- Inspection year
- 2020
- Report date
- 13-May-2022
- PCAOB release
- 104-2022-133
- Audits reviewed
- 3
- Audits w/ Part I.A deficiencies
- 3
- Part I.A deficiency rate
- 100%
- Part I.A deficiencies
- 8
- Part I.B deficiencies
- 3
- Report
- View PDF ↗
Deficiencies (8)
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 | Revenue | The firm did not perform any procedures to evaluate the terms and conditions of a customer arrangement to determine whether the issuer appropriately recognized revenue under the arrangement in conformity with FASB ASC Topic 606 Revenue from Contracts with Customers. (AS 2810.30) Financial statement audit only | AS 2810.30 | |
| 2 | Revenue | The firm selected revenue transactions for testing but did not perform procedures to test whether all of the related performance obligations were satisfied when the issuer recognized revenue. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 3 | Accounts Receivable | To test accounts receivable the firm sent confirmation requests to a sample of customers. For confirmation requests that were not returned the firm performed alternative procedures by testing subsequent cash receipts. The firm did not (1) perform any alternative procedures to test the accounts receivable balances with no subsequent cash receipts and (2) evaluate the combined evidence provided by the confirmation responses and the alternative procedures to determine whether these procedures provided sufficient appropriate evidence about the existence of accounts receivable. (AS 2310.31 and .33) Financial statement audit only | AS 2310.31; AS 2310.33 | |
| 4 | Intangible Assets | The firm did not perform any procedures to evaluate whether the issuer tested non-amortizable intangible assets for impairment. (AS 2301.08) Financial statement audit only | AS 2301.8 |
Issuer B3 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The firm selected a sample of revenue transactions for testing by computing the number of invoices issued during the year by subtracting the first invoice number from the final invoice number for the year from the sales sub-ledger and dividing by the required sample size. The firm then selected invoices based on a defined sampling interval. The firm did not (1) determine whether the invoices selected for testing were recorded within the sales sub-ledger and (2) obtain and test the reconciliation of the sales sub-ledger to the issuer's general ledger. (AS 1105.10) Financial statement audit only | AS 1105.10 | |
| 2 | Revenue | For certain revenue transactions selected for testing the firm did not perform any procedures to test whether delivery had occurred when the issuer recognized revenue. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 3 | Inventory | The firm's approach to substantively testing the issuer's reserve for excess and obsolete inventory was to review and test management's process. The firm did not perform any substantive procedures to test or test controls over the accuracy and completeness of certain data used by the issuer to estimate the inventory reserves. (AS 1105.10; AS 2501.11) Financial statement audit only | AS 1105.10; AS 2501.11 |
Issuer C1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | To test revenue the firm selected revenue transactions that exceeded a monetary threshold and judgmentally selected a sample of revenue transactions from the remaining population. In determining the sample size for the remaining population the firm did not take into account the relevant factors including tolerable misstatement for the population the allowable risk of incorrect acceptance and the characteristics of the population. As a result the sample size the firm used in its test of details was too small to provide sufficient appropriate audit evidence. (AS 2315.16 .23 and .23A) Financial statement audit only | AS 2315.16; AS 2315.23; AS 2315.23A |