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Ernst & Young LLP
United States · Ernst & Young Global Limited · Annually Inspected
- Inspection year
- 2022
- Report date
- 08-Dec-2023
- PCAOB release
- 104-2024-033
- Audits reviewed
- 54
- Audits w/ Part I.A deficiencies
- 25
- Part I.A deficiency rate
- 46%
- Part I.A deficiencies
- 116
- Part I.B deficiencies
- 11
- Report
- View PDF ↗
Deficiencies (116)
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 multiple information-technology (IT) systems to initiate process and/or record transactions related to revenue and the related accounts receivable investment securities and cash. 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 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 | The issuer used multiple information-technology (IT) systems to initiate process and/or record transactions related to revenue and the related accounts receivable investment securities and cash. With respect to change management: · For certain IT systems the firm selected for testing controls that included the issuer's review of changes to these IT systems. For certain of these IT systems 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. Further the firm did not determine whether the control owners possessed the necessary competence to perform these controls. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 3 | Accounts Receivable | The issuer used multiple information-technology (IT) systems to initiate process and/or record transactions related to revenue and the related accounts receivable investment securities and cash. With respect to change management: · For another IT system the firm selected for testing controls over change management but did not perform procedures to test or test any controls over the completeness of the population of items from which it selected its samples for testing. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 | |
| 4 | Accounts Receivable | The issuer used multiple information-technology (IT) systems to initiate process and/or record transactions related to revenue and the related accounts receivable investment securities and cash. With respect to user access: · The issuer used tools to manage user access to certain IT systems. The firm selected for testing controls over user access for these IT systems but did not test whether user access to certain of these IT systems was appropriately granted based on the permissions defined in these tools. (AS 2201.44) Both financial statement and ICFR audits | AS 2201.44 | |
| 5 | Accounts Receivable | The issuer used multiple information-technology (IT) systems to initiate process and/or record transactions related to revenue and the related accounts receivable investment securities and cash. With respect to user access: · The firm selected for testing controls that included the issuer's review of administrative access to certain tools the issuer used to manage access to certain IT systems. The firm did not perform procedures to assess the control owners' (1) determination of whether administrative access to these tools was appropriate and (2) evaluation of certain users' access. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 6 | Accounts Receivable | The firm selected for testing certain automated controls that the issuer used to process and record revenue transactions. The firm did not sufficiently test these controls because the firm did not test whether these controls were designed to address and/or operated as designed for each relevant processing alternative. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 7 | Accounts Receivable | The firm selected for testing certain other controls that the issuer used to process and record revenue transactions. The firm did not identify and test any controls over the accuracy and completeness of certain data used in the operation of these controls. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 8 | Accounts Receivable | As a result of the firm's control testing deficiencies the firm did not perform sufficient substantive procedures over revenue and the related accounts receivable as follows: · The firm did not perform sufficient procedures to test or sufficiently test controls over the accuracy and completeness of certain system-generated data or reports the firm used (1) to make its selections to test certain controls or (2) in its substantive testing. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 | |
| 9 | Accounts Receivable | As a result of the firm's control testing deficiencies the firm did not perform sufficient substantive procedures over revenue and the related accounts receivable as follows: · The sample size the firm used in certain of its substantive procedures to test accounts receivable was 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 |
Issuer B7 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Deferred Revenue | The issuer used an IT system to retain certain data related to revenue and deferred revenue. The firm tested certain IT-dependent manual controls that used data from this IT system. As a result of the deficiencies in the firm's testing of controls the firm's testing of these IT-dependent manual controls was not sufficient. (AS 2201.46) Both financial statement and ICFR audits | AS 2201.46 | |
| 2 | Deferred Revenue | The issuer used an IT system to retain certain data related to revenue and deferred revenue. The firm did not identify and test any controls that addressed the risk that inappropriate changes could be made to the data in this IT system. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 3 | Deferred Revenue | The issuer used an IT system to retain certain data related to revenue and deferred revenue. The firm selected for testing a control that included the issuer's review of the configuration of the tool the issuer used to transfer data into this IT system. The firm did not evaluate the specific review procedures that the control owners performed to assess the configuration of this tool. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 4 | Deferred Revenue | The issuer used an IT system to retain certain data related to revenue and deferred revenue. The firm selected for testing a control that included the issuer's review of the configuration of the tool the issuer used to transfer data into this IT system. In evaluating the design of this control the firm did not assess whether the issuer's review occurred with sufficient frequency to address the risks of material misstatement. (AS 2201.42) Both financial statement and ICFR audits | AS 2201.42 | |
| 5 | Deferred Revenue | For certain revenue and deferred revenue the firm did not perform procedures to test or sufficiently test controls over the accuracy and/or completeness of certain system-generated data or reports the firm used in its substantive testing including substantive analytical procedures. (AS 1105.10; AS 2305.16) Both financial statement and ICFR audits | AS 1105.10; AS 2305.16 | |
| 6 | Deferred Revenue | Certain of the issuer's revenue arrangements included multiple performance obligations. The issuer allocated the total transaction price for each of these arrangements to the separate performance obligations based on the issuer's estimate of the relative standalone selling prices. The firm performed substantive procedures to test the accuracy of certain issuer-produced data the firm used in its testing of the relative standalone selling prices. The sample sizes the firm used in these substantive procedures were smaller than the ones the firm determined necessary to provide sufficient appropriate audit evidence. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 | |
| 7 | Deferred Revenue | The issuer recognized certain of this revenue based on the date when electronic delivery occurred. The firm did not identify and test any controls over the accuracy of these delivery dates. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 |
Issuer C6 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Accounts Receivable | With respect to three of the issuer's business units the following deficiency was identified: The firm's testing of certain automated controls over revenue and accounts receivable was not sufficient because the firm did not test the configuration or programming of these controls or perform other procedures that would have provided sufficient appropriate audit evidence that these controls were designed and operating effectively. (AS 2201.46) Both financial statement and ICFR audits | AS 2201.46 | |
| 2 | Accounts Receivable | For two of these business units the firm selected for testing a control that included the issuer's reviews of adjustments to the contract prices that were used to recognize revenue. The following deficiency was identified: · For the first business unit when evaluating the design of the control the firm did not evaluate (1) the criteria the control owners used to identify items for follow-up and (2) the number of items the control owner reviewed to assess whether it was sufficient to address the risk of material misstatement. (AS 2201.42) Both financial statement and ICFR audits | AS 2201.42 | |
| 3 | Accounts Receivable | For two of these business units the firm selected for testing a control that included the issuer's reviews of adjustments to the contract prices that were used to recognize revenue. The following deficiency was identified: · For the second business unit the firm did not identify and test any controls over the completeness of the report the control owners used in the operation of this control. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 4 | Accounts Receivable | For two of these business units the firm selected for testing controls over contract pricing but did not perform any substantive procedures to test or test any controls over the completeness of the population of items from which it selected its samples for testing. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 | |
| 5 | Accounts Receivable | The sample size the firm used in certain of its substantive procedures to test accounts receivable was too small to provide sufficient appropriate audit evidence because these procedures were designed based on a level of control reliance that was not supported due to the deficiencies in the firm's control testing discussed above. (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 | |
| 6 | Accounts Receivable | 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 firm's approach to addressing the reliability of the audit evidence obtained from this type of analysis was dependent upon the firm's tests of details of certain data underlying the analysis. The sample sizes the firm used in certain of these tests of details were smaller than the ones the firm determined necessary for these procedures. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 |
Issuer D8 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Inventory | The issuer used multiple IT systems to initiate process and record transactions related to this inventory. In its testing of controls over this account the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by these IT systems. The firm did not identify and test any controls that addressed the risk that unauthorized changes were made to the databases that supported certain of these systems. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 2 | Inventory | The issuer used multiple IT systems to initiate process and record transactions related to this inventory. In its testing of controls over this account the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by these IT systems. The firm did not identify and test any controls that addressed the risk that unauthorized changes were made to the databases that supported certain of these systems. As a result of this deficiency 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 | |
| 3 | Inventory | The firm selected for testing controls over the transfers of data between certain of the issuer's inventory systems and the general ledger. The firm did not identify and test any controls over the accuracy and completeness of certain reports used in the operation of these controls. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 4 | Inventory | The firm selected for testing certain automated controls over this inventory. The firm's testing of only one instance of these automated controls was not sufficient because the firm did not test the programming of these controls or perform other procedures that would have provided sufficient appropriate audit evidence that these controls were designed and operating effectively. (AS 2201.46) Both financial statement and ICFR audits | AS 2201.46 | |
| 5 | Inventory | As a result of the firm's control testing deficiencies the firm did not perform sufficient substantive procedures over this inventory as follows: · The firm's substantive procedures to test this inventory included substantive analytical procedures. The firm established its thresholds for investigating differences based on a level of control reliance that was not supported. As a result the thresholds that the firm used did not provide the desired level of assurance that misstatements that could have been material would be identified. (AS 2301.16 .18 and .37; AS 2305.20) Both financial statement and ICFR audits | AS 2301.16; AS 2301.18; AS 2301.37; AS 2305.20 | |
| 6 | Inventory | As a result of the firm's control testing deficiencies the firm did not perform sufficient substantive procedures over this inventory as follows: · The firm did not perform sufficient procedures to test or sufficiently test controls over the accuracy and completeness of certain system-generated data or reports the firm used in its substantive testing including substantive analytical procedures. (AS 1105.10; AS 2305.16) Both financial statement and ICFR audits | AS 1105.10; AS 2305.16 | |
| 7 | Long-Lived Assets | The issuer used cash-flow forecasts to evaluate whether any impairment indicators existed for certain long-lived assets. The firm selected for testing two controls that consisted of the issuer's reviews of (1) the methodology it used to prepare these cash-flow forecasts and (2) certain of these cash-flow forecasts. The firm did not evaluate the specific review procedures that the control owners performed to assess the reasonableness of certain assumptions the issuer used in these cash-flow forecasts. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 8 | Long-Lived Assets | The issuer used cash-flow forecasts to evaluate whether any impairment indicators existed for certain long-lived assets. The firm selected for testing two controls that consisted of the issuer's reviews of (1) the methodology it used to prepare these cash-flow forecasts and (2) certain of these cash-flow forecasts. When evaluating the design of the second control the firm did not evaluate the number of items the control owner reviewed to assess whether it was sufficient to address the risks of material misstatement. (AS 2201.42) Both financial statement and ICFR audits | AS 2201.42 |
Issuer E10 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Deferred Revenue | With respect to one type of revenue and the related deferred revenue the following deficiency was identified: · The issuer recognized certain of this revenue using contractual rates input into the system the issuer used to recognize revenue. The firm did not identify and test any controls over the accuracy of these contractual rates. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 2 | Deferred Revenue | With respect to one type of revenue and the related deferred revenue the following deficiency was identified: · The firm selected for testing a control over the automated calculation of certain of this revenue. The firm did not test whether this control operated as designed for each relevant processing alternative. (AS 2201.44) Both financial statement and ICFR audits | AS 2201.44 | |
| 3 | Deferred Revenue | With respect to one type of revenue and the related deferred revenue the following deficiency was identified: · The firm selected for testing controls related to the issuer's allocation of certain transactions between this revenue and the related deferred revenue. For two of these controls the firm did not evaluate the specific review procedures that the control owners performed to assess the appropriateness of this allocation. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 4 | Deferred Revenue | With respect to one type of revenue and the related deferred revenue the following deficiency was identified: · The firm selected for testing controls related to the issuer's allocation of certain transactions between this revenue and the related deferred revenue. For a third control the firm did not identify and test any controls over the accuracy and completeness of certain data that the control owner used in the operation of the control. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 5 | Deferred Revenue | With respect to one type of revenue and the related deferred revenue the following deficiency was identified: · The firm's approach for substantively testing this revenue consisted primarily of performing a software-assisted analysis to test the relationships among revenue accounts receivable and cash receipts. The firm's approach to addressing the reliability of the audit evidence obtained from this type of analysis was dependent upon the firm's testing of certain data underlying the analysis. The firm did not sufficiently test this underlying data because for certain cash selections the firm did not evaluate whether the cash receipts related to this revenue. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 | |
| 6 | Deferred Revenue | With respect to a second type of revenue and the related deferred revenue the following deficiency was identified: · The firm selected for testing controls that consisted of the issuer's reviews of this revenue and the related deferred revenue. The firm did not identify and test any controls over the accuracy of certain data and reports that the control owners used in the operation of these controls. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 7 | Deferred Revenue | With respect to a second type of revenue and the related deferred revenue the following deficiency was identified: · The sample size that the firm used in certain of its substantive procedures to test this deferred revenue was too small to provide sufficient appropriate audit evidence because these procedures were designed based on a level of control reliance that was not supported due to the deficiency in the firm's control testing discussed above (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 | |
| 8 | Deferred Revenue | For these two types of deferred revenue the firm used certain reports in its substantive testing but did not perform any procedures to test or test any controls over the accuracy of these reports. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 | |
| 9 | Revenue | With respect to a third type of revenue the firm's substantive procedures included performing substantive analytical procedures. The threshold that the firm established to investigate differences was too high to identify misstatements that could be material either individually or in the aggregate. (AS 2305.20) Both financial statement and ICFR audits | AS 2305.20 | |
| 10 | Revenue | With respect to a third type of revenue the firm's substantive procedures included performing substantive analytical procedures. The firm identified certain differences in excess of the firm's established threshold but did not obtain any evidential matter to corroborate the differences. (AS 2305.21) Both financial statement and ICFR audits | AS 2305.21 |
Issuer F10 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Accounts Receivable | The issuer used multiple IT systems to initiate process and record transactions related to certain revenue and the related accounts receivable. 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 deficiencies in the firm's testing of 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 | The issuer used multiple IT systems to initiate process and record transactions related to certain revenue and the related accounts receivable. · The firm selected for testing controls that consisted of the issuer's reviews of new user access and changes made to its production environment for these IT systems. The number of items the firm selected for testing did not provide sufficient appropriate audit evidence given the frequency with which the control operated. (AS 2201.46) Both financial statement and ICFR audits | AS 2201.46 | |
| 3 | Accounts Receivable | The issuer used multiple IT systems to initiate process and record transactions related to certain revenue and the related accounts receivable. · The firm selected for testing a control over the periodic review of user access for each of these IT systems. The firm did not identify and test any controls over the accuracy and completeness of certain information included in manually prepared spreadsheets that the control owners used in the operation of this control. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 4 | Accounts Receivable | The firm's testing of certain automated controls over this revenue and accounts receivable was not sufficient because the firm did not test the configuration or programming of these controls or perform other procedures that would have provided sufficient appropriate audit evidence that these controls were designed and operating effectively. (AS 2201.46) Both financial statement and ICFR audits | AS 2201.46 | |
| 5 | Revenue | For certain revenue which was affected by the audit deficiencies discussed above the following additional deficiencies related to the firm's testing of controls were identified: · The firm selected for testing controls over certain of this revenue that consisted of the issuer's reviews of financial results. The firm did not evaluate whether the design of these controls was sufficiently precise to detect material misstatements. (AS 2201.42) Both financial statement and ICFR audits | AS 2201.42 | |
| 6 | Revenue | For certain revenue which was affected by the audit deficiencies discussed above the following additional deficiencies related to the firm's testing of controls were identified: · The firm selected for testing three IT-dependent manual controls over the processing of certain customer orders and invoices. For two of these controls the firm did not identify and test any controls over the accuracy and completeness of certain data used in the operation of these controls. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 7 | Revenue | For certain revenue which was affected by the audit deficiencies discussed above the following additional deficiencies related to the firm's testing of controls were identified: · The firm selected for testing three IT-dependent manual controls over the processing of certain customer orders and invoices. For the third control the firm's testing of controls over the accuracy and completeness of a report used in the operation of this control using a sample of only one instance was not sufficient because the firm did not test whether changes to configurations within these controls were subject to effective ITGCs over these IT systems. (AS 2201.46) Both financial statement and ICFR audits | AS 2201.46 | |
| 8 | Revenue | For certain revenue which was affected by the audit deficiencies discussed above the following additional deficiencies related to the firm's testing of controls were identified: · The firm did not test or test any controls over the completeness of the system-generated reports that it used to make selections for testing certain controls over this revenue. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 | |
| 9 | Accounts Receivable | The sample size the firm used in certain of its substantive procedures to test accounts receivable was too small to provide sufficient appropriate audit evidence because these procedures were designed based on a level of control reliance that was not supported due to the deficiencies in the firm's control testing discussed above. (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 | |
| 10 | Revenue | The firm performed substantive procedures to test certain revenue as of an interim date. The firm did not perform sufficient procedures to extend its conclusions from the interim date to year end because it did not (1) compare relevant information about this revenue at the interim date with comparable information at year end to identify amounts that appear unusual and investigate such amounts and (2) perform audit procedures to test the remaining period beyond performing a correlation analysis without testing the underlying data used in this analysis. (AS 2301.45) Both financial statement and ICFR audits | AS 2301.45 |
Issuer G3 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Deferred Revenue | For certain revenue and the related deferred revenue the firm did not identify and test any controls over certain data that the issuer used to determine whether the performance obligation was satisfied before revenue was recognized. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 2 | Deferred Revenue | The firm's approach for substantively testing this revenue and the related deferred revenue included performing a software-assisted analysis to test the relationships among revenue accounts receivable deferred revenue and cash receipts. The firm's approach to addressing the reliability of the audit evidence obtained from this type of analysis was dependent upon the firm's testing of certain data underlying the analysis. The sample the firm tested for the second half of the year was smaller than the one the firm determined necessary for these procedures. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 | |
| 3 | Deferred Revenue | The firm used issuer-produced delivery data in its substantive testing of certain other revenue and the related deferred revenue but did not perform any procedures to test or test any controls over the accuracy and completeness of these data. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 |
Issuer H12 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Debt | The issuer used an IT system to process and record transactions related to inventory and debt. The firm selected for testing a control that consisted of the issuer's reviews of instances where administrative access was granted that allowed the issuer's IT personnel to make changes to this system. The firm did not evaluate the specific review procedures that the control owners performed to assess whether (1) users performed appropriate actions when granted this access and (2) this access was appropriately granted for certain instances selected for testing. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 2 | Debt | The issuer used an IT system to process and record transactions related to inventory and debt. The firm selected for testing a control that consisted of the issuer's reviews of instances where administrative access was granted that allowed the issuer's IT personnel to make changes to this system. The number of instances selected for testing did not provide sufficient appropriate audit evidence given the frequency with which the control operated. (AS 2201.46) Both financial statement and ICFR audits | AS 2201.46 | |
| 3 | Debt | In its testing of controls over this inventory and debt the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by this IT system. As a result of the deficiencies in the firm's testing of ITGCs discussed above 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 | |
| 4 | Inventory | The issuer performed cycle counts of certain inventory held at one of its warehouses. The following deficiencies were identified: · The firm did not identify and test any controls that addressed whether all of this inventory was assigned a frequency to be counted. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 5 | Inventory | The issuer performed cycle counts of certain inventory held at one of its warehouses. The following deficiencies were identified: · The firm selected for testing a control that included the issuer's review and approval of count frequencies that had been assigned to this inventory. The firm did not identify and test any controls that addressed whether these approved count frequencies were entered into the system accurately and completely. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 6 | Inventory | The issuer performed cycle counts of certain inventory held at one of its warehouses. The following deficiencies were identified: · The firm selected for testing a control that included the issuer's review and approval of count frequencies that had been assigned to this inventory. The firm did not identify and test any controls over the accuracy and completeness of certain system-generated reports used in the operation of this control. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 7 | Inventory | The issuer performed cycle counts of certain inventory held at one of its warehouses. The following deficiencies were identified: · The firm selected for testing an automated control over the selection of items for cycle counting this inventory. The firm did not test whether the system was appropriately configured to achieve the frequency schedule established by management. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 8 | Inventory | The firm selected for testing a control that included the issuer's cycle-count procedures for certain inventory held at other locations. The firm did not identify and test any controls over the accuracy and completeness of a system-generated report used in the operation of this control. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 9 | Inventory | As a result of the firm's control testing deficiencies the firm did not perform sufficient other audit procedures as follows: · The firm did not obtain sufficient appropriate audit evidence that the cycle-count procedures the issuer used for certain inventory 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) Both financial statement and ICFR audits | AS 2510.11 | |
| 10 | Inventory | As a result of the firm's control testing deficiencies the firm did not perform sufficient other audit procedures as follows: · The sample sizes the firm used in certain of its substantive procedures to test inventory 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 | |
| 11 | Inventory | As a result of the firm's control testing deficiencies the firm did not perform sufficient other audit procedures as follows: · The firm did not perform sufficient procedures to test or sufficiently test controls over the accuracy and completeness of certain system-generated data or reports the firm used in its substantive testing. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 | |
| 12 | Inventory | The firm's substantive procedures to test the unit cost of certain inventory included selecting a sample of inventory items for testing. For certain items in its sample the firm did not perform any procedures to test the cost of the raw materials included in the unit costs. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 |
Issuer I3 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The issuer's revenue included revenue recognized from contracts over time based on costs incurred to date relative to total estimated costs to complete. The following deficiencies were identified: · The firm selected for testing controls that consisted of the issuer's reviews of revenue including the estimated costs to complete. The firm did not identify and test any controls over the accuracy and/or completeness of certain data that the control owners used in the operation of these controls. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 2 | Revenue | The issuer's revenue included revenue recognized from contracts over time based on costs incurred to date relative to total estimated costs to complete. The following deficiencies were identified: · The firm used certain data in its substantive testing of revenue but did not perform any procedures to test or test any controls over the accuracy and/or completeness of these data. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 | |
| 3 | Revenue | The issuer's revenue included revenue recognized from contracts over time based on costs incurred to date relative to total estimated costs to complete. The following deficiencies were identified: · The firm's sample size for testing revenue was too small to provide sufficient appropriate audit evidence because in determining the sample size the firm did not take into account tolerable misstatement the allowable risk of incorrect acceptance and the characteristics of the population. (AS 2315.16 .23 and .23A) Both financial statement and ICFR audits | AS 2315.16; AS 2315.23; AS 2315.23A |
Issuer J7 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Accounts Receivable | The firm selected for testing certain automated controls that the issuer used to process and record transactions related to revenue deferred revenue and accounts receivable. The firm did not sufficiently test these controls because the firm did not test the programming of these controls or perform other procedures that would have provided sufficient appropriate evidence that these controls were designed and operating effectively. (AS 2201.46) Both financial statement and ICFR audits | AS 2201.46 | |
| 2 | Accounts Receivable | The firm selected for testing certain automated controls that the issuer used to process and record transactions related to revenue deferred revenue and accounts receivable. For certain of these controls the firm did not test whether these controls operated as designed for each relevant processing alternative. (AS 2201.44) Both financial statement and ICFR audits | AS 2201.44 | |
| 3 | Business Combinations | During the year the issuer acquired a business. The following deficiency was identified: · The firm selected for testing controls that consisted of the issuer's reviews of the fair values of assets acquired and liabilities assumed including the assumptions and data the issuer used. The firm did not evaluate the specific review procedures that the control owners performed to assess (1) the fair values of certain tangible assets acquired and liabilities assumed and (2) the reasonableness of certain of these assumptions. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 4 | Business Combinations | During the year the issuer acquired a business. The following deficiency was identified: · The firm selected for testing controls that consisted of the issuer's reviews of the fair values of assets acquired and liabilities assumed including the assumptions and data the issuer used. The firm did not test the aspects of one of these controls that addressed the accuracy and completeness of certain of these data. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 5 | Business Combinations | During the year the issuer acquired a business. The following deficiency was identified: · The firm's approach for substantively testing the fair values of these acquired intangible assets was to test the issuer's process. The firm did not sufficiently evaluate the reasonableness of certain of the significant assumptions the issuer used because the firm did not evaluate whether these assumptions were consistent with certain industry factors and the issuer's historical experience. (AS 2501.16) Both financial statement and ICFR audits | AS 2501.16 | |
| 6 | Business Combinations | During the year the issuer acquired a business. The following deficiency was identified: · The firm's approach for substantively testing the fair values of these acquired intangible assets was to test the issuer's process. The firm did not perform any procedures to test the accuracy and completeness of certain issuer-produced data that the company's specialist used to determine the fair value of certain of these acquired intangible assets. (AS 1105.A8a) Both financial statement and ICFR audits | AS 1105.A8a | |
| 7 | Inventory | The firm selected for testing a control that consisted of the issuer's review of capitalized cost variances for certain inventory. The firm did not identify and test any controls over the accuracy of certain data that the control owners used in the operation of this control. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 |
Issuer K4 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Business Combinations | During the year the issuer acquired multiple businesses and determined the fair value of certain acquired intangible assets using cash-flow forecasts. The firm's approach for substantively testing the valuation of these acquired intangible assets was to test the issuer's process. The following deficiency was identified: · For one of these acquired intangible assets the firm did not evaluate the reasonableness of a significant assumption that the issuer used in these cash-flow forecasts. (AS 2501.16) Financial statement audit only | AS 2501.16 | Significant risk |
| 2 | Business Combinations | During the year the issuer acquired multiple businesses and determined the fair value of certain acquired intangible assets using cash-flow forecasts. The firm's approach for substantively testing the valuation of these acquired intangible assets was to test the issuer's process. The following deficiency was identified: · For another of these acquired intangible assets the firm did not test the accuracy and completeness of certain issuer-produced data that a company's specialist used to develop a significant assumption that was used in these cash-flow forecasts. (AS 1105.A8a) Financial statement audit only | AS 1105.A8a | Significant risk |
| 3 | Business Combinations | The firm's substantive procedures to test certain acquired deferred revenue consisted of selecting a sample of transactions for testing. The firm's sample was too small to provide sufficient appropriate audit evidence because in determining the sample size the firm did not take into account tolerable misstatement the allowable risk of incorrect acceptance and the characteristics of the population. (AS 2315.16 .23 and .23A) Financial statement audit only | AS 2315.16; AS 2315.23; AS 2315.23A | Significant risk |
| 4 | Revenue | The firm did not identify and evaluate that the issuer's omission of the disclosure of revenue recognized from contracts with customers separately from its other sources of revenue was not in conformity with FASB ASC Topic 606 Revenue from Contracts with Customers. (AS 2810.30 and .31) In connection with our review the issuer reevaluated its disclosure of revenue recognized from contracts with customers and determined a disclosure was omitted. The issuer did not file an amended Form 10-K or Form 8-K indicating that its previously issued financial statements should not be relied on. Instead the issuer corrected this omission in a subsequent filing. Financial statement audit only | AS 2810.30; AS 2810.31 |
Issuer L10 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Inventory | The issuer used an IT system to initiate process and record transactions related to revenue and inventory at one of the issuer's locations. 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 this IT system. The firm selected for testing an ITGC that consisted of the issuer's review of changes made to this IT system. The firm did not evaluate the specific review procedures that the control owner performed to determine which of these changes required approval prior to implementation into the production environment. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 2 | Inventory | The issuer used an IT system to initiate process and record transactions related to revenue and inventory at one of the issuer's locations. 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 this IT system. The firm selected for testing an ITGC that consisted of the issuer's review of changes made to this IT system. The firm did not evaluate the specific review procedures that the control owner performed to determine which of these changes required approval prior to implementation into the production environment. As a result of this deficiency 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 | |
| 3 | Revenue | The issuer used multiple IT systems to initiate process and record transactions related to revenue at certain of the issuer's locations. The following deficiencies were identified: · The firm did not identify and test any controls over the accuracy of certain price and quantity information that was entered into these IT systems and used to generate customer invoices and recognize revenue. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 4 | Revenue | The issuer used multiple IT systems to initiate process and record transactions related to revenue at certain of the issuer's locations. The following deficiencies were identified: · The firm selected for testing controls that consisted of the issuer's review and approval of changes to prices maintained in these IT systems. The firm did not evaluate the specific review procedures that the control owner performed to assess the appropriateness of certain of these price changes. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 5 | Revenue | The issuer used multiple IT systems to initiate process and record transactions related to revenue at certain of the issuer's locations. The following deficiencies were identified: · The firm selected for testing controls that consisted of the issuer's review and approval of changes to prices maintained in these IT systems. The number of price changes the firm selected for testing did not provide sufficient appropriate audit evidence given the frequency with which the control operated. (AS 2201.46) Both financial statement and ICFR audits | AS 2201.46 | |
| 6 | Revenue | The issuer used multiple IT systems to initiate process and record transactions related to revenue at certain of the issuer's locations. The following deficiencies were identified: · For certain of these locations the firm selected for testing an automated control over the generation of customer invoices. The firm did not test the programming of this automated control or perform other procedures that would have provided sufficient appropriate audit evidence that the control was designed and operating effectively. (AS 2201.46) Both financial statement and ICFR audits | AS 2201.46 | |
| 7 | Revenue | The sample size that the firm used in certain of its substantive procedures to test this revenue was too small to provide sufficient appropriate audit evidence because these procedures were designed based on a level of control reliance that was not supported due to the deficiencies in the firm's control testing discussed above. (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 | |
| 8 | Revenue | The issuer recorded revenue at certain of the issuer's locations net of customer discounts rebates and other deductions. The following deficiencies were identified: · For certain of these locations the firm did not perform any substantive procedures to test these sales deductions. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 | |
| 9 | Revenue | The issuer recorded revenue at certain of the issuer's locations net of customer discounts rebates and other deductions. The following deficiencies were identified: · For another of these locations the firm's substantive procedures to test these sales deductions consisted of substantive analytical procedures. The firm used data to develop its expectations but did not test or test any controls over the accuracy and completeness of certain of these data. (AS 2305.16) Both financial statement and ICFR audits | AS 2305.16 | |
| 10 | Revenue | The issuer recorded revenue at certain of the issuer's locations net of customer discounts rebates and other deductions. The following deficiencies were identified: · For another of these locations the firm's substantive procedures to test these sales deductions consisted of substantive analytical procedures. The firm identified differences in excess of the firm's established threshold but did not evaluate these differences beyond inquiring of management. (AS 2305.21) Both financial statement and ICFR audits | AS 2305.21 |
Issuer M2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | For certain revenue the issuer used a service organization to fulfill certain customer orders and the remaining customer orders were fulfilled by the issuer. The issuer recognized this revenue based on the date when delivery occurred. The following deficiency was identified: · The firm did not identify and test any controls over these delivery dates. (AS 2201.39 and .B19) Both financial statement and ICFR audits | AS 2201.39; AS 2201.B19 | |
| 2 | Revenue | For certain revenue the issuer used a service organization to fulfill certain customer orders and the remaining customer orders were fulfilled by the issuer. The issuer recognized this revenue based on the date when delivery occurred. The following deficiency was identified: · The firm used these delivery dates in certain of its substantive procedures to test this revenue. The firm did not perform substantive procedures to test these delivery dates beyond comparing the dates to system-generated reports. (AS 2301.08 and .13) Both financial statement and ICFR audits | AS 2301.8; AS 2301.13 |
Issuer N3 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Allowance for Credit/Loan Losses | For loans that were collectively evaluated for impairment the issuer determined the qualitative reserve component of the ACL using qualitative factors. With respect to one of these qualitative factors the following deficiency was identified: · The firm selected for testing controls that consisted of the issuer's reviews of the ACL including an assessment of this qualitative factor for reasonableness. The firm did not evaluate the specific review procedures that the control owner performed to assess the reasonableness of the significant assumptions the issuer used to develop this qualitative factor. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 2 | Allowance for Credit/Loan Losses | For loans that were collectively evaluated for impairment the issuer determined the qualitative reserve component of the ACL using qualitative factors. With respect to one of these qualitative factors the following deficiency was identified: · The firm's approach for substantively testing the ACL was to test the issuer's process. The firm did not evaluate whether the issuer had a reasonable basis for the significant assumptions the issuer used to develop this qualitative factor. (AS 2501.16) Both financial statement and ICFR audits | AS 2501.16 | |
| 3 | Allowance for Credit/Loan Losses | The issuer assigned certain loans a loan risk rating which was an important input in estimating the quantitative component of the ACL. The firm's substantive procedures to test the reasonableness of the assigned loan risk rating for these loans included selecting a sample of loans for testing. The firm's sample size was too small to provide sufficient appropriate audit evidence because in determining the sample size the firm did not take into account tolerable misstatement the allowable risk of incorrect acceptance and the characteristics of the population. (AS 2315.16 .23 and .23A) Both financial statement and ICFR audits | AS 2315.16; AS 2315.23; AS 2315.23A |
Issuer O3 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Investment Securities | The issuer recorded its investment securities and related disclosures based on data it obtained from a service organization. The firm selected for testing controls that included the issuer's comparisons of its recorded investment securities to these data. The firm did not identify and test any controls over the accuracy and completeness of these data. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 2 | Investment Securities | The firm did not perform any substantive procedures to evaluate the appropriateness of the issuer's categorization of these securities within the fair value hierarchy set forth in FASB ASC Topic 820 Fair Value Measurement. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 | |
| 3 | Investment Securities | For investment securities tested at an interim date the firm did not perform any procedures to extend its conclusions from the interim date to year end. (AS 2301.45) Both financial statement and ICFR audits | AS 2301.45 |
Issuer P2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The issuer recognized certain revenue based on rates automatically applied to various transaction types and volumes. The firm selected for testing a control that consisted of the issuer's reviews of changes to these rates. The firm did not test the aspect of this control that addressed whether all applicable rate changes were made and appropriately applied to the corresponding transaction types and volumes. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 2 | Revenue | The sample size the firm used in certain of its substantive procedures to test this revenue was too small to provide sufficient appropriate audit evidence because these procedures were designed based on a level of control reliance that was not supported due to the deficiency in the firm's control testing discussed above. (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 |
Issuer Q3 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Business Combinations | During the year the issuer acquired a business. The issuer accounted for an acquired investment using the equity method and determined the fair value of certain acquired intangible assets using cash-flow forecasts. The following deficiency was identified: · The firm selected for testing controls over the accounting for this business combination which included the issuer's review of assumptions used in these cash-flow forecasts. The firm did not evaluate the specific review procedures the control owner performed to assess (1) the appropriateness of the accounting for this investment and certain acquired assets and (2) the reasonableness of certain of these assumptions. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 2 | Business Combinations | During the year the issuer acquired a business. The issuer accounted for an acquired investment using the equity method and determined the fair value of certain acquired intangible assets using cash-flow forecasts. The following deficiency was identified: · The firm's approach for substantively testing the valuation of these acquired intangible assets was to test the issuer's process. The firm did not perform any procedures to evaluate the reasonableness of certain significant assumptions used in these cash-flow forecasts. (AS 2501.16) Both financial statement and ICFR audits | AS 2501.16 | |
| 3 | Business Combinations | During the year the issuer acquired a business. The issuer accounted for an acquired investment using the equity method and determined the fair value of certain acquired intangible assets using cash-flow forecasts. The following deficiency was identified: · The firm did not perform any procedures to evaluate whether the accounting for this acquired investment and certain acquired assets was in conformity with FASB ASC Topic 323 Investments – Equity Method and Joint Ventures and FASB ASC Topic 970 Real Estate – General. Further the firm did not perform any substantive procedures to test the existence of these acquired assets. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 |
Issuer R3 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Leases | During the year the issuer identified misstatements in its accounting for certain leases and control deficiencies associated with these misstatements. The following audit deficiency was identified: · The firm did not evaluate the severity of these control deficiencies individually or in combination to determine whether they represented a material weakness. (AS 2201.62) Both financial statement and ICFR audits | AS 2201.62 | |
| 2 | Leases | During the year the issuer identified misstatements in its accounting for certain leases and control deficiencies associated with these misstatements. The following audit deficiency was identified: · The firm performed substantive procedures to test certain of these misstatements but did not test or test any controls over the completeness of the lease data that the issuer used to calculate these misstatements. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 | |
| 3 | Leases | The sample sizes the firm used in certain of its substantive procedures to test leases 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 due to the deficiency in the firm's control testing discussed above. (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 |
Issuer S2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Leases | The firm's internal inspection program inspected this audit and reviewed this area but did not identify the deficiency below. The issuer used store-level operating results to evaluate whether any impairment indicators existed for its operating lease right-of-use assets and to perform an impairment analysis. The following deficiency was identified: · The firm selected for testing a control that included the issuer's reviews of the accuracy and completeness of these operating results and this impairment analysis. When evaluating the design of this control the firm did not evaluate the number of items the control owner reviewed to assess whether it was sufficient to address the risks of material misstatement. Further the firm did not identify that the control owner did not assess whether these operating results were accurately entered into this impairment analysis. (AS 2201.42) Both financial statement and ICFR audits | AS 2201.42 | |
| 2 | Leases | The firm's internal inspection program inspected this audit and reviewed this area but did not identify the deficiency below. The issuer used store-level operating results to evaluate whether any impairment indicators existed for its operating lease right-of-use assets and to perform an impairment analysis. The following deficiency was identified: · The firm used these operating results in its substantive testing of the potential impairment of these lease right-of-use assets but did not perform any procedures to test or sufficiently test controls over the accuracy and completeness of these operating results. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 |
Issuer T2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Business Combinations | During the year the issuer acquired a business and determined the fair value of certain acquired intangible assets using cash-flow forecasts. The following deficiency was identified: · The firm selected for testing a control that included the issuer's review of assumptions used in these cash-flow forecasts. The firm did not evaluate the specific review procedures that the control owners performed to assess the reasonableness of certain of these assumptions. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 2 | Business Combinations | During the year the issuer acquired a business and determined the fair value of certain acquired intangible assets using cash-flow forecasts. The following deficiency was identified: · The firm's approach for substantively testing the valuation of these acquired intangible assets was to test the issuer's process. The firm did not sufficiently evaluate the reasonableness of certain significant assumptions used in these cash-flow forecasts because its procedures were limited to inquiring of management and for one of these assumptions comparing the current-year forecasted results to actual results. (AS 2501.16) Both financial statement and ICFR audits | AS 2501.16 |
Issuer U3 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Related Party Transactions | During the year the issuer entered into and disclosed transactions with related parties. The issuer conducted surveys of directors and officers of the company in determining its related parties and relationships and transactions with related parties. The following deficiency was identified: · The firm selected for testing controls that included the issuer's reviews of these surveys and its related party listing. The firm did not evaluate the specific review procedures that the control owner performed to assess (1) whether related parties were properly identified and evaluated and (2) the completeness of certain information used in the operation of these controls. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 2 | Related Party Transactions | During the year the issuer entered into and disclosed transactions with related parties. The issuer conducted surveys of directors and officers of the company in determining its related parties and relationships and transactions with related parties. The following deficiency was identified: · The firm selected for testing controls that included the issuer's reviews of these surveys and its related party listing. In testing the operating effectiveness of these controls the firm did not evaluate whether the control owner identified and addressed certain differences between the issuer's survey results and its related party listing. (AS 2201.44) Both financial statement and ICFR audits | AS 2201.44 | |
| 3 | Related Party Transactions | During the year the issuer entered into and disclosed transactions with related parties. The issuer conducted surveys of directors and officers of the company in determining its related parties and relationships and transactions with related parties. The following deficiency was identified: · The firm did not sufficiently evaluate whether the issuer had properly identified and evaluated its related parties and relationships and transactions with related parties because the firm did not take into account whether the issuer had evaluated certain information including differences between its survey results and related party listing. (AS 2410.14) Both financial statement and ICFR audits | AS 2410.14 |
Issuer V1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | During the audit the firm did not identify and evaluate that the issuer's accounting for certain transactions as revenue was not in conformity with FASB ASC Topic 840 Leases. (AS 2810.30) Unrelated to our review the issuer reevaluated its accounting for these transactions and concluded that a material misstatement existed that had not been previously identified. The issuer subsequently corrected this misstatement in a restatement of its financial statements and the firm revised and reissued its report on the financial statements. Financial statement audit only | AS 2810.30 |
Issuer W1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The issuer recognized one type of revenue from arrangements with related parties that provided for the reimbursement of certain costs that the issuer incurred. The firm identified a fraud risk related to the issuer's allocation of costs to these arrangements. For these costs the firm did not perform a test of details to address this fraud risk. (AS 2301.13) Financial statement audit only | AS 2301.13 |
Issuer X1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Leases | During the year the issuer entered into an amendment to an existing lease agreement. The firm did not identify and evaluate that the issuer's accounting for this lease amendment was not in conformity with FASB ASC Topic 842 Leases. (AS 2810.30) Financial statement audit only | AS 2810.30 |
Issuer Y1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The issuer recognized certain revenue from contracts based on labor hours recorded in the issuer's time system. The firm used these labor hours in its substantive testing of this revenue but did not test or test any controls over the accuracy and completeness of these labor hours. (AS 1105.10) Financial statement audit only | AS 1105.10 |