- Inspection year
- 2022
- Report date
- 07-Jun-2023
- PCAOB release
- 104-2023-088
- Audits reviewed
- 1
- Audits w/ Part I.A deficiencies
- 1
- Part I.A deficiency rate
- 100%
- Part I.A deficiencies
- 5
- Part I.B deficiencies
- 2
- Report
- View PDF ↗
Deficiencies (5)
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 firm designed certain of its substantive procedures to test revenue as a dual-purpose test. The following deficiencies were identified: · The firm selected for testing as part of this dual-purpose test a control that consisted of the issuer's review of the shipping terms between the shipping documents and the issuer's revenue system. The firm did not evaluate whether this control was designed to achieve the desired audit objective for all relevant assertions given the control was limited to the review of the shipping terms. (AS 2301.13 .19 and .47) Financial statement audit only | AS 2301.13; AS 2301.19; AS 2301.47 | |
| 2 | Revenue | The firm designed certain of its substantive procedures to test revenue as a dual-purpose test. The following deficiencies were identified: · The sample size the firm used was too small to provide sufficient appropriate audit evidence because in determining the sample size the firm did not (1) take into account tolerable misstatement and the allowable risk of incorrect acceptance and (2) use the larger of the samples that would otherwise have been designed for the two separate purposes. (AS 2315.16 .19 .23 .23A and .44) Financial statement audit only | AS 2315.16; AS 2315.19; AS 2315.23; AS 2315.44; AS 2315.23A | |
| 3 | Inventory | The issuer performed cycle counts of inventory at one of its locations. The firm did not perform sufficient substantive procedures to test this inventory because the firm did not test the sampling methodology and selection parameters used by the issuer or perform other procedures to evaluate whether the issuer's cycle-count procedures were sufficiently reliable to produce results substantially the same as those that would have been obtained by a count of all items each year. (AS 2510.11) Financial statement audit only | AS 2510.11 | Significant risk |
| 4 | Inventory | The firm did not perform any procedures to test or test any controls over the accuracy and completeness of certain data and reports used in its substantive testing of inventory. (AS 1105.10) Financial statement audit only | AS 1105.10 | Significant risk |
| 5 | Inventory | The firm's approach for substantively testing the issuer's inventory reserve was to test the issuer's process. The firm did not perform any procedures beyond reading an issuer-prepared memorandum and inquiring of management to evaluate the reasonableness of the significant assumptions the issuer used to determine this reserve. (AS 2501.16) Financial statement audit only | AS 2501.16 | Significant risk |