- Inspection year
- 2019
- Report date
- 09-Sep-2021
- PCAOB release
- 104-2021-164a
- Audits reviewed
- 3
- Audits w/ Part I.A deficiencies
- 2
- Part I.A deficiency rate
- 67%
- Part I.A deficiencies
- 12
- Part I.B deficiencies
- 2
- Report
- View PDF ↗
Deficiencies (12)
Grouped by issuer and in the same order as the PCAOB report, so each item ties back directly to the source.
Issuer A10 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Accounts Receivable | The issuer's main information technology ('IT') application processed financial transactions and maintained related data. The firm selected for testing IT general controls ('ITGCs') that consisted of controls over access and change management. The firm did not test administrator access to the database and the operating system supporting this application. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 2 | Accounts Receivable | The issuer's main information technology ('IT') application processed financial transactions and maintained related data. The firm selected for testing IT general controls ('ITGCs') that consisted of controls over access and change management. The firm did not identify and test any controls that addressed the risk of developers migrating changes to production without proper approval and testing. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 3 | Accounts Receivable | The firm selected for testing certain IT-dependent controls. The firm did not identify and test any controls over the accuracy and completeness of data used in the operation of these controls. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 4 | Accounts Receivable | The firm selected for testing a control that consisted of the issuer's monthly review of the financial results. 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 | |
| 5 | Accounts Receivable | The firm selected for testing a control that consisted of the issuer's monthly review of the financial results. The firm did not identify and test any controls over the accuracy and completeness of data used in the operation of the control. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 6 | Accounts Receivable | The firm selected for testing three controls that consisted of the configuration of the application to (1) only allow key fields to be populated with certain data (2) sequentially assign sales order customer invoice and cash receipt numbers and (3) not allow customer invoices and journal entries to be posted when the accounting period is closed. The firm did not sufficiently test the configuration of the application because it did not test the operation of the control over all types of revenue transactions that occurred during the year. Further the sample sizes the firm used to test these controls were too small due to the deficiencies in the firm's testing of access and change management controls described above. (AS 2201.42 .44 and .46) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44; AS 2201.46 | |
| 7 | Revenue | The firm did not identify and test any controls that addressed whether transactions processed by the issuer's revenue application were accurately recorded. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 8 | Revenue | The firm did not identify and test any controls to address revenue adjustments. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 9 | Revenue | The firm did not test the completeness of data used in its substantive procedures to test cut-off. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 | |
| 10 | Revenue | The sample size the firm used in certain of its substantive procedures to test certain revenue was too small to provide sufficient appropriate audit evidence because the firm did not use the appropriate (1) tolerable misstatement for the population and (2) risk assessment in its sampling tool. (AS 2315.16 .23 and .23A) Both financial statement and ICFR audits | AS 2315.16; AS 2315.23; AS 2315.23A |
Issuer B2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Accounts Receivable | The firm selected for testing a control that consisted of the issuer's review of the allowance for doubtful accounts. The firm did not evaluate the review procedures that the control owner performed including the procedures performed to investigate certain accounts receivable balances 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 | Accounts Receivable | The firm's approach for substantively testing the valuation of accounts receivable was to review and test management's process. The firm did not sufficiently evaluate the reasonableness of the allowance for doubtful accounts for one customer because in response to the customer indicating in its written confirmation reply that its balance to the issuer was zero the firm limited its procedures to obtaining a written representation from the issuer's management. (AS 2501.09 .10 and .11; AS 2810.03) Both financial statement and ICFR audits | AS 2501.9; AS 2501.10; AS 2501.11; AS 2810.3 |