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PricewaterhouseCoopers
Hong Kong · PricewaterhouseCoopers International Limited · Triennially Inspected
- Inspection year
- 2022
- Report date
- 28-Mar-2023
- PCAOB release
- 104-2023-050
- Audits reviewed
- 4
- Audits w/ Part I.A deficiencies
- 3
- Part I.A deficiency rate
- 75%
- Part I.A deficiencies
- 65
- Part I.B deficiencies
- 7
- Report
- View PDF ↗
Deficiencies (65)
Grouped by issuer and in the same order as the PCAOB report, so each item ties back directly to the source.
Issuer A33 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue and Related Accounts | The issuer used multiple information technology (IT) systems to initiate process and record transactions related to revenue and related accounts. In its testing of controls over these accounts the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by these IT systems. As a result of deficiencies in the firm's testing of IT general controls (ITGCs) the firm's testing of these automated and IT-dependent controls was not sufficient. (AS 2201.46) Both financial statement and ICFR audits | AS 2201.46 | |
| 2 | Revenue and Related Accounts | The issuer used multiple information technology (IT) systems to initiate process and record transactions related to revenue and related accounts. In its testing of controls over these accounts the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by these IT systems. The firm selected for testing controls over administrative access and monitoring but did not perform procedures beyond inquiry to test (1) certain of these controls and (2) an aspect of another of these controls. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 3 | Revenue and Related Accounts | The issuer used multiple information technology (IT) systems to initiate process and record transactions related to revenue and related accounts. In its testing of controls over these accounts the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by these IT systems. The firm did not identify and test any controls over certain automated functionality related to change management and user access. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 4 | Revenue and Related Accounts | The issuer used multiple information technology (IT) systems to initiate process and record transactions related to revenue and related accounts. In its testing of controls over these accounts the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by these IT systems. The firm selected for testing controls that included the issuer's review of whether access was appropriate for transferred employees. The firm did not evaluate the specific review procedures that the control owners performed to assess this access. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 5 | Revenue and Related Accounts | The issuer used multiple information technology (IT) systems to initiate process and record transactions related to revenue and related accounts. In its testing of controls over these accounts the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by these IT systems. The firm selected for testing controls over change management and user access but for certain of these controls did not perform procedures beyond inquiry to test or test any controls over (1) the completeness of the population of items from which it made its selections for testing or (2) the accuracy of information the firm used in its testing. Further for another of these change management controls when testing the completeness of the population from which the firm made its selections for testing the firm did not test all relevant sources of changes. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 | |
| 6 | Revenue and Related Accounts | With respect to the firm's testing of controls with an automated component: · The firm selected for testing various automated controls over certain revenue and related accounts. The firm's testing of these automated controls using a sample of only one instance of the controls' operation was not sufficient because the firm did not test the programming of these controls or perform other procedures that would have provided sufficient appropriate audit evidence that these automated controls were designed and operating effectively. (AS 2201.46) Both financial statement and ICFR audits | AS 2201.46 | |
| 7 | Revenue and Related Accounts | With respect to the firm's testing of controls with an automated component: · For one type of revenue the firm selected for testing a control that consisted of the automated calculation and recording of revenue and related accounts and a manual review of the accuracy of the data used in the operation of this control. The firm did not test the manual aspect of this control. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 8 | Revenue and Related Accounts | With respect to the firm's testing of controls with an automated component: · For certain revenue the firm did not identify and test any controls over certain inputs and assumptions used by the issuer to recognize revenue. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 9 | Revenue and Related Accounts | The firm selected for testing controls over the automated transfer or reconciliation of data between systems. The following deficiencies were identified: · Certain of these controls included the manual resolution of any errors in this data transfer. The firm did not test the operating effectiveness of the manual aspect of these controls. (AS 2201.44) Both financial statement and ICFR audits | AS 2201.44 | |
| 10 | Revenue and Related Accounts | The firm selected for testing controls over the automated transfer or reconciliation of data between systems. The following deficiencies were identified: · For certain other of these controls the firm did not identify and test any controls over the investigation and resolution of identified variances. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 11 | Revenue and Related Accounts | The firm selected for testing controls over the automated transfer or reconciliation of data between systems. The following deficiencies were identified: · For certain of these controls which operated across multiple systems the firm's approach of testing one instance of the controls was based on an unsupported assumption that all systems were configured the same way. (AS 2201.46) Both financial statement and ICFR audits | AS 2201.46 | |
| 12 | Revenue and Related Accounts | With respect to the firm's testing of manual controls: · The firm selected for testing various controls related to the issuer's reviews of certain revenue and related accounts. The firm did not evaluate the review procedures that the control owners performed including the procedures to identify items for follow-up and the procedures to determine whether those items were appropriately resolved. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 13 | Revenue and Related Accounts | With respect to the firm's testing of manual controls: · The firm selected for testing controls that consisted of the issuer's reviews of certain contracts. The firm did not perform procedures beyond inquiry to test or test any controls over the completeness of the population of contracts from which it made its selections for testing. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 | |
| 14 | Revenue and Related Accounts | With respect to the firm's testing of manual controls: · For certain other contracts the firm did not identify and test any controls that addressed whether relevant terms and conditions were identified and evaluated for appropriate revenue recognition. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 15 | Revenue and Related Accounts | With respect to the firm's testing of manual controls: · For one type of revenue the firm did not identify and test any controls that addressed whether the performance obligation was satisfied before revenue was recognized. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 16 | Revenue and Related Accounts | With respect to the firm's substantive testing: · The firm performed tests of details for a sample of certain revenue and related accounts. The firm did not perform any procedures to verify that each of the individual transactions from the respective revenue and related accounts had the opportunity to be selected for testing. (AS 2315.24) Both financial statement and ICFR audits | AS 2315.24 | |
| 17 | Revenue and Related Accounts | With respect to the firm's substantive testing: · The sample sizes the firm used in certain of its substantive procedures to test revenue were too small to provide sufficient appropriate audit evidence because these procedures were designed based on a level of control reliance that was not supported due to the deficiencies in the firm's control testing discussed above. (AS 2301.16 .18 and .37; AS 2315.19 .23 and .23A) Both financial statement and ICFR audits | AS 2301.16; AS 2301.18; AS 2301.37; AS 2315.19; AS 2315.23; AS 2315.23A | |
| 18 | Revenue and Related Accounts | With respect to the firm's substantive testing: · For certain revenue the firm did not perform procedures to evaluate the validity of the inputs used by the issuer to recognize revenue beyond identifying the source of the inputs. Further the firm did not perform procedures to test the prices the issuer used to recognize this revenue beyond testing whether the price charged was below a maximum allowed price. (AS 2301.08 and .13) Both financial statement and ICFR audits | AS 2301.8; AS 2301.13 | |
| 19 | Revenue and Related Accounts | With respect to the firm's substantive testing: · For certain other revenue the firm did not test whether revenue was recognized in accordance with relevant contract terms and conditions. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 | |
| 20 | Revenue and Related Accounts | With respect to the firm's substantive testing: · For certain other revenue the firm obtained the issuer's revenue recognition schedule and recalculated a sample of items. The firm did not consider the different revenue recognition methods when recalculating its sample. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 | |
| 21 | Revenue and Related Accounts | With respect to the firm's substantive testing: · The firm did not perform any procedures to test certain related accounts. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 | |
| 22 | Revenue and Related Accounts | With respect to the firm's substantive testing: · The firm did not perform procedures to test or (as discussed above) sufficiently test controls over the accuracy and completeness of certain system-generated data or reports that (1) the firm used to make its selections for testing and (2) the firm used in its substantive testing. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 | |
| 23 | Revenue and Related Accounts | The issuer engaged an external specialist to assist in developing an estimate of a related account. The firm selected for testing a control that consisted of the issuer's review of the estimate including the company's specialist's report. The firm did not evaluate the review procedures that the control owner performed including the procedures to identify items for follow-up and the procedures to determine whether those items were appropriately resolved. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 24 | Revenue and Related Accounts | The issuer engaged an external specialist to assist in developing an estimate of a related account. The firm selected for testing a control that consisted of the issuer's review of the estimate including the company's specialist's report. The firm did not identify and test any controls over the accuracy and completeness of certain data used in developing the estimate. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 25 | Revenue and Related Accounts | The firm did not perform procedures to test the estimate beyond performing certain recalculations and obtaining the company's specialist report. Further the firm did not perform any procedures to use the work of the company's specialist as audit evidence. (AS 1105.A1 - .A10; AS 2501.07) Both financial statement and ICFR audits | AS 1105.A1; AS 1105.A10; AS 1105.A2; AS 1105.A3; AS 1105.A4; AS 1105.A5; AS 1105.A6; AS 1105.A7; AS 1105.A8; AS 1105.A9; AS 2501.7 | |
| 26 | Significant Accounts | The firm selected for testing controls that consisted of the issuer's review of the reasonableness of certain significant assumptions used by the issuer in developing an estimate related to this significant account. The firm did not evaluate the review procedures that the control owner performed including the procedures to identify items for follow-up and the procedures to determine whether those items were appropriately resolved. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | Significant risk |
| 27 | Significant Accounts | The firm's approach for substantively testing the above estimate related to this significant account was to test the issuer's process. The firm did not sufficiently evaluate the reasonableness of certain significant assumptions because it did not evaluate whether the Issuer had a reasonable basis for the assumptions. Further in evaluating the reasonableness of these significant assumptions the firm did not take into account the issuer's ability to carry out its intended courses of action beyond observing that the assumptions were directionally consistent with the issuer's historical information and other information. (AS 2501.16 and .17) Both financial statement and ICFR audits | AS 2501.16; AS 2501.17 | Significant risk |
| 28 | Significant Accounts | The firm selected for testing a control that consisted of the issuer's review of an aspect of the accounting treatment for this significant account. The firm did not evaluate the specific review procedures that the control owner performed to evaluate whether the accounting treatment was in accordance with GAAP. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | Significant risk |
| 29 | Significant Accounts | The firm did not perform any procedures to evaluate the issuer's conclusion that this aspect of the accounting treatment was in accordance with GAAP. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 | Significant risk |
| 30 | Significant Transactions | The firm selected for testing a control that consisted of the issuer's review of the initial accounting treatment of significant transactions. The firm did not evaluate the review procedures that the control owners performed including the procedures to identify items for follow-up and the procedures to determine whether those items were appropriately resolved. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 31 | Significant Transactions | The firm selected for testing a control that consisted of the issuer's review of the initial accounting treatment of significant transactions. The firm did not identify and test any controls over the review of the subsequent accounting treatment of these significant transactions. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 32 | Significant Transactions | The firm did not perform procedures to test the issuer's conclusion regarding the subsequent accounting treatment of the significant transactions beyond reviewing contractual agreements and certain issuer information. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 | |
| 33 | Significant Transactions | In performing procedures to evaluate the accounting treatment of these transactions the firm used the work of the company's specialist as audit evidence. The firm did not perform any procedures to use the work of the company's specialist as audit evidence. (AS 1105.A1 - .A10; AS 2301.08) Both financial statement and ICFR audits | AS 1105.A1; AS 1105.A10; AS 1105.A2; AS 1105.A3; AS 1105.A4; AS 1105.A5; AS 1105.A6; AS 1105.A7; AS 1105.A8; AS 1105.A9; AS 2301.8 |
Issuer B21 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Goodwill | The firm identified certain deficiencies in the control environment. The firm however did not consider the effect of these deficiencies in other areas of the audit in (1) forming conclusions about the design and operating effectiveness of the controls in those areas and (2) determining the level of control reliance used in the design of its substantive procedures in those areas. (AS 2201.42 .44 and .B6; AS 2301.34) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44; AS 2201.B6; AS 2301.34 | |
| 2 | Revenue and Related Accounts | The issuer recognized revenue at the time services were provided to its customers. The following deficiencies were identified: • The firm selected for testing controls that consisted of the issuer's verification with its customers of the services provided and amounts to be invoiced. The firm did not evaluate the review procedures that the control owners performed including the procedures to identify items for follow-up and the procedures to determine whether those items were appropriately resolved. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 3 | Revenue and Related Accounts | The issuer recognized revenue at the time services were provided to its customers. The following deficiencies were identified: • The firm did not identify and test any controls over (1) the accuracy and completeness of reports generated from the issuer's IT systems and (2) the relevance and reliability of information obtained from external sources that the control owners used in the operation of these controls. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 4 | Revenue and Related Accounts | The issuer recognized revenue at the time services were provided to its customers. The following deficiencies were identified: • The firm did not identify and test any controls over the application of cash receipts to customer accounts. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 5 | Revenue and Related Accounts | To test revenue and related accounts the firm sent positive confirmation requests to the issuer's customers and performed certain other substantive procedures. The following deficiencies were identified: · For one response returned without exception in which the customer indicated its agreement to the amounts invoiced by the issuer during the year the firm did not perform any procedures to test whether the issuer had satisfied its performance obligations for the amounts invoiced. (AS 2301.08 and .13) Both financial statement and ICFR audits | AS 2301.8; AS 2301.13 | |
| 6 | Revenue and Related Accounts | To test revenue and related accounts the firm sent positive confirmation requests to the issuer's customers and performed certain other substantive procedures. The following deficiencies were identified: · The firm did not evaluate the relevance and reliability of information obtained from external sources it used in its testing. (AS 1105.04 and .06) Both financial statement and ICFR audits | AS 1105.4; AS 1105.6 | |
| 7 | Revenue and Related Accounts | To test revenue and related accounts the firm sent positive confirmation requests to the issuer's customers and performed certain other substantive procedures. The following deficiencies were identified: · The firm did not perform procedures to test or (as discussed above) test any controls over the accuracy and completeness of reports generated from the issuer's IT systems that it used in its testing. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 | |
| 8 | Revenue and Related Accounts | To test revenue and related accounts the firm sent positive confirmation requests to the issuer's customers and performed certain other substantive procedures. The following deficiencies were identified: · The firm did not perform any procedures to evaluate certain selected revenue transactions. (AS 2301.08 and .13) Both financial statement and ICFR audits | AS 2301.8; AS 2301.13 | |
| 9 | Revenue and Related Accounts | The sample sizes the firm used in certain of its substantive procedures to test revenue and related accounts were too small to provide sufficient appropriate audit evidence because these procedures were designed based on a level of control reliance that was not supported due to the deficiencies in the firm's control testing discussed above. (AS 2301.16 .18 and .37; AS 2315.19 .23 and .23A) Both financial statement and ICFR audits | AS 2301.16; AS 2301.18; AS 2301.37; AS 2315.19; AS 2315.23; AS 2315.23A | |
| 10 | Revenue and Related Accounts | The firm did not identify and test any controls over the issuer's estimates of variable consideration included in the transaction price. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 11 | Revenue and Related Accounts | The firm did not perform procedures to test the issuer's estimates of variable consideration that it expects to ultimately include in the transaction price beyond testing the amounts the issuer invoiced to its customers during the year. (AS 2501.07) Both financial statement and ICFR audits | AS 2501.7 | |
| 12 | Revenue and Related Accounts | The firm selected for testing a control that consisted of the issuer's review of the method and certain significant assumptions that were used by the issuer to develop another estimate of a related account. The firm did not evaluate the specific review procedures that the control owners performed to evaluate the appropriateness of the method and the reasonableness of certain significant assumptions that were used. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 13 | Revenue and Related Accounts | The firm did not perform any procedures to evaluate whether the method used by the issuer to develop this other estimate was (1) in conformity with the requirements of the applicable financial reporting framework and (2) appropriate for the nature of the related account taking into account its understanding of the issuer and its environment. (AS 2501.10) Both financial statement and ICFR audits | AS 2501.10 | |
| 14 | Revenue and Related Accounts | The firm's approach for substantively testing certain significant assumptions related to this other estimate was to develop an expectation using model analyses and information provided by an auditor-employed specialist for comparison to the issuer's significant assumptions. The firm did not demonstrate that it had a reasonable basis for its expectation of the significant assumptions because it did not evaluate the relevance and reliability of certain external data obtained and used by the auditor-employed specialist in developing its expectations. (AS 1105.04 and .06; AS 2501.16) Both financial statement and ICFR audits | AS 1105.4; AS 1105.6; AS 2501.16 | |
| 15 | Revenue and Related Accounts | The firm's approach for substantively testing certain significant assumptions related to this other estimate was to develop an expectation using model analyses and information provided by an auditor-employed specialist for comparison to the issuer's significant assumptions. The firm did not sufficiently evaluate the work of the auditor-employed specialist and identify that the auditor-employed specialist's work did not provide sufficient appropriate audit evidence because it did not perform procedures to address limitations set forth by the auditor-employed specialist. (AS 1201.C6 and .C7) Both financial statement and ICFR audits | AS 1201.C6; AS 1201.C7 | |
| 16 | Goodwill | The issuer performed a quantitative assessment to test its goodwill for impairment and engaged an external specialist to determine the fair value of its reporting units at year end. The firm selected for testing a control that consisted of the issuer's review of the significant assumptions that were developed and used by the company's specialist to determine the fair value of the issuer's reporting units. The firm did not evaluate the specific review procedures that the control owners performed to evaluate the reasonableness of those significant assumptions. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 17 | Goodwill | The issuer performed a quantitative assessment to test its goodwill for impairment and engaged an external specialist to determine the fair value of its reporting units at year end. The firm selected for testing a control that consisted of the issuer's review of the significant assumptions that were developed and used by the company's specialist to determine the fair value of the issuer's reporting units. The firm did not identify and test any controls over the reasonableness of significant assumptions developed by the issuer that were used by the company's specialist to determine the fair value of the issuer's reporting units. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 18 | Goodwill | The firm's approach for substantively testing the issuer's quantitative goodwill assessment was to test the issuer's process. For one reporting unit the firm did not perform any procedures to evaluate whether the issuer had a reasonable basis for certain significant assumptions it developed. (AS 2501.16) Both financial statement and ICFR audits | AS 2501.16 | |
| 19 | Goodwill | The firm's approach for substantively testing the issuer's quantitative goodwill assessment was to test the issuer's process. The following deficiencies were identified for another reporting unit: · The firm did not sufficiently evaluate the relevance of certain data used by the company's specialist to develop a significant assumption because the firm did not consider certain of the issuer's business objectives. (AS 1105.A8a) Both financial statement and ICFR audits | AS 1105.A8a | |
| 20 | Goodwill | The firm's approach for substantively testing the issuer's quantitative goodwill assessment was to test the issuer's process. The following deficiencies were identified for another reporting unit: · The firm did not perform any procedures to evaluate the reasonableness of a significant assumption developed by the company's specialist. (AS 1105.A8b) Both financial statement and ICFR audits | AS 1105.A8b | |
| 21 | Journal Entries | The firm did not perform sufficient procedures to identify and select journal entries for testing to address the risks of management override identified by the firm because the firm did not use accurate information as the basis for the test. (AS 2401.61) Both financial statement and ICFR audits | AS 2401.61 |
Issuer C11 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Cost of Sales | The issuer used an IT application to process revenue and cost of sales transactions. In its testing of controls over these accounts the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by this application. As a result of deficiencies in the firm's testing of ITGCs for this application the firm's testing of these automated and IT-dependent controls was not sufficient. (AS 2201.46) Both financial statement and ICFR audits | AS 2201.46 | |
| 2 | Cost of Sales | The issuer used an IT application to process revenue and cost of sales transactions. In its testing of controls over these accounts the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by this application. The firm selected for testing a control that consisted of the issuer's review of segregation of duties. The firm did not evaluate the specific review procedures that the control owner performed to identify the population of individuals with administrative access. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 3 | Cost of Sales | The issuer used an IT application to process revenue and cost of sales transactions. In its testing of controls over these accounts the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by this application. The firm selected for testing a control that consisted of the issuer's review of user access. The firm did not evaluate the review procedures that the control owner performed including the procedures to identify items for follow-up and the procedures to determine whether those items were appropriately resolved. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 4 | Cost of Sales | The issuer used an IT application to process revenue and cost of sales transactions. In its testing of controls over these accounts the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by this application. The firm selected for testing a control that consisted of the issuer's review of user access. The firm did not perform procedures to test or test any controls over the completeness of the population of users with access to certain revenue transactions. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 | |
| 5 | Cost of Sales | The issuer used an IT application to process revenue and cost of sales transactions. In its testing of controls over these accounts the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by this application. The firm selected for testing a control over new modified and terminated user access. The firm identified deviations in the operation of this control but did not determine the effect of these deviations on the operating effectiveness of this control. (AS 2201.48) Both financial statement and ICFR audits | AS 2201.48 | |
| 6 | Cost of Sales | The issuer used an IT application to process revenue and cost of sales transactions. In its testing of controls over these accounts the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by this application. The firm selected for testing a control over change management but did not perform procedures to test or test controls over the completeness of the population of changes from which it made its selections for testing. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 | |
| 7 | Cost of Sales | The firm selected for testing certain controls that consisted of the issuer's review of revenue and cost of sales. The firm did not evaluate the review procedures that the control owners performed including the procedures to identify items for follow-up and the procedures to determine whether those items were appropriately resolved. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 8 | Cost of Sales | The firm selected for testing a control that included the automated transfer of data between systems and the manual resolution of any errors in this data transfer. The firm did not test the manual aspect of this control. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 9 | Cost of Sales | The sample sizes the firm used in certain of its substantive procedures to test revenue and cost of sales were too small to provide sufficient appropriate audit evidence because these procedures were designed based on a level of control reliance that was not supported due to the deficiencies in the firm's control testing discussed above. (AS 2301.16 .18 and .37; AS 2315.19 .23 and .23A) Both financial statement and ICFR audits | AS 2301.16; AS 2301.18; AS 2301.37; AS 2315.19; AS 2315.23; AS 2315.23A | |
| 10 | Cash | The firm sent positive confirmation requests for cash. The firm did not identify certain conditions indicating that certain bank confirmation responses or parts thereof might not be authentic or might not have come from the purported source. As a result the firm did not perform additional audit procedures to respond to those conditions and evaluate their effect if any on the other aspects of the audit. (AS 1105.09) Both financial statement and ICFR audits | AS 1105.9 | |
| 11 | Journal Entries | The firm identified fraud criteria for journal entries and obtained a listing of all journal entries that met the criteria. The firm did not perform sufficient substantive procedures to test those journal entries because other than inquiries of management it limited its procedures to one journal entry without having an appropriate rationale for limiting its testing to that journal entry. (AS 2401.61) Both financial statement and ICFR audits | AS 2401.61 |