reevaluated its controls over its E&O inventory reserve 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 material weakness discussed above 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 | Incorrect opinion |
| 6 | Inventory | The sample sizes the firm used in certain of its substantive procedures to test the issuer's E&O reserve 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 |
| 7 | Inventory | The firm's approach for substantively testing the E&O reserve was to review and test management's process. The firm did not perform any procedures to evaluate the reasonableness of the forecasted product demand assumptions that were used to calculate the E&O reserve. (AS 2501.11) Both financial statement and ICFR audits | AS 2501.11 | Incorrect opinion |
Issuer B7 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Investment Securities | The issuer recorded the fair values of its available-for-sale securities based on prices it obtained from an external pricing service. The firm selected for testing controls that consisted of the issuer's (1) comparison of these prices to prices obtained from other external pricing services and investigation of price variances that exceeded certain thresholds and (2) review of the categorization of the securities within the fair value hierarchy as set forth in FASB ASC Topic 820 Fair Value Measurement. The firm did not evaluate the specific review procedures that the control owners performed to evaluate (1) whether the fair values of the securities identified for investigation were reasonable and (2) the pricing inputs used to determine the categorization of the securities within the fair value hierarchy. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | Incorrect opinion |
| 2 | Investment Securities | The issuer recorded the fair values of its available-for-sale securities based on prices it obtained from an external pricing service. The firm selected for testing controls that consisted of the issuer's (1) comparison of these prices to prices obtained from other external pricing services and investigation of price variances that exceeded certain thresholds and (2) review of the categorization of the securities within the fair value hierarchy as set forth in FASB ASC Topic 820 Fair Value Measurement. The firm did not test the aspect of one of these controls that addressed whether all of the issuer's securities were subject to this comparison. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | Incorrect opinion |
| 3 | Allowance for Credit/Loan Losses | The firm selected for testing a control that consisted of a review of past-due loans performed by the issuer to determine whether these loans would be individually or collectively evaluated for impairment. The firm did not identify and test any controls over the accuracy and completeness of a report that was used in the operation of this control. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | Incorrect opinion |
| 4 | Allowance for Credit/Loan Losses | To determine the qualitative reserve component of the ALL for loans that were collectively evaluated for impairment the issuer assigned a loss factor to each loan based on certain qualitative considerations. The following deficiencies were identified: · The firm selected for testing controls that included the issuer's reviews of the qualitative reserve component of the ALL and the corresponding loss factors. The firm did not evaluate the specific review procedures that the control owners performed to assess whether the loss factors assigned to each loan were appropriate. (AS 2201.42 and .44) In connection with our review the issuer reevaluated its controls over the ALL 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 material weakness discussed below 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 | Incorrect opinion |
| 5 | Allowance for Credit/Loan Losses | To determine the qualitative reserve component of the ALL for loans that were collectively evaluated for impairment the issuer assigned a loss factor to each loan based on certain qualitative considerations. The following deficiencies were identified: · The firm did not evaluate the reasonableness of the loss factors beyond comparing the factors to those used in the prior year inquiring of management about changes to those factors and the effects on the ALL and recalculating the qualitative reserve component by loan type. (AS 2501.11) Both financial statement and ICFR audits | AS 2501.11 | Incorrect opinion |
| 6 | Deposit Liabilities | The issuer identified a control deficiency related to unauthorized access to customer accounts that resulted in two fraudulent wire-transfer requests that occurred at one of its locations. The firm did not sufficiently evaluate the severity of the control deficiency because it limited its evaluation of the magnitude of the potential misstatement to one of the fraudulent wire-transfer requests at the affected location without considering the issuer's other locations that were subject to the same controls. (AS 2201.62) In connection with our review the issuer evaluated its controls over wire transfers 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 material weakness discussed above and the firm modified its report 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 | Incorrect opinion |
| 7 | Deposit Liabilities | In response to this control deficiency the issuer made changes to the design of one of its wire-transfer controls. The firm did not perform any procedures to evaluate the changes made to the design of this control. (AS 2201.68) In connection with our review the issuer evaluated its controls over wire transfers 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 material weakness discussed above and the firm modified its report 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 | Incorrect opinion |
Issuer C4 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The firm identified control deficiencies in the issuer's sales process related to segregation of duties conflicts and individuals having inappropriate access to the issuer's revenue system that provided these users with the ability to create and modify customer accounts enter sales orders and record adjustments to accounts receivable. The firm identified and tested various compensating controls including controls that the issuer implemented in response to these control deficiencies. The following audit deficiencies were identified: For the compensating controls the firm did not evaluate the implications of certain control owners having segregation of duties conflicts and/or inappropriate access to the revenue system. (AS 2201.68). Both financial statement and ICFR audits | AS 2201.68 | Incorrect opinion |
| 2 | Revenue | The firm identified control deficiencies in the issuer's sales process related to segregation of duties conflicts and individuals having inappropriate access to the issuer's revenue system that provided these users with the ability to create and modify customer accounts enter sales orders and record adjustments to accounts receivable. The firm identified and tested various compensating controls including controls that the issuer implemented in response to these control deficiencies. The following audit deficiencies were identified: · One of the controls that the issuer implemented consisted of the review of a report of all users who created or modified sales orders during the year. In testing this control the firm did not evaluate the specific review procedures that the control owners performed to identify users with inappropriate access and assess whether the sales orders these users created or modified were appropriate. (AS 2201.68) In connection with our review the issuer reevaluated its controls over segregation of duties and access to the revenue system and concluded that material weaknesses existed that had not been previously identified. The issuer subsequently revised its report on ICFR to reflect these material weaknesses 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 | Incorrect opinion |
| 3 | Revenue | The firm identified control deficiencies in the issuer's sales process related to segregation of duties conflicts and individuals having inappropriate access to the issuer's revenue system that provided these users with the ability to create and modify customer accounts enter sales orders and record adjustments to accounts receivable. The firm identified and tested various compensating controls including controls that the issuer implemented in response to these control deficiencies. The following audit deficiencies were identified: · One of the controls that the issuer implemented consisted of the review of a report of all users who created or modified sales orders during the year. The firm did not identify and test any controls over the accuracy and completeness of the report used in the operation of this control. (AS 2201.68) In connection with our review the issuer reevaluated its controls over segregation of duties and access to the revenue system and concluded that material weaknesses existed that had not been previously identified. The issuer subsequently revised its report on ICFR to reflect these material weaknesses 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 | Incorrect opinion |
| 4 | Revenue | The sample size the firm used in certain of its substantive procedures to test revenue was too small to provide sufficient appropriate audit evidence because these procedures were designed based on a level of control reliance that was not supported due to the deficiencies in the firm's control testing discussed above. (AS 2301.16 .18 and .37; AS 2315.19 .23 and .23A) 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 |
Issuer D1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Stock Compensation. | During the audit the firm did not identify that the issuer's recognition of compensation expense associated with certain equity awards that contained both service and performance conditions was not in conformity with FASB ASC Subtopic 718-10 Compensation - Stock Compensation - Overall. (AS 2810.30) In connection with our review the issuer reevaluated its accounting for compensation expense related to these equity awards 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. Financial statement audit only | AS 2810.30 | Incorrect opinion |
Issuer E21 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Derivatives | The issuer was party to a contract with one of its customers that required the issuer to provide a minimum monthly volume of oil produced from a defined area within one of its properties. The issuer determined that the contract represented a derivative contract and qualified for the scope exception for normal purchases and normal sales under FASB ASC Topic 815 Derivatives and Hedging. The contract included a provision that allowed the issuer to defer any payments owed to the customer for any production below the minimum monthly volumes over the life of the contract ('volume payment') until the end of the contract. Subsequent to year end but prior to the issuer filing its financial statements the issuer renegotiated certain terms of the contract and determined that these changes were enforceable as of year end. With respect to the firm's control testing over and substantive procedures related to whether the contract qualified for the derivative accounting scope exception for normal purchases and normal sales the following deficiencies were identified: · The firm did not identify and test any controls over the issuer's evaluation of the changes to the terms of the contract and the potential implications on the issuer's accounting for the contract in accordance with FASB ASC Topic 815. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 2 | Derivatives | The issuer was party to a contract with one of its customers that required the issuer to provide a minimum monthly volume of oil produced from a defined area within one of its properties. The issuer determined that the contract represented a derivative contract and qualified for the scope exception for normal purchases and normal sales under FASB ASC Topic 815 Derivatives and Hedging. The contract included a provision that allowed the issuer to defer any payments owed to the customer for any production below the minimum monthly volumes over the life of the contract ('volume payment') until the end of the contract. Subsequent to year end but prior to the issuer filing its financial statements the issuer renegotiated certain terms of the contract and determined that these changes were enforceable as of year end. With respect to the firm's control testing over and substantive procedures related to whether the contract qualified for the derivative accounting scope exception for normal purchases and normal sales the following deficiencies were identified: · The firm did not identify and test any controls over the issuer's ongoing evaluation of whether its physical delivery of the contractually required volumes of oil to the customer would be probable. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 3 | Derivatives | The issuer was party to a contract with one of its customers that required the issuer to provide a minimum monthly volume of oil produced from a defined area within one of its properties. The issuer determined that the contract represented a derivative contract and qualified for the scope exception for normal purchases and normal sales under FASB ASC Topic 815 Derivatives and Hedging. The contract included a provision that allowed the issuer to defer any payments owed to the customer for any production below the minimum monthly volumes over the life of the contract ('volume payment') until the end of the contract. Subsequent to year end but prior to the issuer filing its financial statements the issuer renegotiated certain terms of the contract and determined that these changes were enforceable as of year end. With respect to the firm's control testing over and substantive procedures related to whether the contract qualified for the derivative accounting scope exception for normal purchases and normal sales the following deficiencies were identified: · The firm did not perform any substantive procedures to evaluate whether considering the issuer's past production trends and expected future production the minimum monthly volumes per the contract could reasonably be met. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 | |
| 4 | Derivatives | The issuer was party to a contract with one of its customers that required the issuer to provide a minimum monthly volume of oil produced from a defined area within one of its properties. The issuer determined that the contract represented a derivative contract and qualified for the scope exception for normal purchases and normal sales under FASB ASC Topic 815 Derivatives and Hedging. The contract included a provision that allowed the issuer to defer any payments owed to the customer for any production below the minimum monthly volumes over the life of the contract ('volume payment') until the end of the contract. Subsequent to year end but prior to the issuer filing its financial statements the issuer renegotiated certain terms of the contract and determined that these changes were enforceable as of year end. With respect to the firm's control testing over and substantive procedures related to whether the contract qualified for the derivative accounting scope exception for normal purchases and normal sales the following deficiencies were identified: · The contract included a provision that required the issuer to make a partial payment if at any time the issuer's estimate of the volume payment at the end of the contract exceeded a certain amount. In the year under audit the issuer's estimate of future forecasted production indicated that the volume payment would exceed this amount in the following year. The firm did not perform any substantive procedures to evaluate whether this potential partial volume payment would contradict the issuer's assertion that it was probable that the contract would not result in a net settlement. (AS 2810.03) Both financial statement and ICFR audits | AS 2810.3 | |
| 5 | Derivatives | The issuer was party to a contract with one of its customers that required the issuer to provide a minimum monthly volume of oil produced from a defined area within one of its properties. The issuer determined that the contract represented a derivative contract and qualified for the scope exception for normal purchases and normal sales under FASB ASC Topic 815 Derivatives and Hedging. The contract included a provision that allowed the issuer to defer any payments owed to the customer for any production below the minimum monthly volumes over the life of the contract ('volume payment') until the end of the contract. Subsequent to year end but prior to the issuer filing its financial statements the issuer renegotiated certain terms of the contract and determined that these changes were enforceable as of year end. With respect to the firm's control testing over and substantive procedures related to whether the contract qualified for the derivative accounting scope exception for normal purchases and normal sales the following deficiencies were identified: · The firm did not perform any substantive procedures to evaluate whether a change to certain terms of the contract that would allow the issuer to reduce any volume payment would be a form of net settlement. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 | |
| 6 | Derivatives | The issuer was party to a contract with one of its customers that required the issuer to provide a minimum monthly volume of oil produced from a defined area within one of its properties. The issuer determined that the contract represented a derivative contract and qualified for the scope exception for normal purchases and normal sales under FASB ASC Topic 815 Derivatives and Hedging. The contract included a provision that allowed the issuer to defer any payments owed to the customer for any production below the minimum monthly volumes over the life of the contract ('volume payment') until the end of the contract. Subsequent to year end but prior to the issuer filing its financial statements the issuer renegotiated certain terms of the contract and determined that these changes were enforceable as of year end. With respect to the firm's control testing over and substantive procedures related to whether the contract qualified for the derivative accounting scope exception for normal purchases and normal sales the following deficiencies were identified: · The firm did not evaluate whether the issuer's determination of the contract-end date was appropriate and whether the issuer's physical delivery of the contractually required volumes of oil to the customer by this date would be probable. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 | |
| 7 | Derivatives | With respect to the firm's control testing over and substantive procedures related to the consideration of the contract terms and the implications of these terms on revenue recognition the following deficiencies were identified: · The firm selected for testing certain controls over the issuer's evaluation of contracts including changes to existing contracts for revenue recognition under FASB ASC Topic 606 Revenue from Contracts with Customers. The firm concluded that these controls were designed and operating effectively but it did not identify that the issuer did not evaluate (1) the accounting implications of the changes to the terms of the contract and (2) whether the revenue derived from the contract included an element of variable consideration that may have required the issuer to constrain revenue and record a contract liability. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 8 | Derivatives | With respect to the firm's control testing over and substantive procedures related to the consideration of the contract terms and the implications of these terms on revenue recognition the following deficiencies were identified: · The firm did not perform any substantive procedures to test the forecasted production that the issuer used to determine the estimated volume payment. (AS 2501.11) Both financial statement and ICFR audits | AS 2501.11 | |
| 9 | Derivatives | With respect to the firm's control testing over and substantive procedures related to the consideration of the contract terms and the implications of these terms on revenue recognition the following deficiencies were identified: · The firm did not perform sufficient substantive procedures to evaluate the estimated volume payment at the end of the contract. Its procedures to test the forecasted production for the defined area were limited to (1) comparing the issuer's prior-year estimate of forecasted production for the overall property for the current year to the actual production and (2) comparing the forecasted production for the defined area to the total forecasted production for the overall property. (AS 2501.11) Both financial statement and ICFR audits | AS 2501.11 | |
| 10 | Derivatives | With respect to the firm's control testing over and substantive procedures related to the consideration of the contract terms and the implications of these terms on revenue recognition the following deficiencies were identified: · The firm did not evaluate the accounting implications of the changes to the contract terms on revenue recognition and as a result did not identify that (1) the issuer used an incorrect contract-end date to determine the estimated volume payment that it used to evaluate revenue recognition and (2) the revenue derived from the contract included an element of variable consideration that may have required the issuer to constrain revenue and record a contract liability under FASB ASC Topic 606. (AS 2810.30) Both financial statement and ICFR audits | AS 2810.30 | |
| 11 | Derivatives | The issuer recorded oil revenue based on volumes produced from each well; the issuer's ownership interest in each well varied from well to well. The firm did not identify and test any controls over the accuracy of the volume data by well used to record revenue. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 12 | Derivatives | The firm used the volume data in its substantive testing of this revenue but did not perform any procedures to test or in the alternative test any controls over the accuracy of the data. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 | |
| 13 | Oil and Gas Properties | During the year the issuer identified indicators of possible impairment for two of its oil- and gas-producing properties. The issuer developed undiscounted cash flows for its impairment analysis using various assumptions that included (1) oil and gas reserves including historical and forecasted production (2) future development costs and (3) product prices including adjustments to those prices. The issuer engaged an external specialist to estimate the issuer's oil and gas reserves. To test the forecasted production assumption the firm compared the issuer's prior-year estimate of forecasted production for the current year to the actual production and investigated any variances. The firm did not perform sufficient substantive procedures to evaluate the reasonableness of the forecasted production for both properties because its procedures were limited to inquiring of management about the variances. (AS 2501.11) Both financial statement and ICFR audits | AS 2501.11 | |
| 14 | Oil and Gas Properties | The issuer held certain assets that it planned to use to develop one of these properties. The firm did not evaluate whether the issuer should have grouped these assets with this property's assets for its analysis of this property for possible impairment. (AS 2501.11) Both financial statement and ICFR audits | AS 2501.11 | |
| 15 | Oil and Gas Properties | The firm performed substantive analytical procedures to test the reasonableness of the future development costs for each of these two properties. The firm developed its expectations based on (1) historical development costs for one of these properties (2) the number of wells drilled and completed during the year and (3) the issuer's average ownership interest ('working interest') in the wells. These analytical procedures did not provide sufficient appropriate audit evidence because the following deficiencies were identified: · The firm did not determine whether the historical development costs for one property could be expected to be predictive of the future development costs for both properties. (AS 2305.13 and .14) Both financial statement and ICFR audits | AS 2305.13; AS 2305.14 | |
| 16 | Oil and Gas Properties | The firm performed substantive analytical procedures to test the reasonableness of the future development costs for each of these two properties. The firm developed its expectations based on (1) historical development costs for one of these properties (2) the number of wells drilled and completed during the year and (3) the issuer's average ownership interest ('working interest') in the wells. These analytical procedures did not provide sufficient appropriate audit evidence because the following deficiencies were identified: · In testing the historical costs used to develop its expectations the firm did not identify that certain costs should have been excluded from those expectations. (AS 2305.16) Both financial statement and ICFR audits | AS 2305.16 | |
| 17 | Oil and Gas Properties | The firm performed substantive analytical procedures to test the reasonableness of the future development costs for each of these two properties. The firm developed its expectations based on (1) historical development costs for one of these properties (2) the number of wells drilled and completed during the year and (3) the issuer's average ownership interest ('working interest') in the wells. These analytical procedures did not provide sufficient appropriate audit evidence because the following deficiencies were identified: · For one of these properties the firm reduced the historical development costs based on an estimate of certain cost savings the issuer expected to achieve in future years. The firm did not perform any procedures beyond inquiring of management to test these expected cost savings. (AS 2305.16) Both financial statement and ICFR audits | AS 2305.16 | |
| 18 | Oil and Gas Properties | The firm performed substantive analytical procedures to test the reasonableness of the future development costs for each of these two properties. The firm developed its expectations based on (1) historical development costs for one of these properties (2) the number of wells drilled and completed during the year and (3) the issuer's average ownership interest ('working interest') in the wells. These analytical procedures did not provide sufficient appropriate audit evidence because the following deficiencies were identified: · The firm did not perform any procedures to test the accuracy of the number of wells drilled and completed during the year. (AS 2305.16) Both financial statement and ICFR audits | AS 2305.16 | |
| 19 | Oil and Gas Properties | The firm performed substantive analytical procedures to test the reasonableness of the future development costs for each of these two properties. The firm developed its expectations based on (1) historical development costs for one of these properties (2) the number of wells drilled and completed during the year and (3) the issuer's average ownership interest ('working interest') in the wells. These analytical procedures did not provide sufficient appropriate audit evidence because the following deficiencies were identified: · The firm did not identify that the working interest it used to develop its expectation for one of the issuer's properties was different than the working interest used by the issuer's specialist. (AS 2305.16) Both financial statement and ICFR audits | AS 2305.16 | |
| 20 | Oil and Gas Properties | The firm did not perform any procedures to test the accuracy and completeness of the development cost production and pricing data that the issuer provided to the external specialist and that the external specialist used to estimate the issuer's oil and gas reserves. (AS 1210.12) Both financial statement and ICFR audits | AS 1210.12 | |
| 21 | Oil and Gas Properties | The issuer used the forecasted production and future development costs to determine the depletion expense for these properties. As a result of the deficiencies in the firm's testing of this information as discussed above the firm did not perform sufficient substantive procedures to test the issuer's depletion expense. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 |
Issuer F10 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | For one of its business units the issuer entered into revenue arrangements with multiple performance obligations and allocated the total transaction price for each arrangement to the separate performance obligations on a relative standalone selling price basis. The following deficiencies were identified: · The firm did not identify and test any controls that addressed whether the issuer's allocation of revenue to separate performance obligations was based on relative standalone selling prices in conformity with FASB ASC Topic 606. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 2 | Revenue | For one of its business units the issuer entered into revenue arrangements with multiple performance obligations and allocated the total transaction price for each arrangement to the separate performance obligations on a relative standalone selling price basis. The following deficiencies were identified: · For certain revenue recorded from these arrangements the firm did not identify and test any controls that addressed whether the individual prices for goods sold were agreed to by customers prior to recording revenue under FASB ASC Topic 606. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 3 | Revenue | For one of its business units the issuer entered into revenue arrangements with multiple performance obligations and allocated the total transaction price for each arrangement to the separate performance obligations on a relative standalone selling price basis. The following deficiencies were identified: · For certain of these revenue transactions the firm did not identify and test any controls that addressed whether the quantities shipped and invoiced by the issuer represented quantities ordered by customers. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 4 | Revenue | For one of its business units the issuer entered into revenue arrangements with multiple performance obligations and allocated the total transaction price for each arrangement to the separate performance obligations on a relative standalone selling price basis. The following deficiencies were identified: · For certain other revenue recorded from these arrangements the firm did not identify and test any controls that addressed whether certain of these revenue transactions were valid and accurate. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 5 | Revenue | For one of its business units the issuer entered into revenue arrangements with multiple performance obligations and allocated the total transaction price for each arrangement to the separate performance obligations on a relative standalone selling price basis. The following deficiencies were identified: · The firm did not perform any substantive procedures to evaluate whether the issuer's allocation of revenue to separate performance obligations was based on relative standalone selling prices in conformity with FASB ASC Topic 606. (AS 2810.30) Both financial statement and ICFR audits | AS 2810.30 | |
| 6 | Revenue | For another business unit the firm did not identify and test any controls that addressed whether the (1) quantities shipped and invoiced by the issuer represented quantities ordered by customers and (2) prices were agreed to by customers prior to recording revenue. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 7 | Revenue | The firm selected for testing a control that consisted of the issuer's review and approval of changes to the prices maintained in the pricing master file. 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 | |
| 8 | Revenue | The firm selected for testing a control that consisted of the issuer's review and approval of changes to the prices maintained in the pricing master file. The firm did not identify and test any controls that addressed whether all approved price changes were made to the pricing master file. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 9 | Revenue | For a third business unit the firm identified control deficiencies related to the issuer's controls over the review and approval of sales orders and changes to prices maintained in the pricing master file. The firm identified and tested various controls that it believed would mitigate these deficiencies. The firm did not identify that these compensating controls did not address the risks of material misstatement related to fictitious sales orders and inaccurate prices. (AS 2201.68) Both financial statement and ICFR audits | AS 2201.68 | |
| 10 | Revenue | The sample size the firm used in certain of its substantive procedures to test revenue at two of these business units 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 G8 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | For revenue from fixed-price contracts the firm performed substantive procedures to test a portion of this revenue but did not perform any procedures to test the remaining portion. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 | |
| 2 | Revenue | For revenue from completed contracts the firm designed one of its substantive procedures as a dual-purpose test. The firm performed its substantive procedure using the same sample size it determined for its control testing. This sample size was too small to provide sufficient appropriate audit evidence for the substantive procedure because the firm did not use the larger of the samples that would otherwise have been designed for the two separate purposes. (AS 2315.44) Both financial statement and ICFR audits | AS 2315.44 | |
| 3 | Accounts Receivable | To test certain accounts receivable the firm performed confirmation procedures for all invoices that exceeded a monetary threshold. For the items for which the requested confirmations were not returned the firm did not perform alternative procedures that provided sufficient appropriate audit evidence that these invoices represented valid receivables at year end. (AS 2310.31) Both financial statement and ICFR audits | AS 2310.31 | |
| 4 | Accounts Receivable | For these accounts receivable that were not subject to confirmation procedures the firm performed substantive procedures for a nonstatistical sample of invoices. For certain items in its sample the firm did not perform procedures that provided sufficient appropriate audit evidence that these invoices represented valid receivables at year end. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 | |
| 5 | Income Taxes | The firm selected for testing a control that included the issuer's review of the valuation allowance for its deferred tax assets related to its domestic and foreign operations. The firm did not evaluate the specific review procedures that the control owners performed to evaluate the evidence the issuer used to determine whether a valuation allowance was necessary. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 6 | Income Taxes | The firm selected for testing controls that consisted of the issuer's preparation and review of its tax provision including the control discussed above. The firm did not test the aspects of these controls that addressed the income tax expense and deferred taxes recorded for the issuer's foreign operations other than the aspect related to the valuation allowance as discussed above. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 7 | Income Taxes | The firm did not perform sufficient substantive procedures to test the income tax expense and deferred taxes recorded for the issuer's foreign operations because the firm's procedures were limited to comparing balances from the tax provision to supporting documentation for only a small number of deferred tax assets and for only two of the issuer's foreign subsidiaries. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 | |
| 8 | Income Taxes | For one of its foreign subsidiaries the issuer reported a full valuation allowance related to certain deferred tax assets. The firm concluded that the valuation allowance was appropriate without evaluating certain evidence that suggested that a valuation allowance may not be necessary. (AS 2501.11; AS 2810.03) Both financial statement and ICFR audits | AS 2501.11; AS 2810.3 |
Issuer H7 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Income Taxes | The firm identified a control deficiency related to inappropriate access for numerous users to the issuer's IT system that was used to process and record transactions related to revenue and income taxes. The firm did not sufficiently evaluate the severity of this control deficiency because it limited its evaluation to inspecting activity logs of the users that had inappropriate access. (AS 2201.62) Both financial statement and ICFR audits | AS 2201.62 | |
| 2 | Income Taxes | The firm identified a control deficiency related to inappropriate access for numerous users to the issuer's IT system that was used to process and record transactions related to revenue and income taxes. The firm identified and tested various controls that it believed would mitigate this deficiency. The firm did not identify that these compensating controls did not address the risks related to inappropriate access for these users. (AS 2201.68) Both financial statement and ICFR audits | AS 2201.68 | |
| 3 | Income Taxes | During the year the issuer completed a restructuring of its foreign subsidiaries. The following deficiencies were identified: · The firm did not identify and test any controls over the issuer's evaluation of the tax considerations related to this restructuring. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 4 | Income Taxes | During the year the issuer completed a restructuring of its foreign subsidiaries. The following deficiencies were identified: · The firm did not perform any substantive procedures to evaluate the issuer's conclusions related to the tax effects of the restructuring beyond reading a document the issuer's external specialist prepared that summarized the nature of the restructuring and the issuer's conclusions on the related tax considerations. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 | |
| 5 | Income Taxes | The issuer reported an income tax benefit from tax exemptions that a foreign tax authority granted the issuer. These exemptions were subject to compliance with certain conditions. The following deficiencies were identified: · The firm selected for testing a control that consisted of the review of an analysis that the issuer used to determine whether it met those conditions. The firm did not evaluate the specific review procedures that the control owner performed to assess the issuer's compliance with those conditions. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 6 | Income Taxes | The issuer reported an income tax benefit from tax exemptions that a foreign tax authority granted the issuer. These exemptions were subject to compliance with certain conditions. The following deficiencies were identified: · The firm selected for testing a control that consisted of the review of an analysis that the issuer used to determine whether it met those conditions. The firm did not identify and test any controls over the accuracy and completeness of certain information in the issuer's analysis that the control owner used in the operation of this control. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 7 | Income Taxes | The issuer reported an income tax benefit from tax exemptions that a foreign tax authority granted the issuer. These exemptions were subject to compliance with certain conditions. The following deficiencies were identified: · The firm did not perform any substantive procedures to evaluate the issuer's compliance with those conditions. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 |
Issuer I5 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Income Taxes | With respect to the issuer's transfer pricing related to intercompany transactions the following deficiencies were identified: · The firm selected for testing a control over the issuer's monitoring of compliance with its transfer pricing methodology including the review of whether all transactions introducing transfer-pricing risk had been identified for evaluation. The firm did not evaluate the specific review procedures that the control owner performed to (1) determine whether the issuer identified a complete population of transactions with potential transfer-pricing implications for review and (2) assess the issuer's compliance with its transfer-pricing methodology for the transactions that were identified including the control owner's review of intercompany margins. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 2 | Income Taxes | With respect to the issuer's transfer pricing related to intercompany transactions the following deficiencies were identified: · The firm did not perform any substantive procedures to assess the issuer's compliance with its transfer-pricing methodology for intercompany transactions. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 | |
| 3 | Income Taxes | With respect to the issuer's uncertain tax positions the firm did not identify and test any controls over the issuer's evaluation of (1) the unit of account that it used to determine individual tax positions and (2) the assumptions used to evaluate whether its uncertain tax positions met the recognition threshold. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 4 | Income Taxes | With respect to the issuer's disclosures related to its permanent reinvestment of foreign earnings the following deficiencies were identified: · The firm selected for testing a control that included the issuer's review of its disclosures related to these earnings. The firm did not evaluate the specific review procedures that the control owner performed to evaluate the potential effects of the changes in federal tax laws on the issuer's disclosures. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 5 | Income Taxes | With respect to the issuer's disclosures related to its permanent reinvestment of foreign earnings the following deficiencies were identified: · The firm did not perform any substantive procedures to evaluate the potential effects of the changes in federal tax laws on the issuer's disclosures related to its permanent reinvestment of foreign earnings. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 |
Issuer J5 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Income Taxes | During the year certain changes in federal tax laws affected the issuer's determination of its state and local taxes. The firm did not identify and test any controls over the issuer's evaluation of the effects of these changes on its state and local taxes. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 2 | Income Taxes | The firm did not perform any substantive procedures to evaluate the effects of the changes in federal tax laws on the issuer's state and local taxes. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 | |
| 3 | Income Taxes | The firm did not identify and test any controls that addressed whether the issuer's calculations of certain limitations on deductions used to determine income tax expense were appropriate. Further the firm did not identify and test any controls over the issuer's evaluation of the base erosion and anti-abuse tax ('BEAT'). (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 4 | Income Taxes | The firm did not perform any substantive procedures to (1) test the adjusted taxable income amount that the issuer used to determine its business interest deduction and (2) evaluate the issuer's assertion that it did not meet the requirements to calculate and record a BEAT. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 | |
| 5 | Income Taxes | The issuer reported an income tax benefit from tax exemptions that a foreign tax authority granted the issuer. These exemptions were subject to compliance with certain conditions. The firm did not identify and test any controls that addressed whether the issuer met those conditions. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 |
Issuer K4 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Investments | The issuer recorded the fair value of its available-for-sale ('AFS') securities based on prices it obtained from an external pricing service. The firm selected for testing various controls over the valuation of these securities that included the issuer's comparison of these prices to prices obtained from another external pricing service. The securities and prices obtained from both pricing services were manually entered by the issuer into a spreadsheet for this comparison. The firm did not test the aspects of these controls that addressed whether the prices the issuer used in this comparison were derived from different sources. (AS 2201.42 and .44) ICFR audit only | AS 2201.42; AS 2201.44 | |
| 2 | Investments | The issuer recorded the fair value of its available-for-sale ('AFS') securities based on prices it obtained from an external pricing service. The firm selected for testing various controls over the valuation of these securities that included the issuer's comparison of these prices to prices obtained from another external pricing service. The securities and prices obtained from both pricing services were manually entered by the issuer into a spreadsheet for this comparison. The firm did not identify and test any controls over the accuracy of the prices that were manually entered into the comparison spreadsheet. (AS 2201.39) ICFR audit only | AS 2201.39 | |
| 3 | Investments | The firm did not identify and test any controls over the issuer's determination of the categorization of its AFS securities within the fair value hierarchy as set forth in FASB ASC Topic 820. (AS 2201.39) ICFR audit only | AS 2201.39 | |
| 4 | Allowance for Credit/Loan Losses | The issuer used a credit risk-rating model to determine (1) a risk-rating score for each loan and (2) the general reserve component of the ALL using the risk-rating scores as important inputs. The firm selected for testing controls that consisted of the issuer's reviews of the outputs from this model. The firm did not evaluate the specific review procedures that the control owners performed to evaluate the appropriateness of the risk-rating scores and the reasonableness of the general reserve. (AS 2201.42 and .44) ICFR audit only | AS 2201.42; AS 2201.44 |
Issuer L4 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Accounts Receivable | The issuer used two IT systems to process and record transactions related to revenue and certain accounts receivable. The following deficiencies were identified: · The firm selected for testing various controls over program change management for these IT systems but did not perform any procedures to test the completeness of the population of changes obtained from the issuer from which it made its selections for testing. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 | |
| 2 | Accounts Receivable | The issuer used two IT systems to process and record transactions related to revenue and certain accounts receivable. The following deficiencies were identified: · The firm selected for testing various controls over the issuer's review of user access to these IT systems but did not evaluate the specific procedures that the control owners performed to determine whether to grant access to users or whether the granted access continued to be appropriate. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 3 | Accounts Receivable | The issuer used two IT systems to process and record transactions related to revenue and certain accounts receivable. The following deficiencies were identified: · The firm tested certain automated controls that used data maintained by one of these IT systems. The accuracy and completeness of these data depended on effective IT general controls ('ITGCs'). Due to the deficiencies in the firm's testing of the ITGCs discussed above the firm's testing of these automated controls was not sufficient. (AS 2201.46) Both financial statement and ICFR audits | AS 2201.46 | |
| 4 | Accounts Receivable | The sample sizes the firm used in certain of its substantive procedures to test revenue and these accounts receivable 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 M3 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | For certain revenue the issuer entered information related to the types and quantities of services provided into a source system; this information was transferred from the source system to the issuer's revenue system to record revenue. The firm did not identify and test any controls over the accuracy and completeness of this information. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 2 | Revenue | The firm tested a control that consisted of a quarterly comparison of financial results including this revenue to the results of the prior quarter. The firm did not sufficiently test controls over the accuracy and completeness of certain data used in the operation of this control because it did not test an aspect of another control that addressed the accuracy and completeness of these data. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 3 | Revenue | The sample size the firm used in certain of its substantive procedures to test this revenue was too small to provide sufficient appropriate audit evidence because these procedures were designed based on a level of control reliance that was not supported due to the deficiencies in the firm's control testing discussed above. (AS 2301.16 .18 and .37; AS 2315.19 .23 and .23A) 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 N3 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Allowance for Credit/Loan Losses | The issuer used models to determine the general reserve component of the ALL for commercial loans collectively evaluated for impairment. These models used various data including a loan risk rating for each loan that were derived from the issuer's data warehouse system. The loan risk rating was an important input in estimating the ALL and determining whether a loan would be individually or collectively evaluated for impairment. The following deficiencies were identified: · The firm used only the work of the issuer's internal audit as evidence about the effectiveness of certain controls related to the issuer's reviews of the loan risk ratings. This approach did not provide sufficient appropriate audit evidence that these controls were designed and operating effectively because of the amount of subjectivity and judgment involved in evaluating the appropriateness of the loan risk ratings and determining any changes to these ratings. (AS 2201.19; AS 2605.20 and .21) ICFR audit only | AS 2201.19; AS 2605.20; AS 2605.21 | |
| 2 | Allowance for Credit/Loan Losses | The issuer used models to determine the general reserve component of the ALL for commercial loans collectively evaluated for impairment. These models used various data including a loan risk rating for each loan that were derived from the issuer's data warehouse system. The loan risk rating was an important input in estimating the ALL and determining whether a loan would be individually or collectively evaluated for impairment. The following deficiencies were identified: · The issuer identified a deficiency related to one of the loan risk-rating controls discussed above. The firm identified and tested certain controls that it believed would mitigate this deficiency. The firm did not identify that these compensating controls did not address the risks of material misstatement related to inappropriate loan risk ratings. (AS 2201.68) ICFR audit only | AS 2201.68 | |
| 3 | Allowance for Credit/Loan Losses | The issuer used models to determine the general reserve component of the ALL for commercial loans collectively evaluated for impairment. These models used various data including a loan risk rating for each loan that were derived from the issuer's data warehouse system. The loan risk rating was an important input in estimating the ALL and determining whether a loan would be individually or collectively evaluated for impairment. The following deficiencies were identified: · The firm did not identify and test any controls over the accuracy of the transfer of the loan risk ratings from the issuer's source systems to the data warehouse system or test other controls that would have provided evidence over the accuracy of the loan risk ratings in the data warehouse system. (AS 2201.39) ICFR audit only | AS 2201.39 |
Issuer O2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Derivatives | The firm did not identify and test any controls over the observability of the pricing inputs at the individual instrument level that the issuer used to determine the categorization of its investments and derivatives within the fair value hierarchy as set forth in FASB ASC Topic 820. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 2 | Derivatives | The firm performed substantive procedures to evaluate the categorization of the issuer's available-for-sale securities within the fair value hierarchy and to test the valuation of these securities. The firm did not evaluate evidence obtained through these procedures that may have suggested that certain securities categorized as level 2 within the fair value hierarchy lacked observable market data. (AS 2502.43; AS 2810.03) Both financial statement and ICFR audits | AS 2502.43; AS 2810.3 |
Issuer P2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Inventory | The firm selected for testing various automated application controls that the issuer used to process and record transactions related to inventory held at certain locations. The firm's testing did not provide sufficient appropriate audit evidence about the operating effectiveness of these controls during the year and as of year end because the firm performed the majority of its procedures on the automated application controls that were in place after year end without performing procedures beyond inquiring of management to determine that there were no changes to these controls or the issuer's IT systems between year end and the testing date. (AS 2201.44) Both financial statement and ICFR audits | AS 2201.44 | |
| 2 | Inventory | The sample sizes the firm used in certain of its substantive procedures to test this inventory 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 Q2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Accounts Receivable | The firm did not perform any substantive procedures to address the assessed risks of material misstatement related to revenue accounts receivable and inventory for several of the issuer's business units. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 2 | Revenue | For another business unit the firm did not perform any procedures to address an identified fraud risk related to revenue cut-off. (AS 2301.13) Financial statement audit only | AS 2301.13 |
Issuer R1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | To test the occurrence of revenue throughout the year at certain of the issuer's business units the firm's procedures included testing revenue transactions based on a nonstatistical sampling approach that was designed assuming a certain level of substantive evidence the firm planned to obtain from its other substantive procedures. These other substantive procedures did not provide the planned level of substantive evidence to address the risks of material misstatement related to the occurrence of this revenue because these procedures which included confirming accounts receivable at year end performing cut-off testing at year end and testing credit memoranda after year end were primarily focused on the occurrence of revenue at a point in time. As a result the nonstatistical samples were too small to provide sufficient appropriate audit evidence to address the risks of material misstatement related to occurrence of this revenue throughout the year. (AS 2301.37 and .42; AS 2315.19 .23 and .23A) Financial statement audit only | AS 2301.37; AS 2301.42; AS 2315.19; AS 2315.23; AS 2315.23A |