- Inspection year
- 2021
- Report date
- 01-Dec-2022
- PCAOB release
- 104-2023-022
- Audits reviewed
- 2
- Audits w/ Part I.A deficiencies
- 2
- Part I.A deficiency rate
- 100%
- Part I.A deficiencies
- 10
- Part I.B deficiencies
- 3
- Report
- View PDF ↗
Deficiencies (10)
Grouped by issuer and in the same order as the PCAOB report, so each item ties back directly to the source.
Issuer A5 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The issuer used a service organization to process and record revenue transactions. The firm's approach to substantively test revenue included reliance on controls including controls over the accuracy and completeness of transaction data that the issuer obtained from the service organization. The firm did not perform any procedures to test the operating effectiveness of complementary user controls in place at the issuer. (AS 2601.14) Financial statement audit only | AS 2601.14 | |
| 2 | Revenue | The firm's substantive procedures to test revenue included analytical procedures. The firm used the transaction data from the service organization to develop its expectations but did not perform any substantive procedures to test or in the alternative sufficiently test controls over (as discussed above) the accuracy and completeness of these data. (AS 2305.16) Financial statement audit only | AS 2305.16 | |
| 3 | Revenue | With respect to Revenue the firm designed certain of its substantive procedures as a dual-purpose test. The firm performed its substantive procedures using the sample size it determined for its control testing. This sample size was too small to provide sufficient appropriate audit evidence because the firm did not use the larger of the samples that would otherwise have been designed for the two separate purposes. (AS 2315.44) Financial statement audit only | AS 2315.44 | |
| 4 | Other Liabilities | The issuer used data provided by service organizations to determine its estimate for one of its liabilities. The firm used certain of these data in its substantive procedures. The firm's approach to substantively test one component of this liability was to develop an independent expectation. The firm did not perform any procedures to test the accuracy and completeness of certain service organization data that it used to develop its independent expectation. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 5 | Other Liabilities | The issuer used data provided by service organizations to determine its estimate for one of its liabilities. The firm used certain of these data in its substantive procedures. The firm's approach to substantively test one component of this liability was to test the issuer's process. The firm did not perform any procedures to test the accuracy and completeness of certain service organization data that the issuer used to determine its estimate. (AS 2301.08) Financial statement audit only | AS 2301.8 |
Issuer B5 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The firm did not perform sufficient substantive procedures to test certain of the issuer's revenue because its procedures were limited to vouching a sample of sales transactions recorded by the issuer to the bill of sale for each transaction. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 2 | Revenue | The issuer recorded revenue based on completed delivery of products to its customers. The firm tested certain transactions prior to year end to determine whether the issuer recorded revenue in the appropriate period. The firm however did not perform any procedures to verify that delivery had occurred before revenue was recorded. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 3 | Inventory | The firm's approach to substantively test the excess and obsolete inventory reserve was to develop an independent expectation. The firm did not perform any procedures to demonstrate that it had a reasonable basis for the assumptions used in its expectation. (AS 2501.22) Financial statement audit only | AS 2501.22 | |
| 4 | Inventory | The firm's approach to substantively test the excess and obsolete inventory reserve was to develop an independent expectation. The firm did not perform any procedures to test or in the alternative test any controls over the accuracy and completeness of a report generated from the issuer's inventory management system and used to develop its expectation. (AS 1105.10) Financial statement audit only | AS 1105.10 | |
| 5 | Inventory | For certain excess inventory that the issuer determined did not require a reserve the firm did not perform any procedures beyond inquiring of management to evaluate the reasonableness of the issuer's forecasted usage of this inventory. (AS 2501.24) Financial statement audit only | AS 2501.24 |