- Inspection year
- 2021
- Report date
- 20-Oct-2022
- PCAOB release
- 104-2022-242
- Audits reviewed
- 1
- Audits w/ Part I.A deficiencies
- 1
- Part I.A deficiency rate
- 100%
- Part I.A deficiencies
- 6
- Part I.B deficiencies
- 1
- Report
- View PDF ↗
Deficiencies (6)
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 | For revenue that was generally earned upon receipt of the products by customers the firm selected a sample of revenue transactions from sales commission listings obtained from the issuer and performed certain substantive procedures to test revenue. The following deficiencies were identified: - The sample size the firm used 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 because the firm did not identify and test any controls over revenue. (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 | |
| 2 | Revenue | For revenue that was generally earned upon receipt of the products by customers the firm selected a sample of revenue transactions from sales commission listings obtained from the issuer and performed certain substantive procedures to test revenue. The following deficiencies were identified: - The firm did not take into account appropriate factors in determining its sample size including its established tolerable misstatement for the population the allowable risk of incorrect acceptance and the characteristics of the population. (AS 2315.16 .19 .23 and .23A) Financial statement audit only | AS 2315.16; AS 2315.19; AS 2315.23; AS 2315.23A | |
| 3 | Revenue | For revenue that was generally earned upon receipt of the products by customers the firm selected a sample of revenue transactions from sales commission listings obtained from the issuer and performed certain substantive procedures to test revenue. The following deficiencies were identified: - The firm did not determine that the population of sales commission data from which the sample was drawn was appropriate for the specific audit objective of testing recorded revenue. (AS 2315.17) Financial statement audit only | AS 2315.17 | |
| 4 | Revenue | For revenue that was generally earned upon receipt of the products by customers the firm selected a sample of revenue transactions from sales commission listings obtained from the issuer and performed certain substantive procedures to test revenue. The following deficiencies were identified: - The firm did not perform any substantive procedures to test or in the alternative identify and test controls over the accuracy and completeness of the population of revenue transactions from the sales commission listings used to select the sample of revenue transactions. (AS 1105.10) Financial statement audit only | AS 1105.10 | |
| 5 | Revenue | For revenue that was generally earned upon receipt of the products by customers the firm selected a sample of revenue transactions from sales commission listings obtained from the issuer and performed certain substantive procedures to test revenue. The following deficiencies were identified: - The firm did not perform sufficient procedures to evaluate whether the issuer had recognized revenue in the proper period because for certain of the revenue transactions selected for testing the firm did not perform procedures to test whether revenue had been recognized after the specific products ordered were received by the customers. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 6 | Cash and Cash Equivalents | The issuer used a merchant service provider (MSP) to collect and process credit card payments from sales transactions. The funds held by the MSP were commingled with funds of its other clients and maintained in a bank account in the name of the MSP and the issuer was not authorized to withdraw the funds directly from this bank account. The firm did not perform procedures beyond inquiry of management and the MSP and reviewing the agreement between the issuer and MSP to test the presentation and disclosure of this asset. (AS 2301.08) Financial statement audit only | AS 2301.8 |