- Inspection year
- 2019
- Report date
- 24-Feb-2021
- PCAOB release
- 104-2021-066
- Audits reviewed
- 2
- Audits w/ Part I.A deficiencies
- 1
- Part I.A deficiency rate
- 50%
- Part I.A deficiencies
- 4
- Part I.B deficiencies
- 2
- Report
- View PDF ↗
Deficiencies (4)
Grouped by issuer and in the same order as the PCAOB report, so each item ties back directly to the source.
Issuer A4 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The issuer had three categories of revenue that were derived from contractual agreements with varying terms and conditions that could affect the amount and timing of revenue to be recognized. The following deficiencies were identified: · The firm did not determine the likely sources of potential misstatements associated with these categories of revenue to identify and test controls that addressed the risks of misstatement for the relevant assertions of each category of revenue beyond testing one control related to the issuer's review of sales orders for one category of revenue. (AS 2201.30 and .39) Both financial statement and ICFR audits | AS 2201.30; AS 2201.39 | |
| 2 | Revenue | The issuer had three categories of revenue that were derived from contractual agreements with varying terms and conditions that could affect the amount and timing of revenue to be recognized. The following deficiencies were identified: · With respect to firm's testing of the control over the review of sales orders discussed above 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 | Revenue | The issuer had three categories of revenue that were derived from contractual agreements with varying terms and conditions that could affect the amount and timing of revenue to be recognized. The following deficiencies were identified: · The firm's substantive procedures to test one category of revenue consisted of confirming accounts receivable at year end and testing the first five shipments after year end. These procedures did not provide sufficient appropriate audit evidence because the procedures (1) only addressed revenue recorded close to year end and (2) did not include testing of whether revenue recognition criteria had been met. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 | |
| 4 | Equity | The issuer engaged an external party to perform its testing of controls. The firm used the work of the external party as evidence of the effectiveness of controls over equity. Because the firm identified a significant risk associated with an equity transaction that the issuer entered into during the year the firm's use of the work of the external party without performing its own work did not provide sufficient appropriate audit evidence that these controls were designed and operating effectively. Further the firm did not perform any procedures to evaluate the quality and effectiveness of the external party's work. (AS 2201.19; AS 2605.20 .21 and .24) Both financial statement and ICFR audits | AS 2201.19; AS 2605.20; AS 2605.21; AS 2605.24 |