- Inspection year
- 2021
- Report date
- 21-Nov-2022
- PCAOB release
- 104-2023-006
- Audits reviewed
- 17
- Audits w/ Part I.A deficiencies
- 13
- Part I.A deficiency rate
- 76%
- Part I.A deficiencies
- 38
- Part I.B deficiencies
- 3
- Report
- View PDF ↗
Deficiencies (38)
Grouped by issuer and in the same order as the PCAOB report, so each item ties back directly to the source.
Issuer A4 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 | Warrants | In its restated financial statements the issuer recorded these warrants as liabilities and engaged a specialist to determine the fair value for certain of these warrants. The firm's approach for substantively testing the fair values of these certain warrants was to test the issuer's process and the firm used an auditor-employed specialist to evaluate the significant assumptions the company's specialist used. The firm did not sufficiently evaluate the reasonableness of these significant assumptions because it did not identify that the auditor-employed specialist did not evaluate whether the significant assumptions were consistent with relevant information and whether external data that the company's specialist used to develop certain of these assumptions were relevant and reliable. (AS 1105.A8a and .A8b; AS 1201.C6 and .C7) Financial statement audit only | AS 1105.A8a; AS 1105.A8b; AS 1201.C6; AS 1201.C7 | |
| 3 | Revenue | The firm did not perform sufficient substantive procedures to test certain of the issuer's revenue because its procedures were limited to comparing this revenue to system-generated reports and confirmations obtained from related parties. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 4 | Business Combinations | During the year the issuer entered into a transaction with multiple parties. The firm did not evaluate whether the issuer's accounting for this transaction as a business combination was in conformity with FASB ASC Topic 805 Business Combinations. (AS 2810.30) Financial statement audit only | AS 2810.30 |
Issuer B7 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue and Deferred Revenue | The issuer recorded certain revenue at the time services were provided to its customers. The firm did not perform any substantive procedures to test whether the performance obligations for these services had been satisfied when revenue was recognized. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 2 | Revenue and Deferred Revenue | The issuer used various data and assumptions to estimate certain deferred revenue. The firm's approach for substantively testing this deferred revenue was to develop an independent expectation. The firm did not perform any procedures to evaluate whether the assumptions it used to develop its independent expectation were appropriate. (AS 2501.09 .10 and .12) [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 ending on or after December 15 2020.] Financial statement audit only | AS 2501.9; AS 2501.10; AS 2501.12 | |
| 3 | Revenue and Deferred Revenue | The issuer used various data and assumptions to estimate certain deferred revenue. The firm's approach for substantively testing this deferred revenue was to develop an independent expectation. The firm did not test or in the alternative identify and test any controls over the accuracy of the issuer-prepared data it used to develop its independent expectation. (AS 1105.10) Financial statement audit only | AS 1105.10 | |
| 4 | Goodwill and Intangible Assets | The issuer performed a qualitative assessment of goodwill impairment and used information from various internal and external sources in concluding not to perform a quantitative goodwill impairment test. The firm did not perform any procedures beyond reading an issuer-prepared memorandum to evaluate the reasonableness of the assumptions the issuer used in this qualitative assessment. (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 ending on or after December 15 2020.] Financial statement audit only | AS 2501.9; AS 2501.10; AS 2501.11 | |
| 5 | Goodwill and Intangible Assets | The issuer performed a qualitative assessment of goodwill impairment and used information from various internal and external sources in concluding not to perform a quantitative goodwill impairment test. The firm did not (1) test or in the alternative identify and test any controls over the issuer-prepared data and (2) evaluate whether external information the issuer used in its qualitative assessment was relevant and reliable. (AS 1105.04 .06 and .10) Financial statement audit only | AS 1105.4; AS 1105.6; AS 1105.10 | |
| 6 | Goodwill and Intangible Assets | The issuer used a cash flow forecast to evaluate an intangible asset for possible impairment. The firm did not evaluate the period of the expected future cash flows the issuer used in its forecast which was significantly longer than the remaining useful life of the asset. (AS 2502.26 and .28; AS 2810.03) Financial statement audit only | AS 2502.26; AS 2502.28; AS 2810.3 | |
| 7 | Payroll Expense | The firm did not perform sufficient substantive procedures to test payroll and benefits expense because its procedures were limited to comparing the expense recorded in the general ledger to issuer-prepared tax forms and inspecting certain journal entries. (AS 2301.08) Financial statement audit only | AS 2301.8 |
Issuer C4 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Business Combinations | During the year the issuer acquired a business. The following deficiencies were identified: · The firm did not perform any procedures to evaluate whether all identifiable assets acquired and liabilities assumed were recognized in conformity with FASB ASC Topic 805 Business Combinations. Further the firm did not perform any procedures to evaluate whether the issuer's disclosures related to the acquired intangible assets were in conformity with FASB ASC Topic 350 Intangibles – Goodwill and Other. (AS 2810.30 and .31) Financial statement audit only | AS 2810.30; AS 2810.31 | |
| 2 | Business Combinations | During the year the issuer acquired a business. The following deficiencies were identified: · The firm did not perform any procedures to test the fair value the issuer assigned to the acquired intangible assets. (AS 2501.07) Financial statement audit only | AS 2501.7 | |
| 3 | Business Combinations | During the year the issuer acquired a business. The following deficiencies were identified: · The firm did not sufficiently evaluate the reasonableness of the useful life the issuer assigned to these intangible assets because its procedures were limited to comparing this useful life to the useful life the issuer had assigned in a prior year to another type of intangible assets without evaluating the reasonableness of the difference between these two useful lives. (AS 2501.16) Financial statement audit only | AS 2501.16 | |
| 4 | Business Combinations | During the year the issuer acquired a business. The following deficiencies were identified: · The firm's approach for substantively testing the fair value of certain consideration the issuer transferred to the sellers was to test the issuer's process. The firm did not perform any procedures to evaluate the reasonableness of a significant assumption that the issuer used to determine the fair value of this consideration. (AS 2501.16) Financial statement audit only | AS 2501.16 |
Issuer D3 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 | Warrants | In its restated financial statements the issuer recorded these warrants as liabilities and engaged a specialist to determine the fair value for certain of these warrants. The firm's approach for substantively testing the fair values of these certain warrants was to test the issuer's process and the firm used an auditor-employed specialist to evaluate the significant assumptions the company's specialist used. The firm did not sufficiently evaluate the reasonableness of these significant assumptions because it did not identify that the auditor-employed specialist did not (1) perform any procedures to evaluate certain significant assumptions developed by the issuer and (2) evaluate whether external data that the company's specialist used to develop another significant assumption were relevant and reliable and whether that assumption was consistent with other relevant information. (AS 1105.A8a and .A8b; AS 1201. C6 and .C7; AS 2501.16) Financial statement audit only | AS 1105.A8a; AS 1105.A8b; AS 1201.C6; AS 1201.C7; AS 2501.16 | |
| 3 | Equity | During the audit the firm did not identify and appropriately address that the issuer's accounting for certain redeemable shares as permanent equity was not in conformity with FASB ASC Topic 480 Distinguishing Liabilities from Equity. (AS 2810.30) Unrelated to our review the issuer reevaluated its accounting for these shares 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 |
Issuer E3 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 | Warrants | In its restated financial statements the issuer recorded these warrants as liabilities and engaged a specialist to determine the fair value for certain of these warrants. The firm's approach for substantively testing the fair values of these certain warrants was to test the issuer's process and the firm used an auditor-employed specialist to evaluate the significant assumptions the company's specialist used. The firm did not sufficiently evaluate the reasonableness of these significant assumptions because it did not identify that the auditor-employed specialist did not (1) perform any procedures to evaluate a significant assumption developed by the issuer and a significant assumption developed by the company's specialist and (2) evaluate whether external data that the company's specialist used to develop another significant assumption were relevant and reliable and whether that assumption and other significant assumptions developed by the company's specialist were consistent with other relevant information. (AS 1105.A8a and .A8b; AS 1201.C6 and .C7; AS 2501.16) Financial statement audit only | AS 1105.A8a; AS 1105.A8b; AS 1201.C6; AS 1201.C7; AS 2501.16 | |
| 3 | Equity | During the audit the firm did not identify and appropriately address that the issuer's accounting for certain redeemable shares as permanent equity was not in conformity with FASB ASC Topic 480 Distinguishing Liabilities from Equity. (AS 2810.30) Unrelated to our review the issuer reevaluated its accounting for these shares 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 |
Issuer F3 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 | Warrants | In its restated financial statements the issuer recorded these warrants as liabilities and engaged a specialist to determine the fair value for certain of these warrants. The firm's approach for substantively testing the fair values of these certain warrants was to test the issuer's process and the firm used an auditor-employed specialist to evaluate the significant assumptions the company's specialist used. The firm did not sufficiently evaluate the reasonableness of these significant assumptions because it did not identify that the auditor-employed specialist did not (1) perform any procedures to evaluate a significant assumption developed by the issuer and (2) evaluate whether certain significant assumptions that the company's specialist developed were consistent with relevant information. (AS 1105.A8b; AS 1201.C6 and .C7; AS 2501.16) Financial statement audit only | AS 1105.A8b; AS 1201.C6; AS 1201.C7; AS 2501.16 | |
| 3 | Equity | During the audit the firm did not identify and appropriately address that the issuer's accounting for certain redeemable shares as permanent equity was not in conformity with FASB ASC Topic 480 Distinguishing Liabilities from Equity. (AS 2810.30) Financial statement audit only | AS 2810.30 |
Issuer G3 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Derivatives | During the audit the firm did not identify and appropriately address that the issuer's accounting for warrants and another derivative instrument 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 the derivative instrument 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 | Derivatives | In its restated financial statements the issuer recorded these warrants and the derivative instrument as liabilities and engaged a specialist to determine the fair value for certain of these warrants and the derivative instrument. The firm's approach for substantively testing the fair values of these certain warrants and the derivative instrument was to test the issuer's process and the firm used an auditor-employed specialist to evaluate the significant assumptions the company's specialist used. The firm did not sufficiently evaluate the reasonableness of these significant assumptions because it did not identify that the auditor-employed specialist did not (1) perform any procedures to evaluate certain significant assumptions and (2) evaluate whether external data that the company's specialist used to develop other significant assumptions were relevant and reliable and whether those assumptions were consistent with other relevant information. (AS 1105.A8a and .A8b; AS 1201.C6 and .C7) Financial statement audit only | AS 1105.A8a; AS 1105.A8b; AS 1201.C6; AS 1201.C7 | |
| 3 | Equity | During the audit the firm did not identify and appropriately address that the issuer's accounting for certain redeemable shares as permanent equity was not in conformity with FASB ASC Topic 480 Distinguishing Liabilities from Equity. (AS 2810.30) Unrelated to our review the issuer reevaluated its accounting for these shares 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 |
Issuer H3 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 | Warrants | In its restated financial statements the issuer recorded these warrants as liabilities and engaged a specialist to determine the fair value for certain of these warrants. The firm's approach for substantively testing the fair values of these certain warrants was to test the issuer's process and the firm used an auditor-employed specialist to evaluate the significant assumptions the company's specialist used. The firm did not sufficiently test the fair value of these warrants because it did not identify that the auditor-employed specialist did not evaluate whether the method the company's specialist used to value the warrants was appropriate and did not perform any procedures to evaluate a significant assumption that the company's specialist developed. (AS 1105.A8b and .A8c; AS 1201.C6 and .C7) Financial statement audit only | AS 1105.A8a; AS 1105.A8b; AS 1201.C6; AS 1201.C7 | |
| 3 | Equity | During the audit the firm did not identify and appropriately address that the issuer's accounting for certain redeemable shares as permanent equity was not in conformity with FASB ASC Topic 480 Distinguishing Liabilities from Equity. (AS 2810.30) Financial statement audit only | AS 2810.30 |
Issuer I2 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 | Equity | During the audit the firm did not identify and appropriately address that the issuer's accounting for certain redeemable shares as permanent equity was not in conformity with FASB ASC Topic 480 Distinguishing Liabilities from Equity. (AS 2810.30) Unrelated to our review the issuer reevaluated its accounting for these shares 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 |
Issuer J2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Warrants | During the audit the firm did not identify and appropriately address that the issuer's accounting for certain warrants as equity was not in conformity with FASB ASC Topic 815 Derivatives and Hedging. (AS 2810.30) Financial statement audit only | AS 2810.30 | |
| 2 | Revenue and Deferred Revenue | For certain types of revenue that the issuer recorded at two of its business units and deferred revenue that it recorded at one of these business units the firm used data or reports provided by the issuer in various substantive procedures it performed to test these accounts. The firm did not test or in the alternative test any controls over the accuracy and completeness of certain of these data and reports. (AS 1105.10) Financial statement audit only | AS 1105.10 |
Issuer K2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Certain Liabilities | The firm's approach for substantively testing the fair value of a certain liability was to test the issuer's process. The firm did not sufficiently evaluate the reasonableness of a significant assumption the issuer used to determine the fair value of this liability because the firm's procedures were limited to inquiring of management and reading an issuer-prepared memorandum and analysis. (AS 2501.16) Financial statement audit only | AS 2501.16 | |
| 2 | Certain Liabilities | The firm did not identify and evaluate the significance to the financial statements of omissions from a required disclosure under FASB ASC Topic 820 Fair Value Measurements related to this liability. (AS 2810.30 and .31) Financial statement audit only | AS 2810.30; AS 2810.31 |
Issuer L1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Equity | During the audit the firm did not identify and appropriately address that the issuer's accounting for certain redeemable shares as permanent equity was not in conformity with FASB ASC Topic 480 Distinguishing Liabilities from Equity. (AS 2810.30) Unrelated to our review the issuer reevaluated its accounting for these shares 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 |
Issuer M1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The firm's substantive procedures to test revenue consisted of testing a sample of transactions. For certain of the transactions it selected for testing the firm did not perform any procedures to test whether the performance obligation had been satisfied when revenue was recognized. (AS 2301.08) Financial statement audit only | AS 2301.8 |