- Inspection year
- 2021
- Report date
- 01-Dec-2022
- PCAOB release
- 104-2023-024
- Audits reviewed
- 1
- Audits w/ Part I.A deficiencies
- 1
- Part I.A deficiency rate
- 100%
- Part I.A deficiencies
- 3
- Part I.B deficiencies
- 4
- Report
- View PDF ↗
Deficiencies (3)
Grouped by issuer and in the same order as the PCAOB report, so each item ties back directly to the source.
Issuer A3 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Intangible Assets | The issuer entered into an agreement ('acquisition agreement') to acquire a license that granted it the rights to sell certain products and it recorded the license agreement ('license agreement') as an intangible asset. The acquisition and license agreements required the issuer to among other terms pay royalty fees on future net sales (with guaranteed minimum royalty fees) pay an external party for future advisory services and issue convertible preferred stock. The issuer recorded certain of the payments to the external party as part of accounting for the transaction. The firm did not evaluate whether the future royalty payments should have been recorded as part of accounting for the transaction in conformity with FASB ASC Topic 805 Business Combinations. In addition the firm did not evaluate whether it was appropriate to recognize certain of the payments to the external party as part of the accounting for the transaction and not recognize the remaining payments in conformity with FASB ASC Topic 805. (AS 2810.30) Financial statement audit only | AS 2810.30 | |
| 2 | Intangible Assets | The issuer entered into an agreement ('acquisition agreement') to acquire a license that granted it the rights to sell certain products and it recorded the license agreement ('license agreement') as an intangible asset. The acquisition and license agreements required the issuer to among other terms pay royalty fees on future net sales (with guaranteed minimum royalty fees) pay an external party for future advisory services and issue convertible preferred stock. The issuer recorded certain of the payments to the external party as part of accounting for the transaction. The firm's approach for substantively testing the valuation of the convertible preferred stock that was issued was to test the issuer's process. The firm did not evaluate whether the method used by the issuer to determine the value of the convertible preferred stock was appropriate. (AS 2501.10) Financial statement audit only | AS 2501.10 | |
| 3 | Intangible Assets | The issuer entered into an agreement ('acquisition agreement') to acquire a license that granted it the rights to sell certain products and it recorded the license agreement ('license agreement') as an intangible asset. The acquisition and license agreements required the issuer to among other terms pay royalty fees on future net sales (with guaranteed minimum royalty fees) pay an external party for future advisory services and issue convertible preferred stock. The issuer recorded certain of the payments to the external party as part of accounting for the transaction. The firm did not perform procedures to evaluate the reasonableness of a significant assumption the issuer used to determine the fair value of the convertible preferred stock. (AS 2501.16) Financial statement audit only | AS 2501.16 |