- Inspection year
- 2020
- Report date
- 16-Dec-2021
- PCAOB release
- 104-2022-005a
- Audits reviewed
- 15
- Audits w/ Part I.A deficiencies
- 7
- Part I.A deficiency rate
- 47%
- Part I.A deficiencies
- 24
- Part I.B deficiencies
- 1
- Report
- View PDF ↗
Deficiencies (24)
Grouped by issuer and in the same order as the PCAOB report, so each item ties back directly to the source.
Issuer A13 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The issuer used various information-technology (IT) systems to initiate process and record transactions related to revenue for one business unit. The firm tested IT general controls (ITGCs) for these IT systems. The following deficiencies were identified · The firm identified a deficiency in ITGCs related to an individual's inappropriate administrative rights over user access to these systems but did not evaluate the severity of this control deficiency. (AS 2201.62) Both financial statement and ICFR audits | AS 2201.62 | |
| 2 | Revenue | The issuer used various information-technology (IT) systems to initiate process and record transactions related to revenue for one business unit. The firm tested IT general controls (ITGCs) for these IT systems. The following deficiencies were identified · The firm selected for testing controls over user access to one of these systems. The firm did not evaluate the specific review procedures that the control owners performed to determine whether previously granted access continued to be appropriate. Further the firm identified users who had the ability to initiate process and record transactions but did not evaluate whether those rights represented a control deficiency. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 3 | Revenue | The issuer used multiple service organizations to host and/or maintain and manage IT systems that the issuer used to initiate process and record transactions related to certain revenue for another business unit. The following deficiencies were identified: · The firm identified a control deficiency related to the issuer's evaluation of service auditor reports for certain service organizations. The firm identified and tested three compensating controls that it believed would mitigate this deficiency but did not sufficiently evaluate the effect of these controls because it (1) determined that one of these controls was ineffective and (2) did not identify that the control owner of the other two controls was an individual the firm had identified as having inappropriate access to the systems hosted by these service organizations. (AS 2201.68) Both financial statement and ICFR audits | AS 2201.68 | |
| 4 | Revenue | The issuer used multiple service organizations to host and/or maintain and manage IT systems that the issuer used to initiate process and record transactions related to certain revenue for another business unit. The following deficiencies were identified: · The firm did not perform any procedures to test controls at certain other service organizations or identify and test any other controls over the revenue processed by the systems maintained and managed by these service organizations. (AS 2201.39 and .B19) Both financial statement and ICFR audits | AS 2201.39; AS 2201.B19 | |
| 5 | Revenue | In its testing of controls over certain revenue for both of these business units the firm selected for testing various IT-dependent manual controls that used data and reports generated or maintained by certain of these systems. As a result of the deficiencies in the firm's control testing over these systems as discussed above the firm's testing of these IT-dependent manual controls was not sufficient. (AS 2201.46) Both financial statement and ICFR audits | AS 2201.46 | |
| 6 | Revenue | The firm selected for testing certain other controls over this revenue for these business units. The firm did not identify and test any controls over the accuracy and completeness of the reports or data that the control owners used in the performance of these controls. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 7 | Revenue | The firm did not perform substantive procedures to test or sufficiently test controls over the accuracy and completeness of certain reports or data that the firm used in its substantive testing of certain revenue for both of these business units. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 | |
| 8 | Goodwill | The firm did not identify and test any controls over the issuer's review of its goodwill impairment analysis. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 9 | Goodwill | The issuer changed the number of its reporting units in the current year for purposes of its annual goodwill impairment analysis. The following deficiencies were identified: · The firm did not perform any procedures to evaluate whether the issuer's change in the number of reporting units was in conformity with FASB ASC Topic 350 Intangibles – Goodwill and Other and was preferable under FASB ASC Topic 250 Accounting Changes and Error Corrections. (AS 2810.30) Both financial statement and ICFR audits | AS 2810.30 | |
| 10 | Goodwill | The issuer changed the number of its reporting units in the current year for purposes of its annual goodwill impairment analysis. The following deficiencies were identified: · The firm did not perform any procedures to evaluate whether the goodwill associated with any of the prior-year reporting units may have been impaired at the time of the issuer's change in the number of reporting units. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 | |
| 11 | Goodwill | The issuer changed the number of its reporting units in the current year for purposes of its annual goodwill impairment analysis. The following deficiencies were identified: · The firm did not identify and evaluate the significance to the financial statements of the issuer's omission of a required disclosure under FASB ASC Topic 250 related to its change in the number of reporting units. (AS 2810.30 and .31) Both financial statement and ICFR audits | AS 2810.30; AS 2810.31 | |
| 12 | Cash | To test cash at one of the issuer's business units the firm performed confirmation procedures for a sample of cash accounts. The firm did not maintain control over the confirmation requests because the issuer sent the requests. (AS 2310.28) Both financial statement and ICFR audits | AS 2310.28 | |
| 13 | Cash | To test cash at one of the issuer's business units the firm performed confirmation procedures for a sample of cash accounts. For the majority of the items in its sample the responses were returned by email. The firm did not perform substantive procedures that provided sufficient appropriate audit evidence to verify the source of these responses. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 |
Issuer B4 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The issuer recognized certain revenue from contracts based on labor hours recorded in the issuer's time system. The following deficiencies were identified: · The firm did not identify and test any controls over the accuracy of these labor hours. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 2 | Revenue | The issuer recognized certain revenue from contracts based on labor hours recorded in the issuer's time system. The following deficiencies were identified: · Certain of this revenue was generated from contracts that specified the maximum amount of revenue that could be earned under each contract. The firm did not identify and test any controls that addressed the risk that revenue may have been recognized in excess of these contractual maximums. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 3 | Revenue | The issuer recognized certain revenue from contracts based on labor hours recorded in the issuer's time system. The following deficiencies were identified: · The firm used labor hours in its substantive testing of this revenue but did not perform any substantive procedures to test or in the alternative test any controls over the accuracy of these labor hours. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 | |
| 4 | Revenue | The issuer recognized certain revenue from contracts based on labor hours recorded in the issuer's time system. The following deficiencies were identified: · The sample sizes the firm used in certain of its substantive procedures to test this revenue 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) Both financial statement and ICFR audits | AS 2301.16; AS 2301.18; AS 2301.37; AS 2315.19; AS 2315.23; AS 2315.23A |
Issuer C2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Allowance for Credit/Loan Losses | For loans that were collectively evaluated for impairment the issuer determined the qualitative reserve component of the ALL using certain qualitative factors. The following deficiencies were identified: · The firm selected for testing controls that consisted of the issuer's reviews of the ALL including an assessment of the qualitative factors for reasonableness. The firm did not evaluate the specific review procedures that the control owners performed to assess the reasonableness of the qualitative factors. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 2 | Allowance for Credit/Loan Losses | For loans that were collectively evaluated for impairment the issuer determined the qualitative reserve component of the ALL using certain qualitative factors. The following deficiencies were identified: · The firm's approach for substantively testing the ALL was to review and test management's process. The firm did not sufficiently evaluate the reasonableness of the qualitative reserve component of the ALL because the firm's procedures to test the qualitative factors the issuer used to determine the reserve were limited to (1) reading the issuer's ALL memorandum and (2) comparing the qualitative factors the issuer used at year end to those used in prior periods. (AS 2501.09 .10 and .11) Both financial statement and ICFR audits | AS 2501.9; AS 2501.10; AS 2501.11 |
Issuer D2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Allowance for Credit/Loan Losses | For loans that were collectively evaluated for impairment the issuer determined the qualitative reserve component of the ALL using certain qualitative factors. The following deficiencies were identified: · The firm selected for testing a control that consisted of the issuer's review of the qualitative factors for reasonableness. The firm did not evaluate the specific review procedures that the control owners performed to assess the reasonableness of certain qualitative factors. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 2 | Allowance for Credit/Loan Losses | For loans that were collectively evaluated for impairment the issuer determined the qualitative reserve component of the ALL using certain qualitative factors. The following deficiencies were identified: · The firm's approach for substantively testing the ALL was to review and test management's process. The firm did not sufficiently evaluate the reasonableness of the qualitative reserve component of the ALL because the firm's procedures to test certain qualitative factors the issuer used to determine the reserve were limited to (1) reading the issuer's ALL memorandum and its analysis of the factors and (2) comparing the qualitative factors the issuer used at year end to those used in the prior year. (AS 2501.09 .10 and .11) Both financial statement and ICFR audits | AS 2501.9; AS 2501.10; AS 2501.11 |
Issuer E1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Leases | During the year the issuer entered into a lease amendment. The firm did not evaluate whether the issuer's accounting for certain terms of this amendment as a new lease commencing in the subsequent year was in conformity with FASB ASC Topic 842 Leases. (AS 2810.30) Financial statement audit only | AS 2810.30 |
Issuer F1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The firm's substantive procedures to test certain revenue consisted of analytical procedures. To develop its expectation the firm used the quantities of units sold that had been recorded in the issuer's revenue system. The firm's testing of these quantities was not sufficient because its sample size was too small to assess whether the quantities recorded in this system were reliable. (AS 2305.16) Financial statement audit only | AS 2305.16 |
Issuer G1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The issuer used a service organization to accumulate customer activity data initiated in and processed by the issuer's mobile or web-based applications and recorded certain revenue based on these data. The firm did not identify and test any controls over the accuracy and completeness of the customer activity data within the applications. (AS 2201.39) ICFR audit only | AS 2201.39 |