- Inspection year
- 2022
- Report date
- 28-Sep-2023
- PCAOB release
- 104-2023-170
- Audits reviewed
- 3
- Audits w/ Part I.A deficiencies
- 3
- Part I.A deficiency rate
- 100%
- Part I.A deficiencies
- 15
- Part I.B deficiencies
- 8
- Report
- View PDF ↗
Deficiencies (15)
Grouped by issuer and in the same order as the PCAOB report, so each item ties back directly to the source.
Issuer A13 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The issuer recognized revenue from finance leases. The firm did not identify and evaluate a departure from IFRS related to the issuer's exclusion of the present value of the exercise price of purchase options in determining the lease payments as required by IFRS 16 Leases. (AS 2810.30) In connection with our review the issuer reevaluated its accounting for revenue from finance leases and determined a misstatement existed that had not been previously identified. The issuer did not file an amended Form 20-F or Form 6-K indicating that its previously issued financial statements should not be relied on. Instead the issuer corrected this misstatement in a subsequent filing by revising the prior-period financial statements. Financial statement audit only | AS 2810.30 | |
| 2 | Revenue | The firm did not identify and evaluate a departure from IFRS related to the issuer's incorrect disclosure that all proceeds from government grants were included in vehicle sales revenue when certain of those proceeds were included in finance lease revenue. (AS 2810.30 and .31) In connection with our review the issuer reevaluated its disclosures regarding government grants and determined that misstatements existed in disclosures that had not been previously identified. The issuer did not file an amended Form 20-F or Form 6-K indicating that its previously issued financial statements should not be relied on. Instead the issuer corrected these misstatements in a subsequent filing by revising the disclosures. Financial statement audit only | AS 2810.30; AS 2810.31 | |
| 3 | Revenue | The firm did not perform procedures to evaluate the disclosures of vouchers from government programs as 'government grants' that may have suggested that the 'grants' were for the economic benefit of the issuer and that IAS 20 Accounting for Government Grants and Disclosure of Government Assistance was applicable. (AS 2301.08) In connection with our review the issuer reevaluated its disclosures regarding government grants and determined that misstatements existed in disclosures that had not been previously identified. The issuer did not file an amended Form 20-F or Form 6-K indicating that its previously issued financial statements should not be relied on. Instead the issuer corrected these misstatements in a subsequent filing by revising the disclosures. Financial statement audit only | AS 2301.8 | |
| 4 | Related Accounts | The firm did not perform sufficient procedures to test revenue recognized based on vouchers from government programs because it did not obtain evidence that these vouchers were approved by the government or received by the issuer. (AS 2301.08 and .13) Financial statement audit only | AS 2301.8; AS 2301.13 | |
| 5 | Related Accounts | The firm did not perform procedures to test the market interest rate used to determine the present value of lease payments beyond comparing it to the rate used by the issuer in the prior year. (AS 2301.08 and .13) Financial statement audit only | AS 2301.8; AS 2301.13 | |
| 6 | Related Accounts | The firm did not perform procedures to test the installation dates for certain of the leases entered into during the year. (AS 2301.08 and .13) Financial statement audit only | AS 2301.8; AS 2301.13 | |
| 7 | Related Accounts | In its testing of vehicle sales revenue the firm obtained evidence that certain vehicles may not have been delivered until after year end. The firm did not evaluate this evidence beyond concluding that it was shortly after year end. (AS 2301.08 and .13; AS 2810.03) Financial statement audit only | AS 2301.8; AS 2301.13; AS 2810.3 | |
| 8 | Inventory | To substantively test inventory the firm rolled forward the inventory balance from prior year and performed procedures to test the activity during the year including confirming purchases of inventory. The firm received an electronic response to one of its confirmation requests related to the purchase of inventory that was received from a different email address than the contact email address included in the issuer's contracts with the vendor. The firm did not consider performing procedures to verify the source of the response. (AS 2310.29) Financial statement audit only | AS 2310.29 | |
| 9 | Inventory | To substantively test inventory the firm rolled forward the inventory balance from prior year and performed procedures to test the activity during the year including confirming purchases of inventory. The firm did not test the accuracy of the cost of certain inventory that was sold during the year. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 10 | Inventory | Outside custodians held certain of the issuer's inventory. The firm did not perform sufficient procedures to test the existence of this inventory because it limited its procedures to the roll forward described above and positive confirmation requests with the outside custodians. Further the firm did not perform procedures to compare the quantities of inventory included in the confirmation responses to the quantities in the issuer's records. (AS 2301.08; AS 2510.14) Financial statement audit only | AS 2301.8; AS 2510.14 | |
| 11 | Inventory | The firm did not perform sufficient procedures to test whether one type of inventory was stated at the lower of cost or net realizable value because the firm did not consider estimated costs of completion and estimated costs necessary to make the sale. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 12 | Inventory | For a second type of inventory the firm did not perform procedures to test whether the inventory was stated at the lower of cost or net realizable value beyond concluding that although the inventory had not yet been sold it expected the sales price to be higher than similar inventory given it was physically bigger. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 13 | Inventory | With respect to a third type of inventory in testing whether the inventory was stated at the lower of cost or net realizable value the firm did not (1) test the accuracy of the cost of the inventory beyond comparing it to the amounts relieved from inventory as part of its roll forward procedures described above (2) evaluate the effect of differences in asset types beyond consideration of physical size on the selling prices used in its analysis and (3) evaluate the ongoing availability of vouchers from government programs in its determination of the selling prices used in its analysis. (AS 2301.08) Financial statement audit only | AS 2301.8 |
Issuer B1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The issuer recognized certain revenue on the percentage-of-completion basis. To test this revenue the firm selected a sample of open projects. For the selected open projects the firm did not perform procedures beyond obtaining issuer-produced documentation to test the transaction price at contract inception. (CAS 330.6) Financial statement audit only | Other Non-PCAOB Standards |
Issuer C1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Investment Securities | The firm's approach for substantively testing the fair value of investment securities was to test the issuer's process. The firm used a pricing tool it developed to recalculate the fair value of certain investment securities. The firm did not test the functionality of this pricing tool. (AS 2501.10) Financial statement audit only | AS 2501.10 |