- Inspection year
- 2019
- Report date
- 21-Jan-2021
- PCAOB release
- 104-2021-032a
- Audits reviewed
- 3
- Audits w/ Part I.A deficiencies
- 1
- Part I.A deficiency rate
- 33%
- Part I.A deficiencies
- 5
- Part I.B deficiencies
- —
- Report
- View PDF ↗
Deficiencies (5)
Grouped by issuer and in the same order as the PCAOB report, so each item ties back directly to the source.
Issuer A5 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The firm selected for testing controls over revenue including certain automated controls related to the initiation processing and recording of revenue. The automated controls included (1) a three-way match between the customer purchase order bill of lading and invoice and (2) the generation of nightly exception reports. Certain of these automated controls included a manual element that consisted of the confirmation of shipment by warehouse staff. The firm's approach to testing these controls was to test a single transaction. The following deficiencies were identified: · The firm did not evaluate whether each automated control was configurable and if so whether each control was configured appropriately within the system and as a result the firm's testing of these automated controls using a sample of only one instance was not sufficient. (AS 2201.42 and .44) ICFR audit only | AS 2201.42; AS 2201.44 | |
| 2 | Revenue | The firm selected for testing controls over revenue including certain automated controls related to the initiation processing and recording of revenue. The automated controls included (1) a three-way match between the customer purchase order bill of lading and invoice and (2) the generation of nightly exception reports. Certain of these automated controls included a manual element that consisted of the confirmation of shipment by warehouse staff. The firm's approach to testing these controls was to test a single transaction. The following deficiencies were identified: · The firm did not test all relevant scenarios of the automated controls to ensure the system processed transactions as designed for all scenarios. (AS 2201.42 and .44) ICFR audit only | AS 2201.42; AS 2201.44 | |
| 3 | Revenue | The firm selected for testing controls over revenue including certain automated controls related to the initiation processing and recording of revenue. The automated controls included (1) a three-way match between the customer purchase order bill of lading and invoice and (2) the generation of nightly exception reports. Certain of these automated controls included a manual element that consisted of the confirmation of shipment by warehouse staff. The firm's approach to testing these controls was to test a single transaction. The following deficiencies were identified: · The firm did not perform any procedures to test the manual element of the controls. (AS 2201.42 and .44) ICFR audit only | AS 2201.42; AS 2201.44 | |
| 4 | Revenue | The firm selected for testing controls over revenue including certain automated controls related to the initiation processing and recording of revenue. The automated controls included (1) a three-way match between the customer purchase order bill of lading and invoice and (2) the generation of nightly exception reports. Certain of these automated controls included a manual element that consisted of the confirmation of shipment by warehouse staff. The firm's approach to testing these controls was to test a single transaction. The following deficiencies were identified: · The firm did not identify and test any controls over the review of the system-generated exception reports resulting from the three-way match control. (AS 2201.39) ICFR audit only | AS 2201.39 | |
| 5 | Inventory | The firm selected for testing controls over inventory including two automated controls related to (1) the recording of inventory at standard cost when warehouse staff marked inventory as received in the system and (2) the application of standard labor and overhead to materials inventory. The firm's approach to testing these controls was to test a single transaction. The firm did not evaluate whether each automated control was configurable and if so whether each control was configured appropriately within the system and as a result the firm's testing of these automated controls using a sample of only one instance was not sufficient. Further the firm did not perform any procedures to test the manual aspect of an automated control over inventory related to the manual confirmation of inventory received. (AS 2201.42 and .44) ICFR audit only | AS 2201.42; AS 2201.44 |