- Inspection year
- 2021
- Report date
- 06-Oct-2022
- PCAOB release
- 104-2022-241
- Audits reviewed
- 1
- Audits w/ Part I.A deficiencies
- 1
- Part I.A deficiency rate
- 100%
- Part I.A deficiencies
- 7
- Part I.B deficiencies
- 5
- Report
- View PDF ↗
Deficiencies (7)
Grouped by issuer and in the same order as the PCAOB report, so each item ties back directly to the source.
Issuer A7 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Allowance for Credit/Loan Losses | The issuer maintained an ALL related to loans receivable which included a collectively assessed component ('Collective Reserve') and an individually assessed component ('Individual Reserve'). The issuer used various models and assumptions to estimate the ALL. The following deficiencies were identified: - The firm's approach for substantively testing the Collective Reserve was to review and test management's process. The firm did not sufficiently evaluate the reasonableness of the Collective Reserve because the firm did not perform procedures to test certain assumptions the issuer used to determine the reserve including the loss rates and portfolio segmentation. (AS 2501.09 .10 and .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 2501.9; AS 2501.10; AS 2501.11 | |
| 2 | Allowance for Credit/Loan Losses | The issuer maintained an ALL related to loans receivable which included a collectively assessed component ('Collective Reserve') and an individually assessed component ('Individual Reserve'). The issuer used various models and assumptions to estimate the ALL. The following deficiencies were identified: - The firm did not perform procedures to test the Individual Reserve beyond recalculating the days past due for each loan in the population determining the aging bucket for the respective loans and re-performing the issuer's calculation of the reserve using the issuer's loan risk level and associated loss rate assumptions. (AS 2501.07) [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 2501.7 | |
| 3 | Allowance for Credit/Loan Losses | The issuer maintained an ALL related to loans receivable which included a collectively assessed component ('Collective Reserve') and an individually assessed component ('Individual Reserve'). The issuer used various models and assumptions to estimate the ALL. The following deficiencies were identified: - The firm did not identify and appropriately address a departure from IFRS related to the issuer's presentation of repayments of loans from customers as cash flows from investing activities in the statement of cash flows rather than cash flows from operating activities in conformity with IAS 7 Statement of Cash Flows. (AS 2810.30 and .31) Unrelated to our review the issuer reevaluated the presentation of cash flows from the repayment of loans from customers in the statement of cash flows 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 issued a special report regarding those adjustments. Financial statement audit only | AS 2810.30; AS 2810.31 | |
| 4 | Business Combinations | The issuer completed a business combination during the year in which it divested a wholly-owned subsidiary and acquired all of the issued and outstanding shares of another company for cash consideration and the issuance of stock in a series of related divestiture and acquisition transactions. The issuer recorded the acquisition as a reverse merger for accounting and financial reporting purposes. The firm did not perform procedures to test the business combination beyond summarizing the terms of the related transactions and evaluating the appropriateness of the issuer's accounting treatment and financial statement presentation. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 5 | Business Combinations | The issuer completed a business combination during the year in which it divested a wholly-owned subsidiary and acquired all of the issued and outstanding shares of another company for cash consideration and the issuance of stock in a series of related divestiture and acquisition transactions. The issuer recorded the acquisition as a reverse merger for accounting and financial reporting purposes. The firm did not identify and appropriately address a departure from IFRS related to the issuer's accounting for and recognition of certain expenses relating to the business combination in conformity with IFRS 3 Business Combinations. (AS 2810.30 and .31) Unrelated to our review the issuer reevaluated its accounting for certain expenses relating to the business combination 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 issued a special report regarding those adjustments. Financial statement audit only | AS 2810.30; AS 2810.31 | |
| 6 | Business Combinations | The firm did not perform any procedures to test the adjustments recorded by the issuer to correct the misstatement to its financial statements related to the business combination. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 7 | Journal Entries | The firm did not perform any procedures to identify and select journal entries and other adjustments for testing. (AS 2401.58) Financial statement audit only | AS 2401.58 |