- Inspection year
- 2020
- Report date
- 26-May-2022
- PCAOB release
- 104-2022-143
- Audits reviewed
- 4
- Audits w/ Part I.A deficiencies
- 3
- Part I.A deficiency rate
- 75%
- Part I.A deficiencies
- 5
- Part I.B deficiencies
- —
- Report
- View PDF ↗
Deficiencies (5)
Grouped by issuer and in the same order as the PCAOB report, so each item ties back directly to the source.
Issuer A2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Business Combinations | The issuer acquired a business during the year. The firm did not perform procedures beyond inquiry of management to evaluate whether the issuer identified and properly recorded all assets acquired including patent applications trade names trademarks and service marks held by the acquired entity as identifiable intangible assets in accordance with FASB ASC Topic 805 Business Combinations. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 2 | Warrants | The issuer issued stock purchase warrants with a strike price denominated in its functional currency at the time of issuance. The issuer determined that the warrants met the scope exception of FASB ASC Topic 815 Derivatives and Hedging and recorded the fair value of the warrants as additional paid-in capital. The issuer subsequently changed its functional currency which resulted in the warrants no longer meeting the scope exception. The issuer however did not revise its accounting for the warrants. The firm did not identify and appropriately address this GAAP departure. (AS 2810.30 and .31) Unrelated to our review the issuer reevaluated its accounting for warrants and concluded that a material misstatement existed that had not been previously identified. The issuer subsequently corrected this misstatement in a restatement of its financial statements. Financial statement audit only | AS 2810.30; AS 2810.31 |
Issuer B2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Inventory | The firm performed inventory observations at two business units subsequent to year end and performed roll-back procedures for the period from the date of the inventory observations to year end. For one of the business units the firm did not perform procedures beyond reviewing a schedule of inventory movement to test transactions between the date of the inventory observation to year end. (AS 2510.12) Financial statement audit only | AS 2510.12 | |
| 2 | Inventory | The firm performed inventory observations at two business units subsequent to year end and performed roll-back procedures for the period from the date of the inventory observations to year end. For one of the business units the firm did not perform sufficient procedures to test the completeness of inventory at either business unit such as comparing quantities observed to the physical inventory summary. (AS 2301.08) Financial statement audit only | AS 2301.8 |
Issuer C1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Allowance for Doubtful Accounts | The firm's approach for substantively testing the allowance for doubtful accounts was to review and test management's process. The firm did not sufficiently evaluate the reasonableness of the allowance because it limited its procedures to (1) inquiry of management (2) reviewing the issuer's accounts receivable aging report and (3) comparing the allowance balance to the issuer's general ledger. (AS 2501.09 .10 and .11) Financial statement audit only | AS 2501.9; AS 2501.10; AS 2501.11 |