- Inspection year
- 2021
- Report date
- 04-Nov-2022
- PCAOB release
- 104-2022-218
- Audits reviewed
- 30
- Audits w/ Part I.A deficiencies
- 16
- Part I.A deficiency rate
- 53%
- Part I.A deficiencies
- 56
- Part I.B deficiencies
- 7
- Report
- View PDF ↗
Deficiencies (56)
Grouped by issuer and in the same order as the PCAOB report, so each item ties back directly to the source.
Issuer A11 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Inventory | The firm did not identify and test any controls that addressed whether the issuer's inventory system appropriately calculated the unit costs used to record certain manufactured inventory. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 2 | Inventory | The sample sizes the firm used in certain of its substantive procedures to test this inventory were 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 deficiency 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 firm's substantive procedures at year end to test the unit cost of this inventory included selecting a sample of inventory items for testing. The following deficiencies were identified: · The firm did not test whether the issuer's inventory system calculated the inventory unit costs appropriately. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 | |
| 4 | Inventory | The firm's substantive procedures at year end to test the unit cost of this inventory included selecting a sample of inventory items for testing. The following deficiencies were identified: · The firm did not perform sufficient procedures to test the cost of the raw materials included in the selected items because its procedures were limited to comparing certain of these costs to system-generated reports. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 | |
| 5 | Inventory | The firm's substantive procedures at year end to test the unit cost of this inventory included selecting a sample of inventory items for testing. The following deficiencies were identified: · The firm did not perform sufficient procedures to test the labor and overhead costs included in the selected items because it did not test whether these costs were consistent with the standard labor and overhead rates that the issuer had determined. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 | |
| 6 | Accounts Payable | The issuer used an information-technology system to process transactions related to accounts payable at certain of the issuer's business units. The following deficiencies were identified: · The firm selected for testing a control over the daily transfer of data from the accounts payable system to the general ledger including the manual resolution of any errors in this data transfer. In its testing of the operating effectiveness of this control the firm did not test how the control owner resolved these data transfer errors beyond inquiring of management. (AS 2201.44) Both financial statement and ICFR audits | AS 2201.44 | |
| 7 | Accounts Payable | The issuer used an information-technology system to process transactions related to accounts payable at certain of the issuer's business units. The following deficiencies were identified: · The firm selected for testing a control that included the automated processing of invoices by the accounts payable system. The firm did not identify and test any controls over the investigation and resolution of exceptions identified during this automated processing. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 8 | Accounts Payable | The issuer used an information-technology system to process transactions related to accounts payable at certain of the issuer's business units. The following deficiencies were identified: · The firm selected for testing a control that included the automated processing of invoices by the accounts payable system. The firm did not test the aspect of this control related to the processing of these exceptions once they were resolved. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 9 | Accounts Payable | With respect to accounts payable at certain other business units (“other accounts payable”) the following deficiencies were identified: · The firm did not evaluate whether the risks of material misstatement that the firm associated with accounts payable at business units that were subject to more extensive audit procedures also applied to these other accounts payable. (AS 2101.11 and .12; AS 2201.B10) Both financial statement and ICFR audits | AS 2101.11; AS 2101.12; AS 2201.B10 | |
| 10 | Accounts Payable | With respect to accounts payable at certain other business units (“other accounts payable”) the following deficiencies were identified: · The firm did not identify and test any controls over these other accounts payable. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 11 | Accounts Payable | With respect to accounts payable at certain other business units (“other accounts payable”) the following deficiencies were identified: · The firm did not perform any substantive procedures to test these other accounts payable. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 |
Issuer B7 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The firm did not identify and test any controls over the accuracy and completeness of the customer order information from various source systems that the issuer used to record revenue. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 2 | Revenue | The firm selected for testing two controls that consisted of the issuer's reviews of revenue transactions for appropriate revenue recognition. For the first control the firm did not test whether the control addressed all revenue transactions. For the second control the firm did not evaluate whether the issuer's review was sufficient to address the risks of material misstatement given not all revenue transactions were covered by this control. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 3 | Revenue | The firm selected for testing a control that consisted of the issuer's reviews of comparisons of current-period revenue to prior-period revenue. The firm did not identify and test any controls over the accuracy of certain revenue data used in the operation of this control. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 4 | Revenue | The firm's substantive procedures to test certain of this revenue consisted of (1) testing a sample of revenue transactions (2) testing a sample of accounts receivable and (3) performing analytical procedures. The following deficiencies were identified: · For certain of the transactions selected for testing which included multiple services provided to the customer the firm did not evaluate whether multiple performance obligations existed in the associated contract that would affect whether this revenue was appropriately recognized. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 | |
| 5 | Revenue | The firm's substantive procedures to test certain of this revenue consisted of (1) testing a sample of revenue transactions (2) testing a sample of accounts receivable and (3) performing analytical procedures. The following deficiencies were identified: · The firm determined its sample size for testing these revenue transactions based in part on the assurance it had obtained from its testing of a sample of accounts receivable at year end. This year-end accounts receivable testing did not provide the planned level of substantive evidence to address the risks of material misstatement related to this revenue because this procedure was primarily focused on the occurrence of revenue at a point in time. As a result the sample that the firm used to test this revenue was too small to provide sufficient appropriate audit evidence to address the risks of material misstatement related to this revenue throughout the year. (AS 2301.42; AS 2315.19 .23 and .23A) Both financial statement and ICFR audits | AS 2301.42; AS 2315.19; AS 2315.23; AS 2315.23A | |
| 6 | Revenue | The firm's substantive procedures to test certain of this revenue consisted of (1) testing a sample of revenue transactions (2) testing a sample of accounts receivable and (3) performing analytical procedures. The following deficiencies were identified: · For the analytical procedures the firm did not determine whether the expectations it used in these analytical procedures were based on predictable relationships. (AS 2305.13 and.14) Both financial statement and ICFR audits | AS 2305.13; AS 2305.14 | |
| 7 | Expense | The firm did not identify and test any controls over this expense. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 |
Issuer C4 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Warrants | During the audit the firm did not identify and appropriately address that the issuer's accounting for warrants as equity was not in conformity with FASB ASC Topic 815 Derivatives and Hedging. (AS 2810.30) Unrelated to our review the issuer reevaluated its accounting for these 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 and the firm revised and reissued its report on the financial statements. Financial statement audit only | AS 2810.30 | |
| 2 | Revenue | The issuer offered various forms of sales incentives to customers that were recorded as deductions from revenue. The following deficiencies were identified: · The firm did not perform any substantive procedures to test certain of these sales incentives beyond comparing the recorded balances to system-generated reports. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 3 | Revenue | The issuer offered various forms of sales incentives to customers that were recorded as deductions from revenue. The following deficiencies were identified: · The firm's sample for testing certain other of these sales incentives was too small to provide sufficient appropriate audit evidence because in determining the sample size the firm did not take into account tolerable misstatement and the allowable risk of incorrect acceptance. (AS 2315.16 .23 and .23A) Financial statement audit only | AS 2315.16; AS 2315.23; AS 2315.23A | |
| 4 | Statement of Cash Flows | The firm did not identify and evaluate the significance to the financial statements that the issuer's omission of certain cash from the statement of cash flows was not in conformity with FASB ASC Topic 230 Statement of Cash Flows. (AS 2810.30) Financial statement audit only | AS 2810.30 |
Issuer D5 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Investments | The firm selected for testing controls that consisted of the issuer's reviews of the fair value of certain investments. The firm did not evaluate the specific review procedures that the control owners performed to assess the (1) reasonableness of the methodologies and assumptions the issuer used to determine the fair value of these investments and (2) accuracy and completeness of a report used in the operation of these controls. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 2 | Investment Income | The issuer recognized certain investment income based on estimates derived in part from cash-flow models. The following deficiencies were identified: · The firm selected for testing a control that consisted of the issuer's review of the assumptions used in these cash-flow models. The firm did not identify and test any controls over the accuracy and completeness of certain data that were used to develop certain of these assumptions. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 3 | Investment Income | The issuer recognized certain investment income based on estimates derived in part from cash-flow models. The following deficiencies were identified: · During the year the issuer made changes to certain assumptions used in these cash-flow models. The firm selected for testing a control that consisted of the issuer's reviews of these changes. The firm did not evaluate the specific review procedures that the control owners performed to assess the reasonableness of these changes. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 4 | Investment Income | The issuer recognized certain investment income based on estimates derived in part from cash-flow models. The following deficiencies were identified: · The firm did not identify and test any controls over the accuracy and completeness of the output of these cash-flow models that operated during the second half of the year. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 5 | Investment Income | The issuer recognized certain investment income based on estimates derived in part from cash-flow models. The following deficiencies were identified: · The firm used the output of these cash-flow models in its substantive testing of this investment income. The firm did not perform any substantive procedures to test or test any controls over the accuracy and completeness of the output of these cash-flow models for the second half of the year. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 |
Issuer E2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Expenses | During the audit the firm did not identify and evaluate the significance to the financial statements that the issuer's presentation and disclosure of certain expenses was not in conformity with FASB ASC Topic 330 Inventory. (AS 2810.30 and .31) Financial statement audit only | AS 2810.30; AS 2810.31 | |
| 2 | Equity | During the audit the firm did not identify and evaluate the significance to the financial statements of omissions from the statement of stockholders' equity and other required disclosures under FASB ASC Topic 718 Compensation-Stock Compensation and FASB ASC Topic 260 Earnings Per Share. (AS 2810.30 and .31) Financial statement audit only | AS 2810.30; AS 2810.31 |
Issuer F4 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The issuer recognized certain revenue over time based on estimates of the goods and services it would provide to customers and the payments it would receive for those goods and services. The following deficiencies were identified: · The firm selected for testing a control that consisted of the issuer's review of the reasonableness of the forecasted information that the issuer used to develop these estimates. The firm did not identify and test any controls over the accuracy of the data that were used to develop this forecasted information. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 2 | Revenue | The issuer recognized certain revenue over time based on estimates of the goods and services it would provide to customers and the payments it would receive for those goods and services. The following deficiencies were identified: · The sample size the firm used in certain of its substantive procedures to test this 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 deficiency 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 | Revenue | The issuer recognized certain revenue over time based on estimates of the goods and services it would provide to customers and the payments it would receive for those goods and services. The following deficiencies were identified: · The firm's substantive procedures to test this revenue consisted of performing tests of details and substantive analytical procedures. The firm used certain system-generated data in its substantive testing of this revenue but did not test or in the alternative test any controls over the accuracy of these data. (AS 1105.10; AS 2305.16) Both financial statement and ICFR audits | AS 1105.10; AS 2305.16 | |
| 4 | Revenue | The issuer recognized certain revenue over time based on estimates of the goods and services it would provide to customers and the payments it would receive for those goods and services. The following deficiencies were identified: · To facilitate the issuer's fulfillment of its contracts for certain of this revenue the issuer's customers contributed certain goods and services that the issuer recognized as revenue. The firm did not perform sufficient substantive procedures to evaluate whether this revenue was recognized in conformity with FASB ASC Topic 606 Revenue from Contracts with Customers because it did not evaluate certain contractual terms and conditions that could affect revenue recognition. (AS 2810.30) Both financial statement and ICFR audits | AS 2810.30 |
Issuer G4 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Investments | The issuer held investments without readily determinable fair values that were recorded at cost less impairments. The following deficiencies were identified: · For one of these investments selected for testing the firm did not perform sufficient procedures to evaluate whether management considered certain relevant information in determining whether factors may have existed that indicated an impairment loss was present because the firm's procedures were limited to reading certain meeting minutes and related documents which did not address the relevant information. (AS 2503.48) Financial statement audit only | AS 2503.48 | |
| 2 | Investments | The issuer held investments without readily determinable fair values that were recorded at cost less impairments. The following deficiencies were identified: · For another of these investments selected for testing the issuer identified factors that may have indicated an impairment loss was present but concluded that the investment was not impaired based on a sensitivity analysis it prepared for certain of these factors. The firm did not perform any procedures to test this sensitivity analysis and evaluate the other potential impairment factors that were identified by the issuer. (AS 2503.48) Financial statement audit only | AS 2503.48 | |
| 3 | Operating Expenses | The firm's substantive procedures to test certain operating expenses included performing substantive analytical procedures. The following deficiencies were identified: · For certain types of operating expenses the firm did not determine whether the expectations it used in these analytical procedures were based on predictable relationships. Further the firm identified differences in excess of the firm's established threshold but did not evaluate certain of these differences beyond inquiring of management. (AS 2305.13 .14 and .21) Financial statement audit only | AS 2305.13; AS 2305.14; AS 2305.21 | |
| 4 | Operating Expenses | The firm's substantive procedures to test certain operating expenses included performing substantive analytical procedures. The following deficiencies were identified: · For certain other types of operating expenses the expectations the firm used were not sufficiently precise because its expectations were that these expenses would decrease but it did not quantify the amount of the decrease. (AS 2305.17) Financial statement audit only | AS 2305.17 |
Issuer H4 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | Certain of the issuer's revenue arrangements included multiple performance obligations. The issuer allocated the total transaction price for each of these arrangements to the separate performance obligations based on the relative standalone selling price. The issuer disclosed that it used observable prices to determine the standalone selling prices for certain performance obligations in these arrangements. The following deficiencies were identified: · The firm selected for testing a control that consisted of the issuer's review of certain standalone selling prices. The firm did not evaluate the specific review procedures that the control owner performed to conclude that the prices the issuer used to determine the standalone selling prices for these performance obligations were observable. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 2 | Revenue | Certain of the issuer's revenue arrangements included multiple performance obligations. The issuer allocated the total transaction price for each of these arrangements to the separate performance obligations based on the relative standalone selling price. The issuer disclosed that it used observable prices to determine the standalone selling prices for certain performance obligations in these arrangements. The following deficiencies were identified: · The firm selected for testing a control that consisted of the issuer's review of certain standalone selling prices. The firm did not identify and test any controls over the accuracy and completeness of certain reports that the control owner used in the operation of this control. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 3 | Revenue | Certain of the issuer's revenue arrangements included multiple performance obligations. The issuer allocated the total transaction price for each of these arrangements to the separate performance obligations based on the relative standalone selling price. The issuer disclosed that it used observable prices to determine the standalone selling prices for certain performance obligations in these arrangements. The following deficiencies were identified: · The firm did not identify and test any controls that addressed the establishment of the standalone selling price for new products. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 4 | Revenue | Certain of the issuer's revenue arrangements included multiple performance obligations. The issuer allocated the total transaction price for each of these arrangements to the separate performance obligations based on the relative standalone selling price. The issuer disclosed that it used observable prices to determine the standalone selling prices for certain performance obligations in these arrangements. The following deficiencies were identified: · The firm did not perform substantive procedures to evaluate the issuer's determination and disclosure of whether it used observable prices to determine the standalone selling prices for these performance obligations in conformity with FASB ASC Topic 606 Revenue from Contracts with Customers. (AS 2810.30 and .31) Both financial statement and ICFR audits | AS 2810.30; AS 2810.31 |
Issuer I3 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The firm did not identify and test any controls that addressed the risk that certain cash receipts from revenue transactions were not properly recorded to support that these revenue transactions were valid. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 2 | Revenue | The sample sizes the firm used in certain of its substantive procedures to test this revenue were 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 deficiency 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 | Accrued Expense | The firm selected for testing controls that included the issuer's review of the calculation of an accrued expense. The firm did not identify and test any controls over the accuracy of certain data used in this calculation. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 |
Issuer J3 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Certain Assets | The firm's approach for substantively testing the fair values of certain assets was to test the issuer's process and the firm used an auditor-employed specialist to evaluate certain significant assumptions the issuer used to determine these fair values. The firm did not sufficiently evaluate the reasonableness of these significant assumptions because it did not identify that the specialist's procedures were limited to reading an issuer-prepared analysis and obtaining data from external sources that indicated a range of possible assumptions without evaluating whether the issuer had a reasonable basis for its selection of assumptions. (AS 1201.C6 and .C7; AS 2501.16) Financial statement audit only | AS 1201.C6; AS 1201.C7; AS 2501.16 | |
| 2 | Loans Receivable | The firm relied on controls it selected for testing in its approach to testing certain loans receivable. The following deficiencies were identified: · The firm did not test any controls over the entry of loan information and the recording of payments for these loans in the issuer's loan system. (AS 2301.16) Financial statement audit only | AS 2301.16 | |
| 3 | Loans Receivable | The firm relied on controls it selected for testing in its approach to testing certain loans receivable. The following deficiencies were identified: · The sample size the firm used in its substantive procedures to test these loans receivable 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) Financial statement audit only | AS 2301.16; AS 2301.18; AS 2301.37; AS 2315.19; AS 2315.23; AS 2315.23A |
Issuer K2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The firm's substantive procedures to test one type of revenue consisted of testing a sample of revenue transactions. For certain items in its sample the firm did not perform procedures to evaluate whether the issuer met certain revenue recognition criteria. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 2 | Debt | The firm did not identify and evaluate the significance to the financial statements of the issuer's omission of a required disclosure under FASB ASC Topic 470 Debt. (AS 2810.30 and .31) Financial statement audit only | AS 2810.30; AS 2810.31 |
Issuer L2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Cash | The firm did not obtain sufficient appropriate audit evidence that certain cash accounts included in the issuer's cash balance were owned and controlled by the issuer. Although these accounts were in the name of a related party the firm limited its procedures to inspecting a legal letter for one of these cash accounts which the issuer had obtained from the related party during a previous audit. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 2 | Cash | The firm did not obtain sufficient appropriate audit evidence that certain cash accounts included in the issuer's cash balance were owned and controlled by the issuer. The firm did not evaluate whether these cash accounts should have been included in the issuer's related party disclosures. (AS 2410.17) Financial statement audit only | AS 2410.17 |
Issuer M2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Expenses | The firm's substantive procedures to test certain expenses included performing substantive analytical procedures. For certain of these analytical procedures the firm did not determine whether the expectations it used were based on predictable relationships. (AS 2305.13 and .14) Financial statement audit only | AS 2305.13; AS 2305.14 | |
| 2 | Expenses | The firm's substantive procedures to test certain expenses included performing substantive analytical procedures. For each of these analytical procedures the firm identified differences in excess of the firm's established threshold but did not evaluate the differences beyond inquiring of management and in one instance obtaining certain pricing trends. (AS 2305.21) Financial statement audit only | AS 2305.21 |
Issuer N1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Allowance for Credit/Loan Losses | The firm selected for testing a control that consisted of the issuer's review of certain assumptions used to estimate the quantitative component of the ACL for loans collectively evaluated for impairment. The firm did not evaluate the specific review procedures that the control owner performed to assess the reasonableness of these assumptions that were outside of the range of assumptions the issuer established under its ACL methodology. (AS 2201.42 and .44) ICFR audit only | AS 2201.42; AS 2201.44 |
Issuer O1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Long-Lived Assets | The issuer used certain long-lived assets to generate revenue. The firm used information produced by the issuer in its testing of the obsolescence reserve for these assets but did not perform any substantive procedures to test or in the alternative test any controls over the accuracy and completeness of certain of this information. (AS 1105.10) Financial statement audit only | AS 1105.10 |
Issuer P1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Deposit Liabilities | The firm sent positive confirmation requests to the issuer's customers for a sample of deposit liabilities. The firm did not perform sufficient sampling procedures because it did not verify that all deposit liabilities had the opportunity to be selected for testing. (AS 2315.24) Financial statement audit only | AS 2315.24 |