- Inspection year
- 2021
- Report date
- 15-Sep-2022
- PCAOB release
- 104-2022-200
- Audits reviewed
- 4
- Audits w/ Part I.A deficiencies
- 3
- Part I.A deficiency rate
- 75%
- Part I.A deficiencies
- 9
- Part I.B deficiencies
- 1
- Report
- View PDF ↗
Deficiencies (9)
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 | Revenue | The issuer recognized revenue from certain contracts primarily based on sales data. The firm selected controls over revenue for testing that included the use of sales data. The firm's work papers included an adjustment the issuer recorded to previously recognized revenue due to inaccurate sales data. In evaluating the design of the controls selected for testing the firm did not assess the effect of inaccurate sales data on whether the controls could effectively prevent or detect a material misstatement. (AS 2201.42) Both financial statement and ICFR audits | AS 2201.42 | |
| 2 | Revenue | The sample size the firm used in 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 | |
| 3 | Inventory | The issuer reported a reserve for excess and obsolete inventory. The firm selected for testing a control consisting of the issuer's review of the reserve for the inventory. The firm did not evaluate the specific review procedures that the control owners performed to evaluate the reasonableness of the assumptions used to determine the reserve for excess inventory. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 4 | Inventory | The issuer reported a reserve for excess and obsolete inventory. The firm selected for testing a control consisting of the issuer's review of the reserve for the inventory. The firm did not identify and test any controls over the accuracy and completeness of inventory items included in the obsolescence reserve. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 5 | Inventory | The firm's approach for substantively testing the excess and obsolete inventory reserve for certain inventory was to test the issuer's process used to develop the reserve. The firm did not evaluate whether the issuer had a reasonable basis for significant assumptions used to develop the reserve for excess inventory and whether those assumptions were consistent with historical or recent experience taking into account changes if any in conditions affecting the issuer. (AS 2501.16) Both financial statement and ICFR audits | AS 2501.16 | |
| 6 | Inventory | The firm's approach for substantively testing the excess and obsolete inventory reserve for certain inventory was to test the issuer's process used to develop the reserve. The firm did not perform substantive procedures to test or identify and test any controls over the accuracy and completeness of inventory items included in in the obsolescence reserve. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 |
Issuer B2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Participant Distributions | The firm used certain participant data in its substantive testing of participant distributions. For a sample of participants selected for testing the firm did not sufficiently test the accuracy of certain of the data because it limited its procedures to comparing the data from one system to another system. (AS 1105.10) Financial statement audit only | AS 1105.10 | |
| 2 | Participant Distributions | The firm used certain participant data in its substantive testing of participant distributions. The firm did not test or in the alternative test any controls over the completeness of the system-generated reports used to make its selections for testing certain participant data. (AS 1105.10) Financial statement audit only | AS 1105.10 |
Issuer C1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The firm used data from external sources in its substantive testing of certain revenue but did not perform any substantive procedures to evaluate whether this data was reliable. (AS 1105.04 and .06) Financial statement audit only | AS 1105.4; AS 1105.6 |