- Inspection year
- 2020
- Report date
- 30-Sep-2021
- PCAOB release
- 104-2021-153
- Audits reviewed
- 53
- Audits w/ Part I.A deficiencies
- 14
- Part I.A deficiency rate
- 26%
- Part I.A deficiencies
- 50
- Part I.B deficiencies
- 2
- Report
- View PDF ↗
Deficiencies (50)
Grouped by issuer and in the same order as the PCAOB report, so each item ties back directly to the source.
Issuer A8 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The issuer used two information-technology (IT) systems to process and record certain revenue transactions related to services provided to its customers; one of these systems was maintained by an external service organization. The following deficiencies were identified: · With respect to the IT system that was maintained by an external service organization the firm selected for testing a control over access by employees of the service organization to this system and identified control exceptions related to inappropriate access for numerous employees. The firm did not sufficiently evaluate the effect of these exceptions on the effectiveness of this control because its evaluation was limited to inquiring of management of the service organization regarding access privileges. (AS 2201.48) Both financial statement and ICFR audits | AS 2201.48 | |
| 2 | Revenue | The issuer used two information-technology (IT) systems to process and record certain revenue transactions related to services provided to its customers; one of these systems was maintained by an external service organization. The following deficiencies were identified: · With respect to the other IT system the firm selected for testing a control over access by employees of the issuer to this system and identified control exceptions related to inappropriate access for numerous employees. The firm concluded that this control was operating effectively based on its evaluation of these exceptions and the effectiveness of a complementary control and that the combination of these two controls addressed the risks of inappropriate access. The firm's conclusion was inappropriate because the complementary control was not designed to operate during the fourth quarter of the issuer's fiscal year and therefore the two controls discussed above did not address the risks related to inappropriate access to this system as of the date of management's assessment. (AS 2201.48) Both financial statement and ICFR audits | AS 2201.48 | |
| 3 | Revenue | The issuer used two information-technology (IT) systems to process and record certain revenue transactions related to services provided to its customers; one of these systems was maintained by an external service organization. The following deficiencies were identified: · The firm selected for testing certain automated and IT-dependent manual controls over this revenue. The firm's approach to testing these controls depended on effective IT general controls (ITGCs) including controls over access to the systems. Due to the deficiencies in the firm's testing of these controls discussed above the firm's testing of these automated and IT-dependent manual controls was not sufficient. (AS 2201.46) Both financial statement and ICFR audits | AS 2201.46 | |
| 4 | Revenue | The firm used information that was produced by these IT systems in performing certain of its substantive procedures to test this revenue but did not have a basis to rely on this information due to the deficiencies in the firm's testing of access controls discussed above. The firm did not perform any substantive procedures to test or (as discussed above) sufficiently test controls over the accuracy and completeness of this information. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 | |
| 5 | Revenue | The sample size the firm used in certain of its substantive procedures to test this revenue 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 | |
| 6 | Leases | The firm selected for testing two controls that consisted of the issuer's (1) evaluation of its leases for potential implications with respect to the accounting for its leases upon adoption of FASB ASC Topic 842 Leases and (2) review of the disclosures related to that adoption. The firm did not evaluate the specific review procedures that the control owner performed to evaluate the completeness of the population of leases that should have been subject to these controls. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 7 | Leases | The firm selected for testing a control that consisted of the issuer's quarterly review of its lease contracts for appropriate accounting treatment subsequent to the issuer's adoption of FASB ASC Topic 842 Leases. The firm did not test the aspect of this control that addressed the completeness of the population of leases used in the operation of the control. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 8 | Leases | The firm selected for testing a control that consisted of a reconciliation of the lease asset and liability balances from the lease sub-ledger to the general ledger. The firm did not identify and test any controls over the accuracy of the lease information included in manually-prepared spreadsheets that the control owners used in the operation of this control. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 |
Issuer B8 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The issuer recorded certain revenue based on information about the quantities sold and delivery dates that was provided by a third-party administrator. The following deficiencies were identified: · The firm did not identify and test any controls over the accuracy and completeness of the information provided by the third-party administrator. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 2 | Revenue | The issuer recorded certain revenue based on information about the quantities sold and delivery dates that was provided by a third-party administrator. The following deficiencies were identified: · The firm used the quantities sold and delivery date information in its substantive testing of this revenue but did not perform any substantive procedures to test or in the alternative identify and test any controls over (as discussed above) the accuracy and completeness of this information. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 | |
| 3 | Revenue | The issuer recorded certain revenue based on information about the quantities sold and delivery dates that was provided by a third-party administrator. The following deficiencies were identified: · The sample size the firm used in certain of its substantive procedures to test this revenue 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 | The issuer recorded certain other revenue based on the completion of services provided to its customers. The following deficiencies were identified: · The firm did not identify and test any controls that addressed the risk that revenue was recognized before the performance obligation for these services was satisfied. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 5 | Revenue | The issuer recorded certain other revenue based on the completion of services provided to its customers. The following deficiencies were identified: · The firm did not perform any substantive procedures to test whether the performance obligation for these services was satisfied before revenue was recognized. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 | |
| 6 | Business Combinations | During the year the issuer acquired a business and determined the fair value of an acquired intangible asset using forecasted cash flows that assumed significant revenue growth for the majority of the forecast period. The following deficiencies were identified: · For certain years within the forecast period the firm's procedures to evaluate the reasonableness of the revenue growth rates consisted of comparing the issuer's forecasted revenue growth rate to those reported in an industry publication over the same period. The firm did not evaluate significant differences between the issuer's forecasted revenue growth rates and the industry publication's growth rate for these years. (AS 2502.26 .28 .31 and .36) Both financial statement and ICFR audits | AS 2502.26; AS 2502.28; AS 2502.31; AS 2502.36 | |
| 7 | Business Combinations | During the year the issuer acquired a business and determined the fair value of an acquired intangible asset using forecasted cash flows that assumed significant revenue growth for the majority of the forecast period. The following deficiencies were identified: · For certain other years within the forecast period the firm did not perform any procedures to evaluate the reasonableness of the forecasted revenue growth rates. (AS 2502.26 .28 and .31) Both financial statement and ICFR audits | AS 2502.26; AS 2502.28; AS 2502.31 | |
| 8 | Business Combinations | During the year the issuer acquired a business and determined the fair value of an acquired intangible asset using forecasted cash flows that assumed significant revenue growth for the majority of the forecast period. The following deficiencies were identified: · The firm did not perform any procedures to evaluate the reasonableness of certain forecasted expenses beyond comparing the current-year forecasted expenses to actual expenses. (AS 2502.26 .28 and .31) Both financial statement and ICFR audits | AS 2502.26; AS 2502.28; AS 2502.31 |
Issuer C5 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | For certain revenue related to services that the issuer provided to its customers the issuer used two IT systems to process and record revenue transactions. The issuer assigned service codes to each customer based on the prices for the services provided and the specific terms of the customer arrangement. These systems calculated and recorded revenue using those service codes. The following deficiencies were identified: · For certain of this revenue the firm did not identify and test any controls that addressed the risks that the service codes used to record revenue did not represent the services ordered and terms agreed to by the customer. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 2 | Revenue | For certain revenue related to services that the issuer provided to its customers the issuer used two IT systems to process and record revenue transactions. The issuer assigned service codes to each customer based on the prices for the services provided and the specific terms of the customer arrangement. These systems calculated and recorded revenue using those service codes. The following deficiencies were identified: · For the remainder of this revenue the firm selected for testing a control that included an aspect that addressed the appropriateness of the service codes used to record revenue. The firm however did not test this aspect of the control. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 3 | Revenue | For certain revenue related to services that the issuer provided to its customers the issuer used two IT systems to process and record revenue transactions. The issuer assigned service codes to each customer based on the prices for the services provided and the specific terms of the customer arrangement. These systems calculated and recorded revenue using those service codes. The following deficiencies were identified: · For revenue processed and recorded by one of these IT systems the firm did not identify and test any controls to address certain other risks related to the accuracy of customer invoices and revenue calculated by this system. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 4 | Revenue | The firm selected for testing certain manual controls over this revenue that used reports that were generated by these IT systems. The firm's testing of these controls was not sufficient due to the deficiencies in testing controls over the IT systems discussed above. (AS 2201.46) Both financial statement and ICFR audits | AS 2201.46 | |
| 5 | Revenue | The firm's substantive procedures to test the occurrence and accuracy of this revenue did not provide sufficient appropriate audit evidence because its procedures were designed based on a level of control reliance that was not supported due to the deficiencies in the engagement team's control testing discussed above. (AS 2301.16 .18 and .37) Both financial statement and ICFR audits | AS 2301.16; AS 2301.18; AS 2301.37 |
Issuer D5 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Investment Securities | The issuer recorded the fair value of its available-for-sale securities based on prices it obtained from external pricing services. The firm selected for testing a quarterly control over the valuation of these securities that included the issuer's comparison of its recorded prices to prices obtained from another external pricing service and the investigation of securities with price variances that exceeded both a monetary and a percentage change threshold. The following deficiencies were identified: · The firm did not evaluate whether the monetary threshold the issuer used to identify securities for investigation was sufficiently precise to detect material misstatements. (AS 2201.42) Both financial statement and ICFR audits | AS 2201.42 | |
| 2 | Investment Securities | The issuer recorded the fair value of its available-for-sale securities based on prices it obtained from external pricing services. The firm selected for testing a quarterly control over the valuation of these securities that included the issuer's comparison of its recorded prices to prices obtained from another external pricing service and the investigation of securities with price variances that exceeded both a monetary and a percentage change threshold. The following deficiencies were identified: · In testing the operating effectiveness of this control for the fourth quarter the firm did not identify that the comparison spreadsheet that the issuer used in this quarter contained a formulaic error such that the issuer did not properly calculate the price variances for any of its securities. (AS 2201.44) Both financial statement and ICFR audits | AS 2201.44 | |
| 3 | Investment Securities | The issuer recorded the fair value of its available-for-sale securities based on prices it obtained from external pricing services. The firm selected for testing a quarterly control over the valuation of these securities that included the issuer's comparison of its recorded prices to prices obtained from another external pricing service and the investigation of securities with price variances that exceeded both a monetary and a percentage change threshold. The following deficiencies were identified: · For securities for which a comparative price was unavailable the control owner performed procedures that consisted of comparing the recorded price of these securities to their respective historical prices and investigating securities with price variances that exceeded a monetary threshold. In testing the design of this control the firm did not evaluate whether historical prices were an appropriate basis to allow the issuer to assess the reasonableness of the recorded fair values for these securities. (AS 2201.42) Both financial statement and ICFR audits | AS 2201.42 | |
| 4 | Investment Securities | The firm selected for testing two controls over the issuer's determination of the categorization of the securities within the fair value hierarchy as set forth in FASB ASC Topic 820 Fair Value Measurement. The firm did not identify that these controls were not designed to address whether the pricing inputs used to determine the fair value of certain securities were observable. (AS 2201.42) Both financial statement and ICFR audits | AS 2201.42 | |
| 5 | Investment Securities | The sample size the firm used in certain of its substantive procedures to test the valuation of these securities 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 |
Issuer E3 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Accounts Receivable | The issuer used an IT system to process and record transactions including those related to product revenue accounts receivable and certain expenses and related accruals. This system allowed the issuer to create security profiles for users that the issuer used to assign various levels of access privileges to these users including administrative access that allowed users to make changes to this system. The following deficiencies were identified: · The firm selected for testing two ITGCs over administrative access to this system but as part of that testing it did not perform any procedures to assess the control owners' (1) evaluation of certain security profiles and (2) determination of whether the access privileges assigned to those profiles were appropriate. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 2 | Accounts Receivable | The issuer used an IT system to process and record transactions including those related to product revenue accounts receivable and certain expenses and related accruals. This system allowed the issuer to create security profiles for users that the issuer used to assign various levels of access privileges to these users including administrative access that allowed users to make changes to this system. The following deficiencies were identified: · The firm selected for testing certain automated and IT-dependent manual controls over transactions related to these accounts. The firm's approach to testing these controls depended on effective ITGCs. Due to the deficiency in the firm's testing of ITGCs discussed above the firm's testing of these automated and IT-dependent manual controls was not sufficient. (AS 2201.46) Both financial statement and ICFR audits | AS 2201.46 | |
| 3 | Accounts Receivable | The sample sizes the firm used in certain of its substantive procedures to test product revenue accounts receivable and certain expenses and related accruals were 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 |
Issuer F3 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Investment Securities | The issuer recorded the fair value of its available-for-sale securities based on prices it obtained from an external pricing service. The firm selected for testing a control over the valuation of these securities that consisted of the issuer's comparison of its recorded prices to prices obtained from another external pricing service. The firm did not identify and test any controls over the accuracy and completeness of the list of the issuer's securities used by the control owner in performing the comparison. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 2 | Investment Securities | The sample sizes the firm used in certain of its substantive procedures to test the valuation of these securities were 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 | |
| 3 | Allowance for Credit/Loan Losses | The firm selected for testing two controls that included the issuer's validation of certain models that the issuer used to estimate the quantitative component of the ALL for loans collectively evaluated for impairment. The firm did not test the aspects of these controls related to the issuer's (1) evaluation of the mathematical logic of the models; (2) verification of the accuracy and completeness of certain data used in the operation of the controls and (3) tests of the models that included sensitivity analyses and benchmark comparisons to other models. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 |
Issuer G3 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Accounts Receivable | The issuer used an IT system to record revenue and accounts receivable transactions related to certain services that the issuer provided to its customers. This system recorded revenue transactions using service codes that the system selected based on various inputs into the system. The following deficiencies were identified: · The firm did not identify and test any controls that addressed whether the system applied the appropriate service codes based on the inputs into the system. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 2 | Accounts Receivable | The issuer used an IT system to record revenue and accounts receivable transactions related to certain services that the issuer provided to its customers. This system recorded revenue transactions using service codes that the system selected based on various inputs into the system. The following deficiencies were identified: · The firm used these service codes in its substantive testing of this revenue and accounts receivable but did not perform any substantive procedures to test or in the alternative identify and test any controls over the appropriateness of the service codes. (AS1105.10) Both financial statement and ICFR audits | AS 1105.10 | |
| 3 | Accounts Receivable | The issuer used an IT system to record revenue and accounts receivable transactions related to certain services that the issuer provided to its customers. This system recorded revenue transactions using service codes that the system selected based on various inputs into the system. The following deficiencies were identified: · The sample sizes the firm used in certain of its substantive procedures to test this revenue and accounts receivable were 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 |
Issuer H2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Goodwill | The firm selected for testing a control that included the issuer's review of certain assumptions that were used to determine the fair value of the issuer's goodwill and intangible assets for purposes of evaluating these assets for possible impairment. The firm did not evaluate the specific review procedures that the control owners performed to assess the reasonableness of these assumptions. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 2 | Goodwill | For one of its reporting units the issuer used a cash flow forecast to evaluate the goodwill and an intangible asset for possible impairment. Based on this evaluation the issuer recorded an impairment charge related to these assets. The firm did not sufficiently evaluate the reasonableness of the issuer's forecast because its procedures were limited to comparing certain amounts from the forecast to the corresponding amounts in a forecast prepared earlier in the year and inquiring of management about the variances. (AS 2502.26 and .28) Both financial statement and ICFR audits | AS 2502.26; AS 2502.28 |
Issuer I2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Inventory | The firm selected for testing a control over the existence of certain inventory that consisted of the issuer's review of its cycle-count results to assess the reliability of the cycle-count process. 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 | |
| 2 | Inventory | The sample size the firm used in certain of its substantive procedures to test certain of this inventory 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 |
Issuer J3 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Goodwill | The firm selected for testing a control that consisted of the issuer's review and approval of its annual budget. The issuer used this budget in its qualitative assessment of goodwill for possible impairment. 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 | Liabilities for Medical Claims | For each of its health plans the issuer recorded an estimated liability for medical claims that included a component for certain factors such as changes in economic and business conditions. The firm selected for testing five controls that included aspects that addressed the risks related to this component. The following deficiencies were identified: · For three of these controls the firm did not evaluate whether the criteria that the control owners used to identify items for follow up were appropriate. (AS 2201.42) ICFR audit only | AS 2201.42 | |
| 3 | Liabilities for Medical Claims | For each of its health plans the issuer recorded an estimated liability for medical claims that included a component for certain factors such as changes in economic and business conditions. The firm selected for testing five controls that included aspects that addressed the risks related to this component. The following deficiencies were identified: · For the two remaining controls the firm did not identify that these controls were not designed at a level of precision to detect material misstatements. (AS 2201.42) ICFR audit only | AS 2201.42 |
Issuer K3 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Investment Securities | The issuer recorded the fair value of its available-for-sale securities based on prices it obtained from an external pricing service (primary pricing service). The firm selected for testing a control over the valuation of these securities that consisted of the issuer's comparison of its recorded prices to prices obtained from another external pricing service and the issuer's investigation of (1) price variances that exceeded certain thresholds or (2) securities for which prices were not provided by the primary pricing service. The issuer manually entered the securities and prices obtained from both pricing services into a spreadsheet for this comparison. The following deficiencies were identified: · The firm did not identify and test any controls over a report that the control owner used to assess the accuracy and completeness of the issuer's securities that were manually entered into the comparison spreadsheet. (AS 2201.39) ICFR audit only | AS 2201.39 | |
| 2 | Investment Securities | The issuer recorded the fair value of its available-for-sale securities based on prices it obtained from an external pricing service (primary pricing service). The firm selected for testing a control over the valuation of these securities that consisted of the issuer's comparison of its recorded prices to prices obtained from another external pricing service and the issuer's investigation of (1) price variances that exceeded certain thresholds or (2) securities for which prices were not provided by the primary pricing service. The issuer manually entered the securities and prices obtained from both pricing services into a spreadsheet for this comparison. The following deficiencies were identified: · The firm did not test an aspect of this control that addressed whether the prices from the primary pricing service were accurately entered into the comparison spreadsheet. (AS 2201.42 and .44) ICFR audit only | AS 2201.42; AS 2201.44 | |
| 3 | Investment Securities | The issuer recorded the fair value of its available-for-sale securities based on prices it obtained from an external pricing service (primary pricing service). The firm selected for testing a control over the valuation of these securities that consisted of the issuer's comparison of its recorded prices to prices obtained from another external pricing service and the issuer's investigation of (1) price variances that exceeded certain thresholds or (2) securities for which prices were not provided by the primary pricing service. The issuer manually entered the securities and prices obtained from both pricing services into a spreadsheet for this comparison. The following deficiencies were identified: · For securities that met the issuer's criteria for investigation the firm did not evaluate the specific review procedures that the control owner performed to evaluate whether the prices used to record the fair values for these securities were appropriate. (AS 2201.42 and .44) ICFR audit only | AS 2201.42; AS 2201.44 |
Issuer L2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Investment Securities | The issuer used an investment adviser to initiate purchases and sales of its investment securities in accordance with the issuer's investment policy. These securities were held by a third-party custodian. The firm did not perform sufficient procedures to test these securities because the firm's procedures were limited to confirming the recorded balances of these securities with the investment adviser without performing any procedures to evaluate the appropriateness of the information provided by the investment adviser. (AS 2503.21 and .22) Financial statement audit only | AS 2503.21; AS 2503.22 | |
| 2 | Investment Securities | The issuer held certain investment securities that it classified based on the maturity date of the security as either cash equivalents or short-term investments in its financial statements. The firm did not perform any substantive procedures that addressed the appropriateness of the classification of these securities. (AS 2301.08) Financial statement audit only | AS 2301.8 |
Issuer M2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Expenses | The issuer used a service organization to process claims for certain benefits that the issuer provided to its employees. The firm selected for testing a control that consisted of the issuer's review of the service auditor's report for (1) control deficiencies identified by the service auditor and (2) complementary user controls that the issuer needed to have in place in order to achieve the control objectives described in the service auditor's report. The firm did not evaluate the review procedures that the control owner performed including the procedures to identify matters for follow up and the procedures to determine whether those matters were appropriately resolved. (AS 2201.42 and .44) ICFR audit only | AS 2201.42; AS 2201.44 | |
| 2 | Expenses | The issuer used a service organization to process claims for certain benefits that the issuer provided to its employees. The firm selected for testing a control that consisted of the issuer's review of the service auditor's report for (1) control deficiencies identified by the service auditor and (2) complementary user controls that the issuer needed to have in place in order to achieve the control objectives described in the service auditor's report. The firm did not perform any procedures to evaluate whether the issuer implemented the appropriate complementary user controls as described in the service auditor's report. (AS 2201.39 and .B22) ICFR audit only | AS 2201.39; AS 2201.B22 |
Issuer N1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Allowance for Credit/Loan Losses | The firm selected for testing a control that consisted of the issuer's review of the assumptions and qualitative adjustments used to estimate the ALL for loans collectively evaluated for impairment. The firm did not evaluate the specific review procedures that the control owners performed to assess the reasonableness of these assumptions and qualitative adjustments. (AS 2201.42 and .44) ICFR audit only | AS 2201.42; AS 2201.44 |