- Inspection year
- 2022
- Report date
- 11-May-2023
- PCAOB release
- 104-2023-068
- Audits reviewed
- 2
- Audits w/ Part I.A deficiencies
- 2
- Part I.A deficiency rate
- 100%
- Part I.A deficiencies
- 7
- Part I.B deficiencies
- 3
- Report
- View PDF ↗
Deficiencies (7)
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 | Goodwill | The issuer engaged an external specialist to perform a quantitative assessment of goodwill for impairment at an interim date. The issuer also performed a qualitative assessment of goodwill for impairment at year-end and concluded that the performance of an additional quantitative assessment of goodwill was unnecessary. The firm's approach for substantively testing goodwill was to review and test management's process. The following deficiencies were identified: · The firm did not perform substantive procedures beyond inquiry of management to evaluate the reasonableness of certain assumptions used by the specialist to perform the quantitative assessment of goodwill including taking into account the issuer's ability to carry out its stated intentions regarding the assumptions. (AS 2501.16 and .17; AS 1105.A8b) Financial statement audit only | AS 1105.A8b; AS 2501.16; AS 2501.17 | Significant risk |
| 2 | Goodwill | The issuer engaged an external specialist to perform a quantitative assessment of goodwill for impairment at an interim date. The issuer also performed a qualitative assessment of goodwill for impairment at year-end and concluded that the performance of an additional quantitative assessment of goodwill was unnecessary. The firm's approach for substantively testing goodwill was to review and test management's process. The following deficiencies were identified: · The firm did not perform sufficient procedures to evaluate whether a quantitative assessment was required at year-end because it did not evaluate whether relevant events and circumstances were sufficient to offset unfavorable indicators of impairment. (AS 2501.07; AS 2810.03) Financial statement audit only | AS 2501.7; AS 2810.3 | Significant risk |
| 3 | Goodwill | The issuer engaged an external specialist to perform a quantitative assessment of goodwill for impairment at an interim date. The issuer also performed a qualitative assessment of goodwill for impairment at year-end and concluded that the performance of an additional quantitative assessment of goodwill was unnecessary. The firm's approach for substantively testing goodwill was to review and test management's process. The following deficiencies were identified: · The firm did not perform any substantive procedures to determine whether the issuer evaluated a portion of goodwill for impairment. (AS 2301.08 and .11) Financial statement audit only | AS 2301.8; AS 2301.11 | Significant risk |
| 4 | Intangible Assets | The issuer identified certain impairment indicators and performed a qualitative assessment of intangible assets for impairment at an interim date and at year-end. The firm did not perform substantive procedures beyond reading a memorandum prepared by the issuer to evaluate whether the issuer should have performed a quantitative assessment of intangible assets for impairment considering the existence of these unfavorable indicators of impairment. (AS 2501.07; AS 2810.03) Financial statement audit only | AS 2501.7; AS 2810.3 | |
| 5 | Journal Entries | The firm identified a significant deficiency related to a lack of review and approval of manual journal entries. To address the fraud risk the firm selected for testing manual journal entries meeting certain fraud criteria. The following deficiencies were identified: · The firm did not perform any procedures to test the completeness of the population of manual journal entries. (AS 1105.10) Financial statement audit only | AS 1105.10 | |
| 6 | Journal Entries | The firm identified a significant deficiency related to a lack of review and approval of manual journal entries. To address the fraud risk the firm selected for testing manual journal entries meeting certain fraud criteria. The following deficiencies were identified: · The firm did not perform sufficient procedures to test the selected journal entries because it did not examine the underlying support for the entries and instead limited its procedures to reading the journal entry descriptions. (AS 2401.61) Financial statement audit only | AS 2401.61 |
Issuer B1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Leases | A service organization provided lease administration and accounting software services to the issuer using a lease application. An unrelated party entered all of the issuer's lease data and assumptions into the lease application and the issuer was responsible for the accuracy and completeness of such information. The firm selected for testing certain controls that consisted of the issuer's review of journal entries used to record lease activity and account reconciliations related to leases. The firm did not identify and test any controls over the accuracy and completeness of the lease information used in the operation of these controls. (AS 2201.39) ICFR audit only | AS 2201.39 |