- Inspection year
- 2020
- Report date
- 08-Apr-2022
- PCAOB release
- 104-2022-110
- Audits reviewed
- 4
- Audits w/ Part I.A deficiencies
- 2
- Part I.A deficiency rate
- 50%
- 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 A6 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Goodwill | The firm selected for testing change management controls over an information technology ('IT') application the issuer used to process and record revenue and related accounts ('revenue transactions') and goodwill. The firm did not perform procedures to test the completeness of all types of changes in the population of changes from which it made its selections. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 | |
| 2 | Goodwill | The firm selected for testing automated and IT-dependent manual controls over revenue transactions and goodwill that used data and reports generated by the issuer's IT application. The firm's approach to test the accuracy and completeness of the data and reports depended on effective information technology general controls ('ITGCs') including those pertaining to change management. As a result of the deficiency in the firm's testing of change management controls discussed above the firm's testing of the automated and IT-dependent manual controls over revenue transactions and goodwill was not sufficient. (AS 2201.46) Both financial statement and ICFR audits | AS 2201.46 | |
| 3 | Revenue and Related Accounts | The firm selected for testing certain automated controls over the processing and recording of revenue transactions. The firm's testing of these automated controls using a sample of only one instance of the controls' operation was not sufficient because the firm did not test the configuration or programming of these controls or perform other procedures that would have provided sufficient appropriate audit evidence that these controls were designed and operating effectively. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 4 | Revenue and Related Accounts | The firm identified deficiencies in the design and operating effectiveness of certain controls over revenue transactions. The firm concluded that these deficiencies represented a significant deficiency based on the firm's testing of various compensating controls. The firm did not sufficiently evaluate the severity of the control deficiencies over the processing and recording of revenue transactions because it did not identify that the compensating controls were dependent on the effectiveness of the deficient controls. (AS 2201.68) Both financial statement and ICFR audits | AS 2201.68 | |
| 5 | Revenue and Related Accounts | The sample size the firm used in certain of 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) Both financial statement and ICFR audits | AS 2301.16; AS 2301.18; AS 2301.37; AS 2315.19; AS 2315.23; AS 2315.23A | |
| 6 | Revenue and Related Accounts | The firm did not perform substantive procedures to test or sufficiently test controls over the completeness of a system-generated report that the firm used in its substantive testing of revenue transactions. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 |
Issuer B1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The firm's approach for substantively testing revenue consisted primarily of performing a software-assisted analysis to test the relationships among revenue accounts receivable and cash receipts. The firm's approach to addressing the reliability of the audit evidence obtained from this type of analysis was dependent upon the firm's testing of certain data underlying the analysis. The firm did not sufficiently test this underlying data because it did not select its sample from the entire population of data that was used in this analysis. (AS 1105.10) Financial statement audit only | AS 1105.10 |