- Inspection year
- 2019
- Report date
- 30-Sep-2021
- PCAOB release
- 104-2021-186a
- Audits reviewed
- 5
- Audits w/ Part I.A deficiencies
- 1
- Part I.A deficiency rate
- 20%
- Part I.A deficiencies
- 7
- Part I.B deficiencies
- 1
- Report
- View PDF ↗
Deficiencies (7)
Grouped by issuer and in the same order as the PCAOB report, so each item ties back directly to the source.
Issuer A7 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The firm did not identify and test any controls that addressed the risks that the performance obligations and transaction prices were not properly identified and that revenue was not properly recognized in conformity with FASB ASC Topic 606 Revenue from Contracts with Customers. (AS 2201.39) Unrelated and subsequent to our review the issuer reevaluated its accounting for revenue from customer contracts 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 and the firm revised and reissued its report on the financial statements. The issuer also reevaluated its controls over revenue and concluded that material weaknesses existed that had not been previously identified. The issuer subsequently reflected these material weaknesses in a revision of its report on ICFR and the firm revised and reissued its report on ICFR to include these additional material weaknesses. Both financial statement and ICFR audits | AS 2201.39 | |
| 2 | Revenue | The firm did not identify and appropriately address a departure from GAAP related to the issuer's inclusion of unexercised and non-binding customer purchase options in its determination of revenue recognized from customer contracts which was not in conformity with FASB ASC Topic 606. (AS 2810.30) Unrelated and subsequent to our review the issuer reevaluated its accounting for revenue from customer contracts 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 and the firm revised and reissued its report on the financial statements. The issuer also reevaluated its controls over revenue and concluded that material weaknesses existed that had not been previously identified. The issuer subsequently reflected these material weaknesses in a revision of its report on ICFR and the firm revised and reissued its report on ICFR to include these additional material weaknesses. Both financial statement and ICFR audits | AS 2810.30 | |
| 3 | Revenue | The issuer used direct labor costs from its timekeeping system in its actual costs incurred used to determine revenue recognition. The firm tested certain information-technology ('IT') dependent manual controls that used data from the timekeeping system but the firm did not identify and test any ITGCs or other controls over the issuer's timekeeping system. As a result the firm's testing of IT dependent manual controls was not sufficient. (AS 2201.46) Both financial statement and ICFR audits | AS 2201.46 | |
| 4 | Revenue | The firm selected for testing controls that consisted of reviews of a spreadsheet used to accumulate actual costs incurred and total estimated contract costs and calculate revenue recognized by contract. 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 | Business Combinations | During the year the issuer acquired a business. The firm did not identify and test any controls over the valuation of assets acquired and liabilities assumed in a business combination. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 6 | Business Combinations | The firm did not perform any substantive procedures to test the fair value of inventory acquired in a business combination beyond obtaining a preliminary valuation report from the issuer-engaged specialist. (AS 2502.15) Both financial statement and ICFR audits | AS 2502.15 | |
| 7 | Business Combinations | The firm did not perform any substantive procedures to test the existence of certain inventory acquired. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 |