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BDO RCS Auditores Independentes Sociedade Simples Ltda.
Brazil · BDO International Limited · Triennially Inspected
- Inspection year
- 2022
- Report date
- 16-Nov-2023
- PCAOB release
- 104-2024-006
- Audits reviewed
- 3
- Audits w/ Part I.A deficiencies
- 2
- Part I.A deficiency rate
- 67%
- Part I.A deficiencies
- 19
- Part I.B deficiencies
- 3
- Report
- View PDF ↗
Deficiencies (19)
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 | Revenue | The firm's internal inspection program inspected this audit and reviewed these areas but did not identify the deficiencies below. The issuer used multiple information-technology (IT) systems to initiate process and record transactions related to revenue. In its testing of controls over revenue the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by the IT systems that depended on effective IT general controls (ITGCs). As a result of the deficiencies in the firm's testing of ITGCs the firm's testing of these automated and IT-dependent manual controls was not sufficient. (AS 2201.46) Both financial statement and ICFR audits | AS 2201.46 | Significant risk |
| 2 | Revenue | The firm's internal inspection program inspected this audit and reviewed these areas but did not identify the deficiencies below. The issuer used multiple information-technology (IT) systems to initiate process and record transactions related to revenue. In its testing of controls over revenue the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by the IT systems that depended on effective IT general controls (ITGCs). With respect to change management: The firm selected for testing a change management control over certain IT systems that consisted of the recording of non-emergency changes in the issuer's ticketing system and the review and approval of such changes. The firm did not perform procedures to test or test any controls over the completeness of the population of changes from which it made its selections for testing. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 | Significant risk |
| 3 | Revenue | The firm's internal inspection program inspected this audit and reviewed these areas but did not identify the deficiencies below. The issuer used multiple information-technology (IT) systems to initiate process and record transactions related to revenue. In its testing of controls over revenue the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by the IT systems that depended on effective IT general controls (ITGCs). With respect to developer access: The firm did not identify and test any controls over the ability of developers to develop and migrate changes to the production environment for certain IT systems. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | Significant risk |
| 4 | Revenue | The firm's internal inspection program inspected this audit and reviewed these areas but did not identify the deficiencies below. The issuer used multiple information-technology (IT) systems to initiate process and record transactions related to revenue. In its testing of controls over revenue the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by the IT systems that depended on effective IT general controls (ITGCs). With respect to the firm's testing of other controls including automated and IT-dependent manual controls over the recognition of certain revenue which were affected by the audit deficiencies related to change management and developer access the following additional deficiencies were identified: · For certain controls the firm did not identify and test any controls over the accuracy and completeness of data and reports generated by various IT systems that the control owners used in the operation of the controls. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | Significant risk |
| 5 | Revenue | The firm's internal inspection program inspected this audit and reviewed these areas but did not identify the deficiencies below. The issuer used multiple information-technology (IT) systems to initiate process and record transactions related to revenue. In its testing of controls over revenue the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by the IT systems that depended on effective IT general controls (ITGCs). With respect to the firm's testing of other controls including automated and IT-dependent manual controls over the recognition of certain revenue which were affected by the audit deficiencies related to change management and developer access the following additional deficiencies were identified: · For certain controls the firm did not perform procedures to test or test any controls over the completeness of the populations from which it made its selections for testing. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 | Significant risk |
| 6 | Revenue | The firm's internal inspection program inspected this audit and reviewed these areas but did not identify the deficiencies below. The issuer used multiple information-technology (IT) systems to initiate process and record transactions related to revenue. In its testing of controls over revenue the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by the IT systems that depended on effective IT general controls (ITGCs). With respect to the firm's testing of other controls including automated and IT-dependent manual controls over the recognition of certain revenue which were affected by the audit deficiencies related to change management and developer access the following additional deficiencies were identified: · For certain controls the firm did not test controls over the completeness of data and reports generated by various IT systems that were used in the operation of the controls beyond comparing information from these reports to data from the same reports and/or reviewing emails retained by the control owners. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | Significant risk |
| 7 | Revenue | The firm's internal inspection program inspected this audit and reviewed these areas but did not identify the deficiencies below. The firm used system-generated data to substantively test certain revenue but did not test or sufficiently test controls over the accuracy and completeness of this data. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 | Significant risk |
| 8 | Long-Lived Assets | The firm's internal inspection program inspected this audit and reviewed these areas but did not identify the deficiencies below. The firm's approach for substantively testing the valuation of long-lived assets was to test the issuer's process. The firm did not perform procedures beyond inquiry of management to evaluate the reasonableness of the significant assumptions used by the issuer to evaluate long-lived assets for impairment. (AS 2501.16) Both financial statement and ICFR audits | AS 2501.16 | Significant risk |
| 9 | Journal Entries | The firm's internal inspection program inspected this audit and reviewed these areas but did not identify the deficiencies below. The firm identified manual journal entries that met certain fraud criteria. The firm did not select any of the manual journal entries and other adjustments for testing that met the identified fraud criteria. (AS 2401.61) Both financial statement and ICFR audits | AS 2401.61 |
Issuer B10 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Accounts Receivable | The firm did not perform sufficient substantive procedures to test the existence of accounts receivable because for certain receivables selected for testing the firm limited its procedures to comparing the customer's name date and amount of the receivable to the corresponding tax invoice which was based on sales data provided by the component. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 2 | Accounts Receivable | The firm did not request the confirmation of accounts receivable or document how it overcame the presumption to perform confirmation procedures. (AS 2310.34 and .35) Financial statement audit only | AS 2310.34; AS 2310.35 | |
| 3 | Inventory | The component relied on a specialist that it employed for the measurement of the density of certain inventory and engaged an external specialist to assist in the measurement of the stock volume of certain inventory which were used to calculate the inventory quantity. To test the existence of inventory the firm observed the component's physical inventory counts at select locations and performed procedures to test the rollforward of inventory from the dates in which the inventory was physically counted to year-end using a system-generated report provided by the component. To test the valuation of inventory the firm used certain other system generated reports provided by the component. The following deficiencies were identified: · The firm's observation procedures at the selected locations were not suitable because the firm did not perform any substantive procedures to (1) investigate certain variances identified between the firm's test counts and the component's inventory records; (2) compare certain quantities of inventory measured by the firm to the component's inventory records; and (3) test inventory cut-off at one location. Therefore these observations did not provide sufficient evidence of the quantity of inventory at these locations. (AS 2510.09) Financial statement audit only | AS 2510.9 | |
| 4 | Inventory | The component relied on a specialist that it employed for the measurement of the density of certain inventory and engaged an external specialist to assist in the measurement of the stock volume of certain inventory which were used to calculate the inventory quantity. To test the existence of inventory the firm observed the component's physical inventory counts at select locations and performed procedures to test the rollforward of inventory from the dates in which the inventory was physically counted to year-end using a system-generated report provided by the component. To test the valuation of inventory the firm used certain other system generated reports provided by the component. The following deficiencies were identified: · The firm did not perform substantive procedures to test the density and volume conversion factors used to determine the inventory quantity for certain items selected for testing beyond obtaining the factors from the company's specialists. Further the firm did not perform any procedures to use the work of the company's specialists as audit evidence. (AS 1105.A1 - .A10; AS 2510.09) Financial statement audit only | AS 1105.A1; AS 1105.A10; AS 1105.A2; AS 1105.A3; AS 1105.A4; AS 1105.A5; AS 1105.A6; AS 1105.A7; AS 1105.A8; AS 1105.A9; AS 2510.9 | |
| 5 | Inventory | The component relied on a specialist that it employed for the measurement of the density of certain inventory and engaged an external specialist to assist in the measurement of the stock volume of certain inventory which were used to calculate the inventory quantity. To test the existence of inventory the firm observed the component's physical inventory counts at select locations and performed procedures to test the rollforward of inventory from the dates in which the inventory was physically counted to year-end using a system-generated report provided by the component. To test the valuation of inventory the firm used certain other system generated reports provided by the component. The following deficiencies were identified: · The test intervening transactions between the dates of its observation procedures and year-end the firm selected a sample of transactions related to the purchase and sale of inventory which represented approximately 86% and 28% of total inflows and outflows respectively of the total inventory movement. The samples the firm used to test the inventory movement did not provide sufficient appropriate audit evidence because in planning the samples the firm did not consider the characteristics of the entire population of inventory inflows and outflows and how differences in those characteristics would affect the determination of the number of separate inflow and outflow samples. (AS 2315.16 .23 and .23A) Financial statement audit only | AS 2315.16; AS 2315.23; AS 2315.23A | |
| 6 | Inventory | The component relied on a specialist that it employed for the measurement of the density of certain inventory and engaged an external specialist to assist in the measurement of the stock volume of certain inventory which were used to calculate the inventory quantity. To test the existence of inventory the firm observed the component's physical inventory counts at select locations and performed procedures to test the rollforward of inventory from the dates in which the inventory was physically counted to year-end using a system-generated report provided by the component. To test the valuation of inventory the firm used certain other system generated reports provided by the component. The following deficiencies were identified: · The firm did not perform sufficient substantive procedures to test the intervening transactions it selected for testing because the firm's procedures were limited to agreeing certain information related to the transactions to data provided by the component. (AS 2510.12) Financial statement audit only | AS 2510.12 | |
| 7 | Inventory | The component relied on a specialist that it employed for the measurement of the density of certain inventory and engaged an external specialist to assist in the measurement of the stock volume of certain inventory which were used to calculate the inventory quantity. To test the existence of inventory the firm observed the component's physical inventory counts at select locations and performed procedures to test the rollforward of inventory from the dates in which the inventory was physically counted to year-end using a system-generated report provided by the component. To test the valuation of inventory the firm used certain other system generated reports provided by the component. The following deficiencies were identified: · The firm did not perform any procedures to reconcile the quantities of certain inventory items counted at one location to the quantities of those items in the inventory schedule used to roll the results of the firm's observation procedures forward to year-end. (AS 2510.12) Financial statement audit only | AS 2510.12 | |
| 8 | Inventory | The component relied on a specialist that it employed for the measurement of the density of certain inventory and engaged an external specialist to assist in the measurement of the stock volume of certain inventory which were used to calculate the inventory quantity. To test the existence of inventory the firm observed the component's physical inventory counts at select locations and performed procedures to test the rollforward of inventory from the dates in which the inventory was physically counted to year-end using a system-generated report provided by the component. To test the valuation of inventory the firm used certain other system generated reports provided by the component. The following deficiencies were identified: · The firm did not perform any substantive procedures to test the existence of inventory held at a third-party warehouse. (AS 2510.14) Financial statement audit only | AS 2510.14 | |
| 9 | Inventory | The component relied on a specialist that it employed for the measurement of the density of certain inventory and engaged an external specialist to assist in the measurement of the stock volume of certain inventory which were used to calculate the inventory quantity. To test the existence of inventory the firm observed the component's physical inventory counts at select locations and performed procedures to test the rollforward of inventory from the dates in which the inventory was physically counted to year-end using a system-generated report provided by the component. To test the valuation of inventory the firm used certain other system generated reports provided by the component. The following deficiencies were identified: · The firm did not perform any substantive procedures to test the cost of raw materials inventory. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 10 | Inventory | The component relied on a specialist that it employed for the measurement of the density of certain inventory and engaged an external specialist to assist in the measurement of the stock volume of certain inventory which were used to calculate the inventory quantity. To test the existence of inventory the firm observed the component's physical inventory counts at select locations and performed procedures to test the rollforward of inventory from the dates in which the inventory was physically counted to year-end using a system-generated report provided by the component. To test the valuation of inventory the firm used certain other system generated reports provided by the component. The following deficiencies were identified: · The firm did not perform any procedures to test or test any controls over the completeness and/or accuracy of certain data or reports used in its substantive testing of inventory. (AS 1105.10) Financial statement audit only | AS 1105.10 |