- Inspection year
- 2022
- Report date
- 01-Aug-2023
- PCAOB release
- 104-2023-130
- 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
- 4
- 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 A9 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Accounts Receivable | The issuer used seven information-technology (IT) systems to initiate process and record transactions related to certain revenue and the related accounts receivable and deferred revenue. 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 certain of these IT systems. As a result of the following 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 | Accounts Receivable | With respect to change management: The firm selected for testing a change management control over all seven IT systems that consisted of the documentation testing and approval of changes prior to their implementation into production and all changes made in the production environment were to be recorded in a ticketing system. The following deficiency was identified: · For one IT system the firm did not evaluate the effect of the issuer's exclusion of a known change to a system report that did not have a ticket on the firm's conclusions regarding the design and operating effectiveness of this control. (AS 2201.48) Both financial statement and ICFR audits | AS 2201.48 | |
| 3 | Accounts Receivable | With respect to change management: The firm selected for testing a change management control over all seven IT systems that consisted of the documentation testing and approval of changes prior to their implementation into production and all changes made in the production environment were to be recorded in a ticketing system. The following deficiency was identified: · For all seven IT systems the firm did not perform sufficient procedures to test the completeness of the population of changes from which it made its selections because for a seven-month interim period the firm obtained tickets for a sample of changes from certain IT systems but did not verify that they were included in the population and the firm did not perform any procedures to test completeness of the population subsequent to the interim period. Further the firm did not (1) sufficiently evaluate a known change that did not have a ticket and whether other changes could have been made without a ticket and (2) evaluate another known change to a report that had a ticket but was excluded from the population. (AS 1105.10; AS 2810.03) Both financial statement and ICFR audits | AS 1105.10; AS 2810.3 | |
| 4 | Accounts Receivable | As a result of the firm's ITGC testing deficiencies discussed above the firm did not perform sufficient substantive procedures as follows: · The sample sizes the firm used in certain of its substantive procedures to test the existence and valuation of certain accounts receivable 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. (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 | |
| 5 | Accounts Receivable | As a result of the firm's ITGC testing deficiencies discussed above the firm did not perform sufficient substantive procedures as follows: · The firm did not perform any substantive procedures to test or as discussed above with respect to change management sufficiently test controls over the accuracy and completeness of certain system-generated data or reports the firm used to substantively test certain deferred revenue. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 | |
| 6 | Revenue | For certain revenue the firm selected for testing a control that consisted of the reconciliation of data used to recognize revenue between two IT applications. The firm did not evaluate the specific review procedures that the control owner performed to investigate and resolve certain reconciling differences identified during the performance of the control. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 7 | Revenue | For certain revenue the firm selected for testing a control that consisted of the reconciliation of data used to recognize revenue between two IT applications. The firm did not identify and test any controls over the accuracy and completeness of a manually generated spreadsheet used in the operation of this control. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 8 | Revenue | For certain other revenue the firm selected for testing a control that consisted of the reconciliation of data used to recognize revenue and the generation and review of a system-generated exception report. The firm did not identify and test any controls over the accuracy and completeness of certain data used in the operation of this control. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 9 | Revenue | For certain other revenue the firm selected for testing a control that consisted of the reconciliation of data used to recognize revenue between two other IT applications. The firm did not perform procedures to test an IT application control over the accuracy and completeness of a system-generated exception report used in the operation of this control beyond manually reperforming a reconciliation and evaluating the reasonableness of certain differences it had identified between the exceptions listed in the system-generated report and the exceptions identified in its independently prepared reconciliation. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 |
Issuer B1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The firm's approach for substantively testing revenue consisted primarily of performing a software-assisted analysis to test the relationships among revenue accounts receivable and cash receipts. The reliability of the audit evidence obtained from this analysis was dependent upon the firm's testing of cash receipts data underlying the analysis. To test this data the firm took a controls reliance approach. The firm selected for testing a control over the application of cash receipts from the bank statements to outstanding sales invoices that included the matching of unallocated cash receipts to the corresponding customer receivable accounts. The firm did not perform any substantive procedures to test or in the alternative test any controls over the completeness of the population of transactions from which it made its selections to test this control. (AS 1105.10) Financial statement audit only | AS 1105.10 |