- Inspection year
- 2022
- Report date
- 10-Aug-2023
- PCAOB release
- 104-2023-139
- 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 | Revenue and Related Accounts | The issuer generated certain revenues from the sale of products licenses and royalties collaborations and grants. The following deficiency was identified: · The firm selected for testing controls over the issuer's review of 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 | |
| 2 | Revenue and Related Accounts | The issuer generated certain revenues from the sale of products licenses and royalties collaborations and grants. The following deficiency was identified: · The firm selected for testing a control over the issuer's review of the accounting treatment for certain revenue contracts to address a fraud risk associated with the related revenue. 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. Further the firm did not evaluate whether this control was designed to address the fraud risk it identified. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | Significant risk |
| 3 | Revenue and Related Accounts | The issuer used a service organization to initiate and process certain of its revenue transactions related to the sale of products. The firm did not perform any procedures to evaluate whether the issuer implemented the appropriate complementary user controls as described in the service auditor's report. (AS 2201.39 and .B22) Both financial statement and ICFR audits | AS 2201.39; AS 2201.B22 | Significant risk |
| 4 | Revenue and Related Accounts | The issuer used another service organization to ship the products and record these transactions. The firm did not perform any procedures to obtain evidence regarding the controls over the activities performed by this service organization. (AS 2201.39 and .B19) Both financial statement and ICFR audits | AS 2201.39; AS 2201.B19 | Significant risk |
| 5 | Business Combinations | During the year the issuer acquired several businesses. The firm selected for testing controls that included the issuer's review of the business combinations. The firm did not evaluate the specific review procedures that the control owners performed over the appropriateness of the accounting treatment the fair value of the acquired intangible assets and the allocation of the purchase price. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | Significant risk |
| 6 | Business Combinations | The firm's approach for substantively testing the fair value of the intangible assets and goodwill was to test the issuer's process and the firm engaged an external specialist to evaluate the reasonableness of the assumptions developed by the company's specialist and the appropriateness of the methods used by the company's specialist. The firm did not sufficiently test the fair value of the intangible assets and goodwill because it did not identify that the auditor-engaged specialist did not evaluate (1) the reasonableness of the significant assumptions and (2) whether the method(s) used by the company's specialist were appropriate under the circumstances taking into account the requirements of the applicable financial reporting framework. (AS 1105.A8b and .A8c; AS 1210.09 and .12) Both financial statement and ICFR audits | AS 1105.A8b; AS 1105.A8c; AS 1210.9; AS 1210.12 | Significant risk |
Issuer B1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | During the year the issuer recorded revenue net of sales discounts. The firm did not perform any substantive procedures to test sales discounts including the related disclosures. (AS 2301.08 and .13) Financial statement audit only | AS 2301.8; AS 2301.13 |