- Inspection year
- 2019
- Report date
- 16-Aug-2021
- PCAOB release
- 104-2021-160a
- Audits reviewed
- 2
- Audits w/ Part I.A deficiencies
- 2
- Part I.A deficiency rate
- 100%
- Part I.A deficiencies
- 11
- Part I.B deficiencies
- 3
- Report
- View PDF ↗
Deficiencies (11)
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 | Income Statement Account | The firm tested IT general controls ('ITGCs') for an application used to process transactions related to an income statement account and certain assets and identified deficiencies related to access and change management controls. The firm did not evaluate the severity of these deficiencies to determine whether these deficiencies individually or in combination with other deficiencies constituted a material weakness. (AS 2201.62) Both financial statement and ICFR audits | AS 2201.62 | |
| 2 | Income Statement Account | The firm selected for testing a control over an income statement account that consisted of (1) the review of certain transactions in an application and (2) the automated generation of transaction documentation upon approval of those transactions. The firm did not test the transaction review attribute of the control. Further the firm did not sufficiently test the automated attribute of the control because it only tested one instance which was not appropriate due to the deficiencies in access and change management controls described above. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 3 | Income Statement Account | The firm selected for testing a control over a component of this income statement account that consisted of the review of transaction documentation. The firm did not evaluate the 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 | Certain Assets | The firm selected for testing a control over a certain asset that consisted of the automated calculation of the recorded value for two portions of this asset and relied on its testing of the control from prior years' audits. The firm did not support its reliance on testing performed in the prior years' audits because (1) of the deficiencies in access and change management controls described above and (2) it did not verify that the control had not changed since it was last tested. (AS 2201.42 .44 and .B29) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44; AS 2201.B29 | |
| 5 | Certain Assets | The firm selected for testing a control that consisted of management's review of the reserve over certain portions of this asset. The firm did not evaluate the 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 | |
| 6 | Certain Assets | The firm selected for testing a control that consisted of management's review of the reserve over certain portions of this asset. The firm did not identify and test any controls over the reserve for other portions of this asset. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 7 | Certain Assets | The firm did not test the recorded value for one portion of the asset. Further the firm did not test or (as discussed above) sufficiently test controls over the calculation of the recorded value for both portions of the asset. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 | |
| 8 | Certain Assets | To estimate the reserve for one portion of this asset the issuer developed certain projections. The firm's approach for substantively testing this reserve was to review and test management's process. The firm did not sufficiently evaluate the reasonableness of the reserve because the firm did not (1) obtain an understanding of the issuer's process for determining the projections and (2) perform procedures to test certain factors and assumptions used by the issuer to determine the reserve. (AS 2501.09 .10 and .11) Both financial statement and ICFR audits | AS 2501.9; AS 2501.10; AS 2501.11 | |
| 9 | Certain Assets | To estimate the reserve for one portion of this asset the issuer developed certain projections. The firm's approach for substantively testing this reserve was to review and test management's process. The firm did not evaluate the reserve for another portion of the asset. (AS 2501.07) Both financial statement and ICFR audits | AS 2501.7 |
Issuer B2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The firm tested the design effectiveness of ITGCs for two applications used to process revenue transactions. The firm's substantive procedures to test certain revenue transactions consisted of testing the automated calculation for a sample of transactions. The sample sizes the firm used 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 because the firm did not test the operating effectiveness of ITGCs for the two applications discussed above. (AS 2301.16 .18 .21 and .37; AS 2315.19 .23 and .23A) Financial statement audit only | AS 2301.16; AS 2301.18; AS 2301.21; AS 2301.37; AS 2315.19; AS 2315.23; AS 2315.23A | |
| 2 | Revenue | The firm did not test the accuracy and completeness of data included in certain reports used by the firm in its substantive procedures. (AS 1105.10) Financial statement audit only | AS 1105.10 |