- Inspection year
- 2019
- Report date
- 28-Jul-2021
- PCAOB release
- 104-2021-145a
- Audits reviewed
- 7
- Audits w/ Part I.A deficiencies
- 3
- Part I.A deficiency rate
- 43%
- Part I.A deficiencies
- 15
- Part I.B deficiencies
- —
- Report
- View PDF ↗
Deficiencies (15)
Grouped by issuer and in the same order as the PCAOB report, so each item ties back directly to the source.
Issuer A9 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | For one of the issuer's reporting units: · The issuer uses an application to record invoices and the resulting revenue and generate revenue reports. The firm selected for testing change management controls that consisted of the review of changes to this application. 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 | |
| 2 | Revenue | For one of the issuer's reporting units: · The issuer uses an application to record invoices and the resulting revenue and generate revenue reports. The firm did not identify and test any controls (1) over the completeness of information used in the operation of these controls and (2) that addressed the risk of developers migrating unapproved changes to production. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 3 | Revenue | For one of the issuer's reporting units: · The firm selected for testing a control that consisted of management's review of customer invoices. 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 | |
| 4 | Revenue | For one of the issuer's reporting units: · In addition the firm did not identify and test any controls over the accuracy and completeness of certain information used in the operation of this control. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 5 | Revenue | For one of the issuer's reporting units: · The firm did not identify and test any controls that addressed the fraud risk of improper recognition of certain revenue at year end. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 6 | Revenue | For one of the issuer's reporting units: · The sample size the firm used in certain of its substantive procedures to test revenue was too small to provide sufficient appropriate audit evidence because the procedures were designed based on a level of control reliance that was not supported due to the deficiencies in the firm's testing of change management and management's review of customer invoices controls 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 | |
| 7 | Business Combinations | During the year the issuer acquired a business entity and used an external specialist to determine the fair value of the acquired intangible assets. The firm's approach for testing the fair value was to review and test management's process. The firm did not sufficiently (1) evaluate the reasonableness of forecasts and (2) test the accuracy and completeness of data that the issuer provided to the external specialist because it limited its procedures to inquiry of management. (AS 1210.12) Both financial statement and ICFR audits | AS 1210.12 | |
| 8 | Business Combinations | The external specialist used information from various other sources to develop assumptions to determine the fair value of those assets. The firm did not evaluate the relevance and reliability of information the external specialist used. (AS 2502.31) Both financial statement and ICFR audits | AS 2502.31 | |
| 9 | Business Combinations | The external specialist used information from various other sources to develop assumptions to determine the fair value of those assets. The firm did not sufficiently evaluate the reasonableness of the assumptions developed by the external valuation specialist because it limited its procedures to inquiry of management. (AS 2502.26 and .28) Both financial statement and ICFR audits | AS 2502.26; AS 2502.28 |
Issuer B4 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The firm selected for testing a control over certain revenue that consisted of the automated generation of a customer invoice and recognition of related revenue upon shipment of goods. The firm did not test the configuration of the system or any instances of the control that occurred during the year (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 2 | Revenue | The firm selected for testing a control over certain other revenue that consisted of management's review of customer invoices. 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 firm selected for testing a control over certain other revenue that consisted of management's review of customer invoices. The firm did not identify and test any controls over the accuracy and completeness of the data used in the operation of this control. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 4 | Revenue | The sample sizes the firm used in certain of its substantive procedures to test revenue were too small to provide sufficient appropriate audit evidence because (1) the firm did not appropriately consider tolerable misstatement for the population and (2) 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 2315.16 .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 |
Issuer C2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Accounts Receivable | The firm tested information technology general controls for an application used to process revenue and accounts receivable transactions and identified control deficiencies related to access and change management. The firm selected for testing controls over certain revenue that consisted of the automated generation of a customer invoice and recognition of related revenue and accounts receivable upon shipment of goods. The firm did not sufficiently test these controls because it tested only one instance which was not appropriate due to the identified control deficiencies. (AS 2201.46) Both financial statement and ICFR audits | AS 2201.46 | |
| 2 | 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 the procedures were designed based on a level of control reliance that was not supported due to the deficiencies in the firm's testing of automated controls 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 |