- Inspection year
- 2021
- Report date
- 16-Nov-2022
- PCAOB release
- 104-2023-004
- Audits reviewed
- 14
- Audits w/ Part I.A deficiencies
- 4
- Part I.A deficiency rate
- 29%
- Part I.A deficiencies
- 15
- Part I.B deficiencies
- 1
- Report
- View PDF ↗
Deficiencies (15)
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 firm did not identify and test any controls over the initial recording of certain sales in the issuer's sales systems. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 2 | Revenue | The firm's substantive procedures to test certain of this revenue consisted of substantive analytical procedures. The firm used certain sales data to develop its expectations but did not test the accuracy of these data. (AS 2305.16) Both financial statement and ICFR audits | AS 2305.16 | |
| 3 | Long-Lived Assets | The firm selected for testing a control that consisted of the issuer's reviews of its assessments of long-lived assets for possible impairment. For the first business unit the firm did not test the operating effectiveness of this control. (AS 2201.44) Both financial statement and ICFR audits | AS 2201.44 | |
| 4 | Long-Lived Assets | The firm selected for testing a control that consisted of the issuer's reviews of its assessments of long-lived assets for possible impairment. For the second business unit the firm did not identify and test any controls over the accuracy and completeness of historical sales data used in the operation of this control. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 5 | Long-Lived Assets | For the first business unit the firm did not sufficiently test the issuer's assessment of long-lived assets for possible impairment because the firm's procedures were limited to reading the consolidated operating results for this business unit. (AS 2501.07) Both financial statement and ICFR audits | AS 2501.7 | |
| 6 | Long-Lived Assets | For the second business unit the firm used historical sales data in its evaluation of the issuer's assessment of long-lived assets for possible impairment. The firm did not perform any substantive procedures to test or identify and test controls over the accuracy of these data. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 |
Issuer B4 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Allowance for Credit/Loan Losses | The firm selected for testing controls that included the issuer's reviews of the assigned loan risk ratings. The loan risk rating was an important input in estimating the ALL. The firm did not evaluate the specific review procedures that the control owners performed to assess the reasonableness of the assigned risk ratings. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 2 | Allowance for Credit/Loan Losses | For loans that were collectively evaluated for impairment the issuer determined the qualitative reserve component of the ALL using certain qualitative factors. The following deficiencies were identified: · The firm selected for testing a control that consisted of the issuer's reviews of the ALL including an assessment of the qualitative factors for reasonableness. The firm did not evaluate the specific review procedures that the control owners performed to assess the reasonableness of the qualitative factors. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 3 | Allowance for Credit/Loan Losses | For loans that were collectively evaluated for impairment the issuer determined the qualitative reserve component of the ALL using certain qualitative factors. The following deficiencies were identified: · The firm's approach for substantively testing the ALL was to review and test the issuer's process. The firm did not sufficiently evaluate the reasonableness of the qualitative factors the issuer used to determine the qualitative reserve component of the ALL because the firm's procedures were limited to (1) reading the issuer's ALL memorandum and (2) comparing the qualitative factors the issuer used to those used in prior periods. (AS 2501.16) Both financial statement and ICFR audits | AS 2501.16 | |
| 4 | Deposit Liabilities | The firm sent positive confirmation requests to the issuer's customers for a sample of deposit liabilities. For the items in its sample for which the requested confirmations were not returned the firm did not perform alternative procedures that provided sufficient appropriate audit evidence that the recorded amounts of the deposit liabilities were accurate as of the confirmation date. (AS 2310.31) Both financial statement and ICFR audits | AS 2310.31 |
Issuer C3 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Allowance for Credit/Loan Losses | The firm selected for testing controls that included the issuer's reviews of the assumptions used to estimate the ACL. 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 | |
| 2 | Allowance for Credit/Loan Losses | The firm's approach for substantively testing the reasonableness of certain assumptions the issuer used to estimate the ACL was to review and test the issuer's process. The firm's procedures were limited to comparing these assumptions to those used in the prior year and inquiring of management about significant variances. Further the firm's approach for testing certain other assumptions the issuer used to estimate the ACL was to develop an independent expectation of the assumptions. The firm did not have a reasonable basis for its expectation because it did not evaluate the relevance of the industry information it used in developing its expectation. (AS 1105.04 and .06; 2501.16) Both financial statement and ICFR audits | AS 1105.4; AS 1105.6; AS 2501.16 | |
| 3 | Investments | The firm selected for testing a control that included the issuer's review of the fair values of investments. The firm did not evaluate the specific review procedures that the control owner performed to assess the reasonableness of these fair values. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 |
Issuer D2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The firm selected for testing a control over the issuer's review of certain contracts for appropriate revenue recognition. The firm did not evaluate the specific review procedures that the control owners performed to assess whether the allocation of revenue to separate performance obligations was based on standalone selling prices. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 2 | Revenue | For certain revenue the firm selected a sample of revenue transactions for testing. The firm did not perform any substantive procedures to evaluate whether the issuer's allocation of revenue to separate performance obligations was based on standalone selling prices. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 |