- Inspection year
- 2020
- Report date
- 24-Mar-2022
- PCAOB release
- 104-2022-101a
- Audits reviewed
- 1
- Audits w/ Part I.A deficiencies
- 1
- Part I.A deficiency rate
- 100%
- Part I.A deficiencies
- 3
- Part I.B deficiencies
- —
- Report
- View PDF ↗
Deficiencies (3)
Grouped by issuer and in the same order as the PCAOB report, so each item ties back directly to the source.
Issuer A3 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The issuer recognized certain revenue upon shipment of its products to distributors. Certain contracts for this revenue included provisions for customer pricing rebates. The firm did not identify and evaluate the significance to the issuer's financial statements of departures from GAAP related to (1) the issuer not considering the rebates in estimating at the time revenue was recognized the amount of consideration to which it was entitled in conformity with FASB ASC Topic 606 Revenue from Contracts with Customers and (2) the issuer's disclosures inaccurately stating that customer pricing rebates were recorded as a reduction of revenue in the same period the related sales were recorded. (AS 2810.30 and .31) Financial statement audit only | AS 2810.30; AS 2810.31 | |
| 2 | Revenue | To substantively test revenue the firm selected sales transactions for testing. For these selections the firm did not evaluate whether all of the relevant revenue recognition criteria had been met. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 3 | Inventory | The firm's approach for substantively testing the issuer's reserve for excess and obsolete (E&O) inventory was to develop an independent expectation of the estimate. The firm did not sufficiently evaluate the reasonableness of the estimate because the firm's independent expectation was limited to inventory items with no changes in quantities on hand during the year and did not consider whether there were other inventory items that required an E&O reserve. Further the firm's procedures to evaluate differences it identified from its independent expectation were limited to inquiry of management. (AS 2501.09 .10 and .12) Financial statement audit only | AS 2501.9; AS 2501.10; AS 2501.12 |