- Inspection year
- 2019
- Report date
- 21-Sep-2021
- PCAOB release
- 104-2021-180
- Audits reviewed
- 3
- Audits w/ Part I.A deficiencies
- 3
- Part I.A deficiency rate
- 100%
- Part I.A deficiencies
- 22
- Part I.B deficiencies
- —
- Report
- View PDF ↗
Deficiencies (22)
Grouped by issuer and in the same order as the PCAOB report, so each item ties back directly to the source.
Issuer A15 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Significant Estimates | The firm selected for testing certain controls related to the issuer's reviews of a significant estimate. 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 2301.19 and .21) Financial statement audit only | AS 2301.19; AS 2301.21 | |
| 2 | Significant Estimates | The firm selected for testing certain controls related to the issuer's reviews of a significant estimate. The firm did not test the design and operating effectiveness of other controls because the firm selected transactions from reports that were not used in the operation of the controls. (AS 2301.19 and .21) Financial statement audit only | AS 2301.19; AS 2301.21 | |
| 3 | Significant Estimates | The firm selected for testing a quarterly control over portions of the estimate. The firm tested this control through the second quarter but did not perform any procedures to update the results of its testing from that interim date to the issuer's year end. (AS 2301.29) Financial statement audit only | AS 2301.29 | |
| 4 | Significant Estimates | The firm identified control deficiencies in its testing of certain controls but did not evaluate the severity of the deficiencies and their effect on its control risk assessment. (AS 2301.34) Financial statement audit only | AS 2301.34 | |
| 5 | Significant Estimates | The firm obtained and evaluated the service auditor's report for the issuer's system used to process and record transactions related to this estimate. The firm identified and tested certain controls intended to address complementary user entity controls included in the service auditor's report. The firm identified deficiencies in these controls and identified and tested other controls that it believed mitigated these deficiencies. The firm however did not identify that the other controls did not address the same risks as the deficient controls. (AS 2601.14) Financial statement audit only | AS 2601.14 | |
| 6 | Significant Estimates | The firm's approach for substantively testing the estimate was to review and test management's process. The firm did not sufficiently evaluate the reasonableness of the estimate because the firm did not perform procedures to test certain assumptions used by the issuer to determine the estimate. (AS 2501.09 .10 and .11) Financial statement audit only | AS 2501.9; AS 2501.10; AS 2501.11 | |
| 7 | Significant Estimates | The firm's approach for substantively testing the estimate was to review and test management's process. The firm did not test or in the alternative test any controls over the accuracy and completeness of certain data used to determine the estimate. (AS 1105.10; AS 2501.11) Financial statement audit only | AS 1105.10; AS 2501.11 | |
| 8 | Significant Estimates | The firm performed substantive procedures to test certain factors used by the issuer to determine the estimate. The following deficiencies were identified: · The sample sizes the firm used in those procedures 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) Financial statement audit only | AS 2301.16; AS 2301.18; AS 2301.37; AS 2315.19; AS 2315.23; AS 2315.23A | |
| 9 | Significant Estimates | The firm performed substantive procedures to test certain factors used by the issuer to determine the estimate. The following deficiencies were identified: · The firm did not evaluate differences it identified in its substantive testing of certain data used by the issuer to determine the estimate. (AS 2501.09 .10 and .11) Financial statement audit only | AS 2501.9; AS 2501.10; AS 2501.11 | |
| 10 | Liabilities | The firm selected for testing controls related to the issuer's review of a certain liability account. 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 2301.19 and .21) Financial statement audit only | AS 2301.19; AS 2301.21 | |
| 11 | Liabilities | In addition the firm identified control deficiencies in its testing of one control but did not evaluate the severity of the deficiencies and their effect on its control risk assessment. (AS 2301.34) Financial statement audit only | AS 2301.34 | |
| 12 | Liabilities | The firm obtained and evaluated the service auditor's report for the issuer's system used to process and record transactions related to this liability. The firm identified and tested certain controls intended to address complementary user entity controls included in the service auditor's report. The firm identified deficiencies in these controls and identified and selected for testing a compensating control to address these deficiencies. The firm did not assess and evaluate the effect of the identified control deficiencies as the compensating control selected for testing is one of the controls described above related to the firm not evaluating review procedures performed by the control owners. (AS 2601.14) Financial statement audit only | AS 2601.14 | |
| 13 | Liabilities | The firm's approach for substantively testing this liability account consisted of sending negative confirmation requests. The firm's procedures did not provide sufficient appropriate audit evidence because the use of negative confirmations was not supported by the firm's risk assessment. (AS 2310.20) Financial statement audit only | AS 2310.20 | |
| 14 | Liabilities | The sample sizes the firm used in certain of its substantive procedures to test this liability account 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) Financial statement audit only | AS 2301.16; AS 2301.18; AS 2301.37; AS 2315.19; AS 2315.23; AS 2315.23A | |
| 15 | Significant Accounts | The firm did not test the presentation and disclosure of certain significant accounts beyond testing the mathematical accuracy of the issuer's calculations. (AS 2502.43) Financial statement audit only | AS 2502.43 |
Issuer B6 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue and Related Accounts | The firm's approach to test revenue included confirming amounts billed with a sample of the issuer's customers. For confirmations received the firm did not perform procedures to test whether the performance obligations were satisfied to recognize revenue. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 2 | Revenue and Related Accounts | The firm's approach to test revenue included confirming amounts billed with a sample of the issuer's customers. The firm did not test the accuracy and completeness of the data and reports used in determining if the performance obligation was satisfied for (1) confirmation responses that were not received and (2) other revenue transactions tested where confirmations were not requested. (AS 1105.10) Financial statement audit only | AS 1105.10 | |
| 3 | Revenue and Related Accounts | The firm identified a fraud risk related to overstatement and completeness of revenue. The firm did not perform sufficient tests of details in response to the fraud risk because it limited its procedures to confirming amounts billed and testing other revenue transactions as discussed above. (AS 2301.13) Unrelated and prior to our review the issuer reevaluated its accounting for revenue and concluded that a material misstatement existed that had not been previously identified. The issuer subsequently corrected this misstatement in a restatement of its financial statements. Financial statement audit only | AS 2301.13 | |
| 4 | Revenue and Related Accounts | The firm did not sufficiently test the issuer's allowance for doubtful accounts because it limited its procedures to calculating the (1) allowance for doubtful accounts as a percentage of total accounts receivable and (2) percentage of accounts receivable in each aging bucket. (AS 2501.07) Financial statement audit only | AS 2501.7 | |
| 5 | Intangible Assets | The issuer acquired a business during the year and engaged an external specialist to determine the fair value of the intangible assets. The firm did not perform procedures to test the reasonableness of the issuer's forecasts used by the external specialist. (AS 1210.12) Financial statement audit only | AS 1210.12 | |
| 6 | Related Party Transactions | The firm did not perform sufficient procedures to evaluate whether the issuer properly identified its related parties and relationships and transactions with related parties because the firm did not take into account information gathered during the audit. (AS 2410.14) Financial statement audit only | AS 2410.14 |
Issuer C1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Leases | During the year the issuer acquired several properties. The firm did not evaluate whether the existing leases on these acquired properties were properly classified. (AS 2301.08) Financial statement audit only | AS 2301.8 |