- Inspection year
- 2021
- Report date
- 15-Sep-2022
- PCAOB release
- 104-2022-198a
- 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
- 5
- 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 | Debt | The issuer issued convertible notes during the current and prior year. For certain convertible notes the issuer recorded both a derivative liability and beneficial conversion feature associated with the same conversion option of each convertible note. The following deficiencies were identified: • The firm did not identify and evaluate the significance to the issuer's financial statements of a GAAP departure related to the issuer's accounting treatment for and disclosure of these transactions. Specifically the firm did not evaluate whether the conversion options related to certain convertible notes should have been either (1) separated and accounted for as derivatives in conformity with FASB ASC Subtopic 815-15 Derivatives and Hedging — Embedded Derivatives; or (2) accounted for as beneficial conversion features in conformity with FASB ASC Subtopic 470¬20 Debt — Debt with Conversion and Other Options. (AS 2810.03 .30 and .31) Financial statement audit only | AS 2810.3; AS 2810.30; AS 2810.31 | |
| 2 | Debt | The issuer issued convertible notes during the current and prior year. For certain convertible notes the issuer recorded both a derivative liability and beneficial conversion feature associated with the same conversion option of each convertible note. The following deficiencies were identified: • The firm did not evaluate the appropriateness of the model the issuer used to value certain of the derivative liabilities given the complexity of the conversion options associated with the related convertible notes. (AS 2501.10) Financial statement audit only | AS 2501.10 | |
| 3 | Debt | The issuer issued convertible notes during the current and prior year. For certain convertible notes the issuer recorded both a derivative liability and beneficial conversion feature associated with the same conversion option of each convertible note. The following deficiencies were identified: • For certain convertible notes the firm did not test at inception the fair value of the derivative liabilities and associated debt discounts and the allocation of the proceeds to all of the features associated with the convertible notes. (AS 2501.07) Financial statement audit only | AS 2501.7 |