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Ernst Young Chartered Accountants
Ireland · Ernst & Young Global Limited · Triennially Inspected
- Inspection year
- 2019
- Report date
- 11-Feb-2021
- PCAOB release
- 104-2021-058
- Audits reviewed
- 3
- Audits w/ Part I.A deficiencies
- 2
- Part I.A deficiency rate
- 67%
- Part I.A deficiencies
- 6
- Part I.B deficiencies
- —
- Report
- View PDF ↗
Deficiencies (6)
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 | Accounts Receivable | The firm was instructed by the principal auditor of the issuer to test specific controls of the component in the areas of revenue accounts receivable and inventory. During the audit the principal auditor provided additional information to the firm regarding certain of these controls including the existence of additional control attributes and changes to the description of the controls. The firm did not perform procedures to (1) understand if the revised control descriptions as communicated by the principal auditor were indicative of changes to the controls and if so change its tests of design and operating effectiveness and (2) test the additional control attributes communicated by the principal auditor including one such attribute related to the component's monitoring of the accuracy and frequency of inventory cycle counts. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 2 | Accounts Receivable | The firm selected for testing as instructed by the principal auditor a control that consisted of the review and approval of price quotes. 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 | |
| 3 | Accounts Receivable | The sample size the firm used in certain of its substantive procedures to test accounts receivable 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 | |
| 4 | Inventory | The firm selected for testing as instructed by the principal auditor a control that consisted of the performance of periodic cycle counts and the review and approval of related adjustments. The firm did not evaluate whether the documentation it inspected for unobserved inventory cycle counts provided evidence that all steps related to those counts were performed as designed. (AS 2201.44) Both financial statement and ICFR audits | AS 2201.44 | |
| 5 | Inventory | The firm did not obtain sufficient appropriate audit evidence that the issuer's inventory cycle count procedures were sufficiently reliable to produce results substantially the same as those that would have been obtained by a count of all items during the year due to the deficiencies in the firm's control testing discussed above. (AS 2510.11) Both financial statement and ICFR audits | AS 2510.11 |
Issuer B1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Long-Lived Assets | The issuer reported a loss from operations that did not include a loss recognized on a long-lived asset held for sale that was not a discontinued operation (the 'loss'). The firm did not identify and appropriately address a departure from GAAP related to the issuer's presentation of the loss which was not in conformity with FASB ASC Topic 360 Property Plant and Equipment. (AS 2810.30) Unrelated and prior to our review the issuer reevaluated its presentation of the loss in its consolidated statements of operations 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 financial reporting 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 revised its opinion on the effectiveness of the issuer's ICFR to express an adverse opinion and reissued its report. Financial statement audit only | AS 2810.30 |