- Inspection year
- 2019
- Report date
- 25-Jun-2021
- PCAOB release
- 104-2021-125
- Audits reviewed
- 2
- Audits w/ Part I.A deficiencies
- 2
- Part I.A deficiency rate
- 100%
- 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 A3 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue and Accounts Receivable | The issuer processed and recorded all transactions using two information technology ('IT') systems. The firm tested certain automated and IT-dependent manual controls that used data and reports generated or maintained by the systems. The accuracy and completeness of these data and reports depended on effective IT general controls ('ITGCs'). The firm did not identify and test controls over the accuracy and completeness of information used in the testing or operation of certain ITGCs. As a result the firm's testing of automated and IT-dependent manual controls over revenue and accounts receivable was not sufficient. (AS 2201.46) ICFR audit only | AS 2201.46 | |
| 2 | Revenue and Accounts Receivable | The issuer processed and recorded all transactions using two information technology ('IT') systems. The firm tested certain automated and IT-dependent manual controls that used data and reports generated or maintained by the systems. The accuracy and completeness of these data and reports depended on effective IT general controls ('ITGCs'). The firm did not identify and test any controls intended to address the risk of management override of controls over the posting of journal entries. (AS 2201.39) ICFR audit only | AS 2201.39 | |
| 3 | Business Combinations | The firm selected for testing a control consisting of reviews of the reasonableness of assumptions used in the valuation of assets acquired and liabilities assumed in a business combination. 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) ICFR audit only | AS 2201.42; AS 2201.44 |
Issuer B2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Business Combinations | The issuer acquired a business and engaged an external specialist to determine the fair value of an acquired intangible asset. The firm's approach for testing the fair value was to review and test management's process. The following deficiencies were identified: · The firm did not evaluate the reasonableness of the equity risk premium rate and income tax rate used by the specialist to determine the fair value of the acquired intangible asset. (AS 2502.26 and .28) Financial statement audit only | AS 2502.26; AS 2502.28 | |
| 2 | Business Combinations | The issuer acquired a business and engaged an external specialist to determine the fair value of an acquired intangible asset. The firm's approach for testing the fair value was to review and test management's process. The following deficiencies were identified: · The firm did not sufficiently evaluate the issuer-provided operating forecast used by the specialist to value the intangible asset because its procedures were limited to inquiring of management and comparing the forecast to the issuer's historical financial information without performing procedures to evaluate whether the issuer's historical performance would be representative of the issuer's future operations. (AS 1210.12) Financial statement audit only | AS 1210.12 |