- Inspection year
- 2020
- Report date
- 10-Feb-2022
- PCAOB release
- 104-2022-064a
- Audits reviewed
- 4
- Audits w/ Part I.A deficiencies
- 3
- Part I.A deficiency rate
- 75%
- Part I.A deficiencies
- 15
- Part I.B deficiencies
- 2
- Report
- View PDF ↗
Deficiencies (15)
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 | Revenue | The firm selected for testing certain information technology general controls (ITGCs) automated controls and information technology (IT) dependent manual controls that used data and reports generated or maintained by the issuer's IT systems. The following deficiencies were identified: · The firm did not obtain an understanding of how revenue transactions are recorded and processed by certain applications. (AS 2201.30) Both financial statement and ICFR audits | AS 2201.30 | |
| 2 | Revenue | The firm selected for testing certain information technology general controls (ITGCs) automated controls and information technology (IT) dependent manual controls that used data and reports generated or maintained by the issuer's IT systems. The following deficiencies were identified: · The firm selected for testing certain ITGCs that included a review element. The firm did not evaluate whether the control owners possessed the necessary authority and competence to perform the controls effectively. Further 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 | |
| 3 | Revenue | The firm selected for testing certain information technology general controls (ITGCs) automated controls and information technology (IT) dependent manual controls that used data and reports generated or maintained by the issuer's IT systems. The following deficiencies were identified: · The issuer used two service organizations for initiating processing and recording certain revenue. The firm did not obtain an understanding of and test any relevant controls at the service organization. (AS 2201.39 and .B19) Both financial statement and ICFR audits | AS 2201.39; AS 2201.B19 | |
| 4 | Revenue | The firm selected for testing certain information technology general controls (ITGCs) automated controls and information technology (IT) dependent manual controls that used data and reports generated or maintained by the issuer's IT systems. The following deficiencies were identified: · The firm did not sufficiently test certain application controls because it tested only one instance which was not appropriate due to the deficiencies discussed above. (AS 2201.46) Both financial statement and ICFR audits | AS 2201.46 | |
| 5 | Revenue | The firm selected for testing certain information technology general controls (ITGCs) automated controls and information technology (IT) dependent manual controls that used data and reports generated or maintained by the issuer's IT systems. The following deficiencies were identified: · The firm did not test controls over the accuracy and completeness of data and reports used in the operation of certain controls. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 6 | Revenue | The firm selected for testing a review control over the determination that performance obligations related to revenue recognition had been met. 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 | |
| 7 | Revenue | The firm selected for testing a review control over the approval of customer change orders. 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 | |
| 8 | Revenue | The sample sizes the firm used in certain of its substantive procedures to test 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 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 | |
| 9 | Revenue | The firm used data produced by the issuer to test certain revenue. The firm did not perform any substantive procedures to test or sufficiently test controls over the accuracy and completeness of the data. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 |
Issuer B5 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The firm relied on controls in its approach to testing revenue. The firm did not sufficiently test controls in the revenue process because it limited its procedures to a walkthrough. (AS 2301.16) Financial statement audit only | AS 2301.16 | |
| 2 | Revenue | The sample size the firm used in its substantive procedures to test revenue was 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 | |
| 3 | Revenue | The firm did not test whether the issuer appropriately identified and satisfied performance obligations prior to recognizing revenue in conformity with FASB ASC Topic 606 Revenue from Contracts with Customers. (AS 2810.30) Financial statement audit only | AS 2810.30 | |
| 4 | Certain Assets and Liabilities | The firm did not test the existence of certain assets and the completeness of certain liabilities. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 5 | Certain Assets and Liabilities | The firm did not test the fair value of certain accounts. (AS 2502.15) Financial statement audit only | AS 2502.15 |
Issuer C1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Inventory | The firm did not perform procedures to test beyond inquiry of management the inventory reserve for excess and obsolete inventory. (AS 2501.07) Financial statement audit only | AS 2501.7 |