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Grant Thornton LLP
United States · Grant Thornton International Limited · Annually Inspected
- Inspection year
- 2021
- Report date
- 04-Nov-2022
- PCAOB release
- 104-2022-221a
- Audits reviewed
- 31
- Audits w/ Part I.A deficiencies
- 7
- Part I.A deficiency rate
- 23%
- Part I.A deficiencies
- 28
- Part I.B deficiencies
- 6
- Report
- View PDF ↗
Deficiencies (28)
Grouped by issuer and in the same order as the PCAOB report, so each item ties back directly to the source.
Issuer A12 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. The issuer also reevaluated its controls over the accounting for these warrants and concluded that a material weakness existed that had not been previously identified. The issuer subsequently reflected this material weakness in a revision to its report on ICFR and the firm revised its opinion on the effectiveness of the issuer's ICFR to express an adverse opinion and reissued its report. Both financial statement and ICFR audits | AS 2810.30 | |
| 2 | Business Combinations | During the year the issuer acquired multiple businesses and determined the fair values of the acquired intangible assets and consideration transferred using forecasted cash flows and other assumptions. Each business combination contained provisions for contingent consideration to be paid to the sellers. The following deficiencies were identified: · The firm selected for testing two controls over the preliminary valuation of acquisitions that included reviews of the assumptions the issuer used in these forecasted cash flows and other assumptions the issuer used to determine these fair values. The firm did not evaluate the specific review procedures that the control owners performed to assess the reasonableness of these assumptions. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 3 | Business Combinations | During the year the issuer acquired multiple businesses and determined the fair values of the acquired intangible assets and consideration transferred using forecasted cash flows and other assumptions. Each business combination contained provisions for contingent consideration to be paid to the sellers. The following deficiencies were identified: · The firm selected for testing two controls over the preliminary valuation of acquisitions that included reviews of the assumptions the issuer used in these forecasted cash flows and other assumptions the issuer used to determine these fair values. The firm did not identify and test any controls over the accuracy and completeness of certain information that the control owners used in the operation of these controls. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 4 | Business Combinations | During the year the issuer acquired multiple businesses and determined the fair values of the acquired intangible assets and consideration transferred using forecasted cash flows and other assumptions. Each business combination contained provisions for contingent consideration to be paid to the sellers. The following deficiencies were identified: · The firm selected for testing one control over the final valuation of acquisitions that included the review of data that the company's specialist had used to develop certain assumptions that were used to determine these fair values. The firm did not evaluate the specific review procedures that the control owners performed to assess the reliability of these data. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 5 | Business Combinations | During the year the issuer acquired multiple businesses and determined the fair values of the acquired intangible assets and consideration transferred using forecasted cash flows and other assumptions. Each business combination contained provisions for contingent consideration to be paid to the sellers. The following deficiencies were identified: · The firm did not test the aspects of the above controls that addressed the issuer's evaluation of the accounting for contingent consideration in these business combinations. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 6 | Business Combinations | The firm's approach for substantively testing the fair values of the acquired intangible assets and consideration transferred was to test the issuer's process. The following deficiencies were identified: · For two acquired businesses the firm did not evaluate the reasonableness of the significant assumptions used to determine these fair values. (AS 2501.16) Both financial statement and ICFR audits | AS 2501.16 | |
| 7 | Business Combinations | The firm's approach for substantively testing the fair values of the acquired intangible assets and consideration transferred was to test the issuer's process. The following deficiencies were identified: · For two acquired businesses the firm did not perform procedures to test the accuracy and completeness of certain information produced by the issuer that was used to determine these fair values. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 | |
| 8 | Business Combinations | The firm's approach for substantively testing the fair values of the acquired intangible assets and consideration transferred was to test the issuer's process. The following deficiencies were identified: · For another acquired business the following deficiencies were identified: o The firm did not perform procedures to test the accuracy and completeness of the information the issuer used to develop certain assumptions used to determine these fair values. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 | |
| 9 | Business Combinations | The firm's approach for substantively testing the fair values of the acquired intangible assets and consideration transferred was to test the issuer's process. The following deficiencies were identified: · For another acquired business the following deficiencies were identified: o The firm did not perform procedures to (1) test the accuracy and completeness of issuer-produced data that the company's specialist had used and (2) evaluate the reliability of data from sources external to the company that the company's specialist had used to develop certain of these assumptions. (AS 1105.A8a) Both financial statement and ICFR audits | AS 1105.A8a | |
| 10 | Business Combinations | The firm's approach for substantively testing the fair values of the acquired intangible assets and consideration transferred was to test the issuer's process. The following deficiencies were identified: · For another acquired business the following deficiencies were identified: o The firm did not evaluate the reasonableness of certain assumptions the issuer used to determine the fair values. (AS 2501.16) Both financial statement and ICFR audits | AS 2501.16 | |
| 11 | Business Combinations | The firm's approach for substantively testing the fair values of the acquired intangible assets and consideration transferred was to test the issuer's process. The following deficiencies were identified: · The firm did not perform procedures to evaluate whether the accounting for contingent payments to certain sellers in these business combinations was in conformity with FASB ASC Topic 805 Business Combinations. (AS 2810.30) Both financial statement and ICFR audits | AS 2810.30 | |
| 12 | Revenue | The issuer recognized certain revenue based in part on contractual rates input into the systems the issuer used to process revenue. The firm selected for testing a control that consisted of the issuer's reviews of changes to these contractual rates in these systems. The firm did not identify and test any controls over the completeness of the report the issuer used in the operation of this control. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 |
Issuer B5 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Accounts Receivable | The issuer used a service organization to process certain revenue and accounts receivable. The firm obtained two service auditor's reports that addressed information technology general controls (ITGCs) at this service organization. The service auditor's report that addressed 11 months of the year under audit contained a qualified opinion for certain ITGCs that were ineffective. The firm did not perform any procedures to evaluate the effect of this qualified opinion on the audit. (AS 2201.B21) Both financial statement and ICFR audits | AS 2201.B21 | |
| 2 | Accounts Receivable | The issuer recorded certain revenue net of estimated allowances for contractual adjustments. These estimated allowances were determined based in part on historical cash collections data applied at the transaction level. The firm did not identify and test any controls that addressed the accuracy of these data. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 3 | Accounts Receivable | For certain customer contracts the firm did not identify and test any controls that addressed whether relevant terms and conditions were identified and evaluated for appropriate revenue recognition. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 4 | Accounts Receivable | 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 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 | |
| 5 | Accounts Receivable | The firm did not perform substantive procedures to evaluate the terms and conditions included in certain customer contracts when testing whether the issuer appropriately recognized revenue related to these contracts. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 |
Issuer C3 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Leases | The firm selected for testing a control that included the issuer's review of forecasts used in the issuer's analysis of possible impairment of operating lease right-of-use assets. The firm did not evaluate the specific review procedures that the control owners performed to assess the reasonableness of the revenue growth rates that the issuer used in these forecasts. (AS 2201.42 and .44) ICFR audit only | AS 2201.42; AS 2201.44 | |
| 2 | Leases | The firm selected for testing controls that included the issuer's reviews of new and amended lease agreements and the reconciliation of the lease asset balance from the lease sub-ledger to the general ledger. The firm did not identify and test any controls over the accuracy and completeness of the lease information that was used in the operation of these controls. (AS 2201.39) ICFR audit only | AS 2201.39 | |
| 3 | Depreciation & Amortization | The firm selected for testing controls that included the issuer's review of the estimated useful lives assigned to long-lived assets and the calculation of depreciation expense for these assets. The firm did not evaluate the specific review procedures that the control owner performed to assess the reasonableness of the useful lives assigned to these assets. (AS 2201.42 and .44) ICFR audit only | AS 2201.42; AS 2201.44 |
Issuer D2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | With respect to the issuer's disclosure of transaction prices allocated to unsatisfied performance obligations the following deficiencies were identified: · The firm did not identify and test any controls that addressed whether the estimated transaction prices for certain types of contracts included in this disclosure were determined in conformity with FASB ASC Topic 606 Revenue from Contracts with Customers. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 2 | Revenue | With respect to the issuer's disclosure of transaction prices allocated to unsatisfied performance obligations the following deficiencies were identified: · The firm did not identify and evaluate the significance to the financial statements of misstatements in this disclosure under FASB ASC Topic 606. (AS 2810.30 and .31) Both financial statement and ICFR audits | AS 2810.30; AS 2810.31 |
Issuer E2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The firm did not perform sufficient substantive procedures to evaluate whether one type of revenue was appropriately recognized because the firm did not review certain customer contracts which was necessary in order to identify performance obligations and evaluate whether this revenue was appropriately recognized. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 2 | Inventory | The firm's approach for substantively testing the 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 in the alternative test any controls over the accuracy and completeness of the forecasted demand data that the issuer used to develop the reserve for excess and obsolete inventory. (AS 1105.10; AS 2501.11) [This citation refers to AS 2501 Auditing Accounting Estimates which was in effect for this audit. This standard was replaced by AS 2501 Auditing Accounting Estimates Including Fair Value Measurements which became effective for audits of financial statements for fiscal years ending on or after December 15 2020.] Financial statement audit only | AS 1105.10; AS 2501.11 |
Issuer F2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Inventory | The issuer intended to use a significant portion of its inventory on hand at year end to manufacture a product type it had sold at a significant loss during the year. The following deficiencies were identified: · The firm did not identify and test any controls that addressed whether this inventory was recorded at the lower of cost or net realizable value. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 2 | Inventory | The issuer intended to use a significant portion of its inventory on hand at year end to manufacture a product type it had sold at a significant loss during the year. The following deficiencies were identified: · The firm did not perform any substantive procedures to test whether this inventory was recorded at the lower of cost or net realizable value. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 |
Issuer G2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | With respect to the issuer's disclosure of transaction prices allocated to unsatisfied performance obligations the following deficiencies were identified: · The firm selected for testing controls that consisted of the issuer's reviews of this disclosure. The firm did not test the aspects of these controls that addressed the issuer's assessment of whether certain contractual terms and estimated transaction prices for contracts that were included in this disclosure were in conformity with FASB ASC Topic 606. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 2 | Revenue | With respect to the issuer's disclosure of transaction prices allocated to unsatisfied performance obligations the following deficiencies were identified: · The firm did not perform any substantive procedures to evaluate whether certain contractual terms and estimated transaction prices for contracts that were included in this disclosure were disclosed in conformity with FASB ASC Topic 606. (AS 2810.30 and .31) Both financial statement and ICFR audits | AS 2810.30; AS 2810.31 |