- Inspection year
- 2020
- Report date
- 24-Mar-2022
- PCAOB release
- 104-2022-100
- Audits reviewed
- 3
- Audits w/ Part I.A deficiencies
- 2
- Part I.A deficiency rate
- 67%
- Part I.A deficiencies
- 6
- Part I.B deficiencies
- —
- Report
- View PDF ↗
Deficiencies (6)
Grouped by issuer and in the same order as the PCAOB report, so each item ties back directly to the source.
Issuer A4 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Inventory | The firm selected for testing a control that consisted of management's review and approval of inventory adjustments. The firm did not evaluate the specific review procedures that the control owners performed to evaluate the accuracy of the inventory adjustments. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 2 | Inventory | The firm selected for testing a control that consisted of management's quarterly review and approval of the inventory reserve analysis. The firm did not evaluate the specific review procedures the control owners performed to evaluate the (1) reasonableness of certain assumptions used to determine the inventory reserve and (2) accuracy and completeness of a system-generated report used in the operation of the control. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 3 | Inventory | The firm's approach for substantively testing the inventory reserve was to review and test management's process. The firm did not sufficiently evaluate the reasonableness of the inventory reserve because the firm did not perform procedures to test the reasonableness of certain assumptions used by the issuer to determine the inventory reserve. (AS 2501.09 .10 and .11) Both financial statement and ICFR audits | AS 2501.9; AS 2501.10; AS 2501.11 | |
| 4 | Inventory | The firm's approach for substantively testing the inventory reserve was to review and test management's process. The firm did not test or sufficiently test controls over the accuracy and completeness of certain information the firm used in its substantive testing of the inventory reserve. (AS 1105.10; AS 2501.11) Both financial statement and ICFR audits | AS 1105.10; AS 2501.11 |
Issuer B2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The issuer accrues a provision for customer rebates. The firm selected for testing a control that consisted of management's review of the rebate accrual and an investigation of certain variances over established thresholds. The firm did not evaluate whether the thresholds that the control owner used were sufficiently precise to detect misstatements that could be material. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 2 | Revenue | The sample size the firm used in certain of its substantive procedures to test the rebate accrual 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 deficiency 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 |