- Inspection year
- 2019
- Report date
- 16-Aug-2021
- PCAOB release
- 104-2021-155a
- Audits reviewed
- 9
- Audits w/ Part I.A deficiencies
- 8
- Part I.A deficiency rate
- 89%
- Part I.A deficiencies
- 70
- Part I.B deficiencies
- 11
- Report
- View PDF ↗
Deficiencies (70)
Grouped by issuer and in the same order as the PCAOB report, so each item ties back directly to the source.
Issuer A19 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Long-Lived Assets | The issuer purchased land and buildings (the 'acquired property') and assumed certain legal obligations ('assumed liabilities'). The issuer engaged an external specialist to value the acquired property. The issuer valued the assumed liabilities based on the seller's estimate of costs to satisfy the obligation and certain performance guarantees. The firm did not identify or appropriately address departures from GAAP related to the issuer (1) not allocating certain capitalized costs to the carrying amounts of the related components of the acquired property in conformity with FASB ASC Topic 410 Asset Retirement and Environmental Obligations and (2) inappropriately disclosing all assets of the acquired property within one asset category instead of disclosing balances of major classes of depreciable assets by nature or function in conformity with FASB ASC Topic 360 Property Plant and Equipment. (AS 2810.30 and .31) Financial statement audit only | AS 2810.30; AS 2810.31 | |
| 2 | Long-Lived Assets | The issuer purchased land and buildings (the 'acquired property') and assumed certain legal obligations ('assumed liabilities'). The issuer engaged an external specialist to value the acquired property. The issuer valued the assumed liabilities based on the seller's estimate of costs to satisfy the obligation and certain performance guarantees. The firm did not test the data used by the external specialist to value the acquired property. (AS 1210.12) Financial statement audit only | AS 1210.12 | |
| 3 | Long-Lived Assets | The issuer purchased land and buildings (the 'acquired property') and assumed certain legal obligations ('assumed liabilities'). The issuer engaged an external specialist to value the acquired property. The issuer valued the assumed liabilities based on the seller's estimate of costs to satisfy the obligation and certain performance guarantees. The firm did not evaluate the reasonableness of the assumptions developed by the external specialist to value the acquired property. (AS 2502.26 and .28) Financial statement audit only | AS 2502.26; AS 2502.28 | |
| 4 | Long-Lived Assets | The issuer purchased land and buildings (the 'acquired property') and assumed certain legal obligations ('assumed liabilities'). The issuer engaged an external specialist to value the acquired property. The issuer valued the assumed liabilities based on the seller's estimate of costs to satisfy the obligation and certain performance guarantees. The firm did not evaluate whether the assumed liabilities recorded by the issuer represented a reasonable estimate of their fair value. (AS 2502.26 and .28) Financial statement audit only | AS 2502.26; AS 2502.28 | |
| 5 | Long-Lived Assets | The issuer purchased land and buildings (the 'acquired property') and assumed certain legal obligations ('assumed liabilities'). The issuer engaged an external specialist to value the acquired property. The issuer valued the assumed liabilities based on the seller's estimate of costs to satisfy the obligation and certain performance guarantees. The firm did not evaluate whether the presentation of the assumed liabilities as a non-current liability was in conformity with FASB ASC Topic 210 Balance Sheet. (AS 2810.30) Financial statement audit only | AS 2810.30 | |
| 6 | Segment Disclosures | The firm did not identify or appropriately address departures from GAAP related to (1) inaccuracies in the amount of assets allocated to the issuer's segments and (2) the issuer's omission of a disclosure related to the total amount of revenue from a customer that represented more than ten percent of revenue as required by FASB ASC Topic 280 Segment Reporting. (AS 2810.30 and .31) Financial statement audit only | AS 2810.30; AS 2810.31 | |
| 7 | Segment Disclosures | The firm did not evaluate whether each segment disclosed by the issuer met the criteria to be considered an operating segment in conformity with FASB ASC Topic 280. (AS 2810.30 and .31) Financial statement audit only | AS 2810.30; AS 2810.31 | |
| 8 | Accounts Receivable | The firm received electronic responses to its accounts receivable confirmation requests. The firm did not consider performing procedures to address the risks associated with electronic responses such as verifying the source and contents of the confirmation responses. (AS 2310.29) Financial statement audit only | AS 2310.29 | |
| 9 | Accounts Receivable | The firm's approach for substantively testing the allowance for doubtful accounts was to review and test management's process. The firm did not sufficiently evaluate the reasonableness of the allowance because it limited its procedures to (1) inquiry of management and (2) obtaining documents from the issuer related to promises from its customers to pay the amounts owed without evaluating the authenticity and reliability of those documents. (AS 2501.09 .10 and .11) Financial statement audit only | AS 2501.9; AS 2501.10; AS 2501.11 | |
| 10 | Certain Assets | The issuer identified impairment indicators related to a certain asset. The issuer engaged an external specialist to determine the asset's fair value and also relied upon its sale of the asset through a non-monetary transaction subsequent to year end in concluding that the asset was not impaired. The firm did not perform sufficient procedures to evaluate the issuer's conclusions. The following deficiencies were identified: • The firm did not test the data used by the external specialist to determine the fair value of the asset. (AS 1210.12) Financial statement audit only | AS 1210.12 | |
| 11 | Certain Assets | The issuer identified impairment indicators related to a certain asset. The issuer engaged an external specialist to determine the asset's fair value and also relied upon its sale of the asset through a non-monetary transaction subsequent to year end in concluding that the asset was not impaired. The firm did not perform sufficient procedures to evaluate the issuer's conclusions. The following deficiencies were identified: • The firm did not evaluate the reasonableness of assumptions used by the external specialist to determine the fair value. (AS 2502.26 and .28) Financial statement audit only | AS 2502.26; AS 2502.28 | |
| 12 | Certain Assets | The issuer identified impairment indicators related to a certain asset. The issuer engaged an external specialist to determine the asset's fair value and also relied upon its sale of the asset through a non-monetary transaction subsequent to year end in concluding that the asset was not impaired. The firm did not perform sufficient procedures to evaluate the issuer's conclusions. The following deficiencies were identified: • The firm did not test the fair value of the subsequent sale of this asset. (AS 2502.26 and .28) Financial statement audit only | AS 2502.26; AS 2502.28 | |
| 13 | Certain Assets | The firm did not evaluate whether the presentation of the asset as a current asset in the issuer's balance sheet was in conformity with FASB ASC Topic 210. (AS 2810.30) Financial statement audit only | AS 2810.30 | |
| 14 | Investments | The issuer held certain non-marketable equity investments that were recorded at adjusted cost. For one of these investments the firm did not perform sufficient procedures to evaluate the issuer's conclusion that the investment was not impaired because the firm did not (1) test the issuer's qualitative assessment and (2) test the fair value of the issuer's sale of this investment through a non-monetary transaction subsequent to year end which the issuer used to support its conclusion that the investment was not impaired at year end. (AS 2501.07) Financial statement audit only | AS 2501.7 | |
| 15 | Investments | For another of these investments the issuer concluded that the investment was not impaired based in part on a private placement transaction earlier in the year. The firm did not perform sufficient procedures to evaluate the issuer's conclusions that the investment was not impaired because the firm did not (1) test the issuer's qualitative assessment; (2) evaluate whether impairment indicators existed because the investee company reported a net loss for the year and its total liabilities exceeded its total assets; and (3) evaluate the value of the investee's shares at year end relative to the private placement transaction earlier in the year. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 16 | Investments | The issuer also held an investment in an entity for which it had a majority ownership but the entity was not consolidated due to certain qualitative considerations. The firm did not evaluate these qualitative considerations in assessing whether the issuer's accounting was in conformity with FASB ASC Topic 323 Investments — Equity Method and Joint Ventures. (AS 2810.30) Financial statement audit only | AS 2810.30 | |
| 17 | Investments | The issuer also held an investment in an entity for which it had a majority ownership but the entity was not consolidated due to certain qualitative considerations. The issuer identified impairment indicators related to this investment and engaged an external specialist to estimate its fair value. The firm did not test the data used by the external specialist to determine the fair value. (AS 1210.12) Financial statement audit only | AS 1210.12 | |
| 18 | Investments | The issuer also held an investment in an entity for which it had a majority ownership but the entity was not consolidated due to certain qualitative considerations. The firm did not evaluate the reasonableness of the assumptions used by the external specialist to estimate the fair value. (AS 2502.26 and .28) Financial statement audit only | AS 2502.26; AS 2502.28 | |
| 19 | Discontinued Operations | The issuer indicated its intention to phase out components of its business. The firm did not evaluate whether these components should have been reported as discontinued operations in conformity with FASB ASC Subtopic 205-20 Presentation of Financial Statements — Discontinued Operations. (AS 2810.30 and .31) Financial statement audit only | AS 2810.30; AS 2810.31 |
Issuer B10 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The issuer adopted FASB Topic ASC 606 Revenue from Contracts with Customers during the year under audit. The firm did not perform procedures beyond reading an issuer-prepared memorandum to evaluate the significant judgments made by the issuer in the application of FASB ASC Topic 606 including the appropriateness of the issuer's determination that consideration did not need to be allocated to certain performance obligations. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 2 | Revenue | In addition the firm did not identify or appropriately address departures from GAAP related to the issuer's omission of disclosures related to (1) the nature of and reason for the change in accounting principle and (2) the transition method used by the issuer as required by FASB ASC Topic 606. (AS 2810.30 and .31) Financial statement audit only | AS 2810.30; AS 2810.31 | |
| 3 | Accounts Receivable | To substantively test accounts receivable the firm sent confirmation requests for a selection of accounts receivable that met certain criteria. The firm did not perform any procedures to test the remaining population of accounts receivable. (AS 1105.27) Financial statement audit only | AS 1105.27 | |
| 4 | Business Combinations | During the year the issuer acquired certain businesses and engaged an external specialist to estimate the fair value of certain acquired intangible assets. The firm did not test the data used by the external specialist to estimate the fair value. (AS 1210.12) Financial statement audit only | AS 1210.12 | |
| 5 | Business Combinations | During the year the issuer acquired certain businesses and engaged an external specialist to estimate the fair value of certain acquired intangible assets. The firm did not evaluate the reasonableness of assumptions used by the external specialist to estimate the fair value. (AS 2502.26 and .28) Financial statement audit only | AS 2502.26; AS 2502.28 | |
| 6 | Business Combinations | For certain other business combinations the firm did not evaluate the reasonableness of the estimated useful lives of the acquired intangible assets. (AS 2501.07) Financial statement audit only | AS 2501.7 | |
| 7 | Investments | The issuer reported an equity-method investment in an investee whose fiscal year end was six months earlier than the issuer's. The firm did not test any transactions or the investee's financial information for the six-month period between the investee's and the issuer's fiscal year ends. (AS 2503.28) Financial statement audit only | AS 2503.28 | |
| 8 | Investments | The issuer reported an equity-method investment in an investee whose fiscal year end was six months earlier than the issuer's. The firm did not test the percentage of ownership in the investee at year end. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 9 | Related Party Transactions | The firm did not evaluate whether the issuer had properly identified its related parties and relationships and transactions with related parties including testing the accuracy and completeness of the related parties and relationships and transactions with related parties identified by the issuer. Further the firm did not evaluate whether related party transactions were properly accounted for and disclosed in the issuer's financial statements. (AS 2410.14 and .17) Financial statement audit only | AS 2410.14; AS 2410.17 | |
| 10 | Going Concern | During the year under audit the firm identified conditions and events that caused it to believe there could be substantial doubt about the issuer's ability to continue as a going concern for a reasonable period of time and concluded that the substantial doubt was alleviated. The firm did not sufficiently evaluate management's plans because it did not test the prospective financial information including the issuer's ability to carry out a significant planned reduction in operating expenditures which was significant to overcoming the adverse conditions and events. (AS 2415.03 .08 and .09) Financial statement audit only | AS 2415.3; AS 2415.8; AS 2415.9 |
Issuer C14 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue and Accounts Receivable | The firm's approach to testing revenue included testing selected revenue transactions for one type of revenue and contracts for another type of revenue. For the selected transactions and one of the contracts selected for testing the firm did not evaluate the appropriateness of revenue recognized. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 2 | Revenue and Accounts Receivable | The firm selected for confirmation key items related to certain revenue and accounts receivable transactions. The following deficiencies were identified: • The firm received electronic responses to its confirmation requests. The firm did not consider performing procedures to address the risks associated with electronic responses such as verifying the source and contents of the confirmation responses. (AS 2310.29) Financial statement audit only | AS 2310.29 | |
| 3 | Revenue and Accounts Receivable | The firm selected for confirmation key items related to certain revenue and accounts receivable transactions. The following deficiencies were identified: • The firm did not perform alternative procedures for positive confirmation requests for which it did not receive a response. (AS 2310.31) Financial statement audit only | AS 2310.31 | |
| 4 | Revenue and Accounts Receivable | The firm selected for confirmation key items related to certain revenue and accounts receivable transactions. The following deficiencies were identified: • The firm did not evaluate the nature of exceptions in returned confirmations. (AS 2310.33) Financial statement audit only | AS 2310.33 | |
| 5 | Revenue and Accounts Receivable | The firm selected for confirmation key items related to certain revenue and accounts receivable transactions. The following deficiencies were identified: • The firm did not perform any procedures to test the remaining population of accounts receivable that was not included in the confirmation selections. (AS 1105.27) Financial statement audit only | AS 1105.27 | |
| 6 | Allowance for Doubtful Accounts | The firm's approach for substantively testing the allowance for doubtful accounts was to review and test management's process. The firm did not sufficiently evaluate the reasonableness of the allowance because the firm did not perform procedures to test the assumptions the issuer used to determine the allowance. (AS 2501.09 .10 and .11) Financial statement audit only | AS 2501.9; AS 2501.10; AS 2501.11 | |
| 7 | Allowance for Doubtful Accounts | The firm's approach for substantively testing the allowance for doubtful accounts was to review and test management's process. The firm did not test the accuracy and completeness of data the issuer used to determine the allowance. (AS 1105.10; AS 2501.11) Financial statement audit only | AS 1105.10; AS 2501.11 | |
| 8 | Business Combinations | During the year the issuer acquired certain businesses. The firm did not perform audit procedures beyond reading the issuer-prepared memoranda merger agreements and related acquisition documents to understand the issuer's process in determining fair value measurements and disclosures including the data and assumptions that were used in the analyses in order to plan the nature timing and extent of the audit procedures. (AS 2502.11) Financial statement audit only | AS 2502.11 | |
| 9 | Business Combinations | During the year the issuer acquired certain businesses. The firm did not test the fair values of the acquired intangible assets and test the measurement of goodwill. (AS 2502.26 and .28) Financial statement audit only | AS 2502.26; AS 2502.28 | |
| 10 | Business Combinations | During the year the issuer acquired certain businesses. The firm did not test the presentation and disclosure of certain acquisitions in the notes to the financial statements. (AS 2502.43) Financial statement audit only | AS 2502.43 | |
| 11 | Goodwill and Intangible Assets | During the prior year the issuer acquired a business and recorded both goodwill and intangible assets. During the year under audit the issuer performed an impairment analysis as a result of the discovery of misrepresentations the seller made and recorded an impairment loss for that goodwill. The firm did not identify that certain of these misrepresentations existed at the date of the audit report for the prior year and evaluate whether appropriate revisions to the prior year's financial statements should have been disclosed in the financial statements of the year under audit. (AS 2905.04 .05 and .06) Financial statement audit only | AS 2905.4; AS 2905.5; AS 2905.6 | |
| 12 | Goodwill and Intangible Assets | The firm did not evaluate the reasonableness of assumptions used in the issuer's goodwill impairment analysis. (AS 2502.26 and .28) Financial statement audit only | AS 2502.26; AS 2502.28 | |
| 13 | Goodwill and Intangible Assets | The firm did not evaluate the reasonableness of the issuer's conclusion that its other intangible assets related to this reporting unit were not also impaired. (AS 2501.07; AS 2810.03) Financial statement audit only | AS 2501.7; AS 2810.3 | |
| 14 | Comparability of Financial Statements | During the year under audit the issuer disclosed that it corrected certain immaterial errors contained in its prior year financial statements. The firm did not evaluate the issuer's conclusion that these errors were immaterial to each affected year and whether the comparability of the financial statements between periods was materially affected by the adjustments that were made to previously issued financial statements. (AS 2820.02) Financial statement audit only | AS 2820.2 |
Issuer D9 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Goodwill | In its annual goodwill impairment test the issuer compared the fair value of a reporting unit to the recorded amount of goodwill. The firm did not identify and evaluate the significance to the issuer's financial statements of a departure from GAAP related to the issuer's failure to compare the fair value of the reporting unit to its carrying amount including goodwill in conformity with FASB ASC Topic 350 Intangibles — Goodwill and Other. (AS 2810.30) Financial statement audit only | AS 2810.30 | |
| 2 | Goodwill | The firm did not perform any procedures to evaluate the reasonableness of certain assumptions used by the issuer to estimate the fair value of the reporting unit. (AS 2502.26 and .28) Financial statement audit only | AS 2502.26; AS 2502.28 | |
| 3 | Accounts Receivable | To test accounts receivable the firm sent confirmation requests either by mail or electronic mail to a selection of the issuer's customers that met certain criteria. The following deficiencies were identified: • The firm received electronic responses to certain of its confirmation requests. The firm did not consider performing procedures to address the risks associated with electronic responses such as verifying the source and contents of the confirmation responses. (AS 2310.29) Financial statement audit only | AS 2310.29 | |
| 4 | Accounts Receivable | To test accounts receivable the firm sent confirmation requests either by mail or electronic mail to a selection of the issuer's customers that met certain criteria. The following deficiencies were identified: • The firm did not perform alternative procedures for positive confirmation requests for which it did not receive a response. (AS 2310.31) Financial statement audit only | AS 2310.31 | |
| 5 | Accounts Receivable | To test accounts receivable the firm sent confirmation requests either by mail or electronic mail to a selection of the issuer's customers that met certain criteria. The following deficiencies were identified: • The firm did not evaluate the nature of exceptions in returned confirmations. (AS 2310.33) Financial statement audit only | AS 2310.33 | |
| 6 | Accounts Receivable | To test accounts receivable the firm sent confirmation requests either by mail or electronic mail to a selection of the issuer's customers that met certain criteria. The following deficiencies were identified: • The firm did not perform any procedures to test the remaining population of accounts receivable that was not included in the confirmation selections. (AS 1105.27) Financial statement audit only | AS 1105.27 | |
| 7 | Accounts Receivable | The firm's approach for substantively testing the allowance for doubtful accounts was to review and test management's process. The firm did not sufficiently evaluate the reasonableness of the allowance because the firm did not perform procedures to test the assumptions the issuer used to determine the allowance. (AS 2501.09 .10 and .11) Financial statement audit only | AS 2501.9; AS 2501.10; AS 2501.11 | |
| 8 | Accounts Receivable | The firm's approach for substantively testing the allowance for doubtful accounts was to review and test management's process. The firm did not test the accuracy and completeness of data the issuer used to determine the allowance. (AS 1105.10; AS 2501.11) Financial statement audit only | AS 1105.10; AS 2501.11 | |
| 9 | Going Concern | During the year under audit the firm identified conditions and events that caused it to believe there could be substantial doubt about the issuer's ability to continue as a going concern for a reasonable period of time and concluded that the substantial doubt was alleviated. The firm did not sufficiently evaluate management's plans because it did not assess the likelihood that the issuer could obtain additional funding. (AS 2415.03 and .08) Financial statement audit only | AS 2415.3; AS 2415.8 |
Issuer E6 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The issuer recognized revenue using certain inputs and assumptions to measure its progress toward the completion of its performance obligations. The firm's approach for substantively testing the estimate of progress toward completion was to review and test management's process. The firm did not sufficiently evaluate the reasonableness of this estimate because the firm did not test the accuracy and completeness of the inputs the issuer used to determine the estimate. (AS 1105.10; AS 2501.11) Financial statement audit only | AS 1105.10; AS 2501.11 | |
| 2 | Revenue | The issuer recognized revenue using certain inputs and assumptions to measure its progress toward the completion of its performance obligations. The firm's approach for substantively testing the estimate of progress toward completion was to review and test management's process. The firm did not perform procedures to test the assumptions the issuer used to determine the estimate. (AS 2501.09 .10 and .11) Financial statement audit only | AS 2501.9; AS 2501.10; AS 2501.11 | |
| 3 | Goodwill and Intangible Assets | The issuer reported goodwill and/or intangible assets in certain reporting units. The issuer estimated the fair value of certain of these reporting units to assess whether there was a potential impairment. The following deficiencies were identified: • With respect to one reporting unit the firm did not identify and evaluate the significance to the issuer's financial statement of a departure from GAAP related to the issuer combining indefinite-lived intangible assets with goodwill and finite-lived assets when performing its impairment testing which is not in conformity with FASB ASC Topic 350. (AS 2810.30) Financial statement audit only | AS 2810.30 | |
| 4 | Goodwill and Intangible Assets | The issuer reported goodwill and/or intangible assets in certain reporting units. The issuer estimated the fair value of certain of these reporting units to assess whether there was a potential impairment. The following deficiencies were identified: • The firm did not evaluate the reasonableness of significant assumptions used by the issuer in its estimate of fair value. (AS 2502.26 and .28) Financial statement audit only | AS 2502.26; AS 2502.28 | |
| 5 | Goodwill and Intangible Assets | The issuer reported goodwill and/or intangible assets in certain reporting units. The issuer estimated the fair value of certain of these reporting units to assess whether there was a potential impairment. The following deficiencies were identified: • With respect to another reporting unit the firm did not evaluate the reasonableness of the assumptions used by the issuer in its estimate of the fair value. (AS 2502.26 and .28) Financial statement audit only | AS 2502.26; AS 2502.28 | |
| 6 | Goodwill and Intangible Assets | The issuer reported goodwill and/or intangible assets in certain reporting units. The issuer estimated the fair value of certain of these reporting units to assess whether there was a potential impairment. The following deficiencies were identified: • With respect to a third reporting unit the firm did not perform any procedures to evaluate whether the issuer tested goodwill for impairment. (AS 2301.08) Financial statement audit only | AS 2301.8 |
Issuer F7 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The firm selected certain revenue contracts for testing. The firm did not identify and test whether all relevant performance obligations for revenue recognition had been met for those contracts selected for testing. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 2 | Revenue | For one type of revenue the firm used a sampling tool to determine the sample size for testing but only tested a subset of the sample. (AS 2315.25) Financial statement audit only | AS 2315.25 | |
| 3 | Revenue | The firm sent confirmation requests to a sample of customers and a majority of the confirmation responses received were provided to the firm after having been initially received by the issuer. The firm did not maintain control over the confirmation requests and responses through direct communication between the firm and the intended recipients of the confirmation requests. (AS 2310.28) Financial statement audit only | AS 2310.28 | |
| 4 | Revenue | For another type of revenue the firm selected transactions for testing that met certain criteria. The firm did not perform any procedures to test the remaining population that was not included in the selections. (AS 1105.27) Financial statement audit only | AS 1105.27 | |
| 5 | Revenue | For another type of revenue the firm selected transactions for testing that met certain criteria. The firm did not perform any substantive procedures to test or in the alternative test controls over the accuracy and completeness of issuer-generated invoices used in the firm's testing of this type of revenue. (AS 1105.10) Financial statement audit only | AS 1105.10 | |
| 6 | Accounts Receivable | The firm received electronic responses to its accounts receivable confirmation requests. The firm did not consider performing procedures to address the risks associated with electronic responses such as verifying the source and contents of the confirmation responses. (AS 2310.29) Financial statement audit only | AS 2310.29 | |
| 7 | Allowance for Doubtful Accounts | The firm's approach for substantively testing the allowance for doubtful accounts was to review subsequent transactions. The firm did not sufficiently evaluate the reasonableness of the allowance because the firm limited its procedures to reviewing cash collections subsequent to year end for one customer's accounts receivable balance. (AS 2501.09 .10 and .13) Financial statement audit only | AS 2501.9; AS 2501.10; AS 2501.13 |
Issuer G4 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Convertible Debt | The firm did not identify and evaluate the significance to the issuer's financial statements of a departure from GAAP related to the conversion features of certain convertible notes that should have been accounted for as either beneficial conversion features in conformity with FASB ASC Subtopic 470-20 Debt — Debt with Conversion and Other Options or as embedded derivatives in conformity with FASB ASC Topic 815 Derivatives and Hedging. (AS 2810.30) Financial statement audit only | AS 2810.30 | |
| 2 | Convertible Debt | The firm identified errors related to certain of the issuer's convertible notes. The firm did not evaluate whether the uncorrected misstatements were material individually or in combination with other misstatements. (AS 2810.17) Financial statement audit only | AS 2810.17 | |
| 3 | Goodwill | The issuer performed a qualitative assessment of goodwill impairment and used a recent fair value calculation prepared by an external specialist in concluding to not perform a quantitative goodwill impairment test. The firm did not sufficiently evaluate whether the issuer considered certain relevant events or changes in circumstances in conformity with FASB ASC Subtopic 350-20 Intangibles — Goodwill and Other— Goodwill including the issuer's operating losses negative working capital and substantial doubt about the issuer's ability to continue as a going concern. (AS 2810.03 and .30) Financial statement audit only | AS 2810.3; AS 2810.30 | |
| 4 | Goodwill | The issuer performed a qualitative assessment of goodwill impairment and used a recent fair value calculation prepared by an external specialist in concluding to not perform a quantitative goodwill impairment test. The firm did not perform any procedures beyond inquiry of the external specialist to (1) test the data (2) evaluate the reasonableness of assumptions and (3) evaluate the relevance and reliability of information the specialist used in the recent fair value calculation that the firm used to support its evaluation of the issuer's qualitative assessment. (AS 2501.09 .10 and .11) Financial statement audit only | AS 2501.9; AS 2501.10; AS 2501.11 |
Issuer H1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Inventory | The firm performed inventory observations at an interim date and performed roll-forward procedures for the period from the interim date to year end. The firm did not perform any substantive procedures to test or in the alternative test controls over the accuracy and completeness of information the firm used in performing the roll-forward procedures. (AS 1105.10) Financial statement audit only | AS 1105.10 |