- Inspection year
- 2019
- Report date
- 06-Jul-2021
- PCAOB release
- 104-2021-138a
- Audits reviewed
- 3
- Audits w/ Part I.A deficiencies
- 3
- Part I.A deficiency rate
- 100%
- Part I.A deficiencies
- 9
- Part I.B deficiencies
- 1
- Report
- View PDF ↗
Deficiencies (9)
Grouped by issuer and in the same order as the PCAOB report, so each item ties back directly to the source.
Issuer A2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The issuer entered into certain revenue arrangements with multiple performance obligations and allocated the total consideration from these arrangements between goods and services. The firm selected for testing a control that consisted of management's review of new contracts for appropriate revenue recognition. 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 | |
| 2 | Business Combinations | The issuer determined the fair value of an acquired intangible asset using various assumptions including revenue growth rates. The firm identified control deficiencies related to two controls selected for testing over management's review of these assumptions. Except for the two deficient controls the firm did not identify and test any controls that address the risk of potential misstatement related to errors in the assumptions including revenue growth rates. (AS 2201.39) ICFR audit only | AS 2201.39 |
Issuer B6 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | For one business unit the firm selected for testing a control that consisted of management's review of a monthly revenue variance analysis. The firm did not evaluate the review procedures that the control owner performed including for certain customers 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 | |
| 2 | Revenue | For this business unit the firm's substantive procedures to test revenue consisted of testing samples of transactions and performing substantive analytical procedures. The following deficiencies were identified: · In performing its testing of the selected transactions the firm did not evaluate whether the selling prices that the issuer used to record revenue agreed with the terms in the customer purchase orders or contracts. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 | |
| 3 | Revenue | For this business unit the firm's substantive procedures to test revenue consisted of testing samples of transactions and performing substantive analytical procedures. The following deficiencies were identified: · The sample size the firm used 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 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 | |
| 4 | Revenue | For this business unit the firm's substantive procedures to test revenue consisted of testing samples of transactions and performing substantive analytical procedures. The following deficiencies were identified: · In performing the substantive analytical procedures the firm did not evaluate whether the relationship between cash receipts and revenue was sufficiently predictable. (AS 2305.13 and .14) Both financial statement and ICFR audits | AS 2305.13; AS 2305.14 | |
| 5 | Revenue | For another business unit the firm selected for testing a control that consisted of management's review of a monthly revenue variance analysis. 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 | |
| 6 | Revenue | For this business unit the firm's substantive procedures to test revenue consisted of substantive analytical procedures. The firm did not (1) evaluate whether prior period revenue was sufficiently predictive of revenue for the year and (2) develop certain other expectations it used in these analytical procedures based on industry revenue growth data at a level of precision to provide sufficient appropriate audit evidence. (AS 2305.13 .14 and .17) Both financial statement and ICFR audits | AS 2305.13; AS 2305.14; AS 2305.17 |
Issuer C1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Long-Lived Assets | The firm selected for testing a control that consisted of management's review of certain assumptions used to determine depreciation expense on long-lived assets. 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 |