- Inspection year
- 2022
- Report date
- 07-Nov-2023
- PCAOB release
- 104-2024-038
- Audits reviewed
- 11
- Audits w/ Part I.A deficiencies
- 11
- Part I.A deficiency rate
- 100%
- Part I.A deficiencies
- 57
- Part I.B deficiencies
- 31
- Report
- View PDF ↗
Deficiencies (57)
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 and Related Accounts | The firm did not perform substantive procedures to test certain revenue beyond comparing it to the issuer's information system. (AS 2301.08 and .13) Financial statement audit only | AS 2301.8; AS 2301.13 | |
| 2 | Revenue and Related Accounts | The firm did not perform substantive procedures to test a second type of revenue beyond obtaining evidence that the issuer received cash for certain transactions. (AS 2301.08 and .13) Financial statement audit only | AS 2301.8; AS 2301.13 | |
| 3 | Revenue and Related Accounts | For a third type of revenue the firm selected certain revenue transactions for testing. The firm did not perform substantive procedures to test those revenue transactions beyond obtaining evidence that the issuer received cash for the transactions. (AS 2301.08 and .13) Financial statement audit only | AS 2301.8; AS 2301.13 | |
| 4 | Revenue and Related Accounts | The firm did not perform any substantive procedures to test certain receivables related to revenue. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 5 | Revenue and Related Accounts | The firm did not perform any substantive procedures to test the issuer's allowance for doubtful accounts. (AS 2501.07) Financial statement audit only | AS 2501.7 | |
| 6 | Revenue and Related Accounts | The firm did not perform any substantive procedures to test liabilities related to revenue. (AS 2301.08) Unrelated to our review the issuer reevaluated its accounting for the allowance for doubtful accounts certain receivables related to revenue and liabilities related to revenue and concluded that material misstatements existed that had not been previously identified. The issuer subsequently corrected these misstatements in a restatement of its financial statements. Financial statement audit only | AS 2301.8 | |
| 7 | Business Combinations | During the year the issuer acquired certain businesses and engaged specialists to determine the fair value of certain assets and contingent consideration at the acquisition date. The following deficiencies were identified: · The firm did not perform substantive procedures to test the fair value of these assets and the contingent consideration beyond obtaining and reading the company's specialists' reports. Further the firm did not perform any procedures with respect to its use of the work of the company's specialists as audit evidence. (AS 1105.A1 - .A10; AS 2501.07) 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 2501.7 | |
| 8 | Business Combinations | During the year the issuer acquired certain businesses and engaged specialists to determine the fair value of certain assets and contingent consideration at the acquisition date. The following deficiencies were identified: · The firm did not perform any substantive procedures to test the existence of the other assets acquired and the completeness of the liabilities assumed. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 9 | Business Combinations | During the year the issuer acquired certain businesses and engaged specialists to determine the fair value of certain assets and contingent consideration at the acquisition date. The following deficiencies were identified: · The firm did not perform any substantive procedures to test the fair value of the other assets acquired and the liabilities assumed. (AS 2501.07) Financial statement audit only | AS 2501.7 |
Issuer B4 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Audit Evidence | The firm did not complete all necessary procedures and obtain sufficient evidence to support the representations in the auditor's report. Specifically the firm did not review the work of engagement team members to evaluate whether (1) the work was performed and documented (2) the objectives of the procedures were achieved and (3) the results of the work support the conclusions reached. (AS 1105.04; AS 1201.05) Financial statement audit only | AS 1105.4; AS 1201.5 | |
| 2 | Revenue | The firm did not perform substantive procedures to test revenue beyond comparing certain transactions to issuer-prepared documentation and cash receipts. (AS 2301.08 and .13) Financial statement audit only | AS 2301.8; AS 2301.13 | |
| 3 | Business Combinations | During the year the issuer acquired certain businesses. The firm did not perform substantive procedures to test the acquisitions beyond testing the valuation of stock that was issued in connection with the acquisitions. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 4 | Journal Entries | The firm did not identify and select journal entries and other adjustments for testing to address the potential for material misstatement due to fraud. (AS 2401.58) Financial statement audit only | AS 2401.58 |
Issuer C3 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Debt | The firm did not perform any substantive procedures to evaluate whether the issuer's accounting for and presentation of convertible notes payable including warrants were in conformity with relevant GAAP. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 2 | Debt | The issuer settled certain debt by issuing shares. The firm did not perform any substantive procedures to test this transaction. (AS 2301.08) Unrelated to our review the issuer reevaluated its (1) accounting for and presentation of convertible notes payable including warrants and (2) accounting for the settlement of debt and concluded that material misstatements existed that had not been previously identified. The issuer subsequently corrected these misstatements in a restatement of its financial statements. Financial statement audit only | AS 2301.8 | |
| 3 | Other Income | The issuer recognized other income as a result of cancelling certain accrued expenses due to the expiration of the statute of limitations on such liabilities. The issuer engaged external counsel (“company's specialist”) to evaluate these claims under the local law. The firm did not perform substantive procedures to test other income beyond obtaining and reading the legal letters from the company's specialist. Further the firm did not perform any procedures with respect to its use of the work of the company's specialist as audit evidence. (AS 1105.A1 - .A10; AS 2301.08) 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 2301.8 |
Issuer D4 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Related Party Transactions | The firm did not perform any substantive procedures to test related party transactions. (AS 2410.12) Financial statement audit only | AS 2410.12 | |
| 2 | Related Party Transactions | The firm identified that certain related party transactions may have been illegal acts and communicated the potential illegal acts to the issuer's Board of Directors. The issuer's Board of Directors engaged legal counsel (“company's specialist”) to evaluate these matters. The firm did not perform sufficient procedures to determine whether illegal acts had occurred because it limited its procedures to obtaining and reading a legal letter from the company's specialist and did not perform any procedures with respect to its use of the work of the company's specialist as audit evidence. (AS 1105.A1 - .A10; AS 2405.10 and .11) 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 2405.10; AS 2405.11 | |
| 3 | Certain Income Statement Transactions | The firm did not perform substantive procedures to test certain income statement transactions beyond obtaining and reading a legal agreement. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 4 | Investment Securities | The firm did not perform substantive procedures to test investment securities beyond comparing the balance to the brokerage statement obtained from the issuer. (AS 2301.08) Financial statement audit only | AS 2301.8 |
Issuer E2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Planning Materiality | The firm did not establish a materiality level for the financial statements as a whole that was appropriate in light of the particular circumstances and consideration of the relevant factors because the firm established separate materiality levels for balance sheet accounts and income statement accounts. (AS 2105.06) Financial statement audit only | AS 2105.6 | |
| 2 | Certain Liabilities | The firm did not perform substantive procedures to test certain liabilities beyond obtaining the issuer's schedules and recalculating certain amounts. (AS 2301.08 and .11) Financial statement audit only | AS 2301.8; AS 2301.11 | Significant risk |
Issuer F8 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Certain Assets | The issuer reported certain assets. The following deficiencies were identified: · The firm did not perform any substantive procedures to establish that the issuer had control and ownership of these assets. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 2 | Certain Assets | The issuer reported certain assets. The following deficiencies were identified: · The firm did not perform substantive procedures to test the existence valuation and completeness of these assets beyond tracing quantities and prices to schedules provided by the issuer. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 3 | Certain Assets | The issuer reported certain assets. The following deficiencies were identified: · The firm did not identify and evaluate a GAAP departure related to the issuer's disclosure that these assets were current assets and the issuer's classification of them as non-current assets on the balance sheet. (AS 2810.03 .30 and .31) Financial statement audit only | AS 2810.3; AS 2810.30; AS 2810.31 | |
| 4 | Certain Assets | The issuer reported certain assets. The following deficiencies were identified: · The firm did not identify and evaluate the issuer's omission of disclosures related to the accounting policies for these assets that were required by FASB ASC Topic 235 Notes to the Financial Statements. (AS 2810.30 and .31) Financial statement audit only | AS 2810.30; AS 2810.31 | |
| 5 | Certain Assets | The issuer reported certain assets. The following deficiencies were identified: · The firm did not evaluate whether the issuer's presentation of these assets was in conformity with GAAP. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 6 | Revenue | The firm did not perform substantive procedures to test revenue beyond comparing it to a schedule provided by the issuer. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 7 | Revenue | The firm did not identify and evaluate the issuer's omission of disclosures related to the accounting policies for revenue recognition that were required by FASB ASC Topic 235. (AS 2810.30 and .31) Financial statement audit only | AS 2810.30; AS 2810.31 | |
| 8 | Related Party Transactions | The firm did not perform substantive procedures to test a related party payable beyond inquiry and confirming the amount with the related party who was an executive officer of the issuer. (AS 2410.12) Financial statement audit only | AS 2410.12 | Significant risk |
Issuer G7 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Business Combinations | During the year the issuer acquired several businesses and engaged a specialist to determine the fair value of the acquired intangible assets and goodwill at the acquisition dates. The following deficiencies were identified: · The firm did not perform substantive procedures to test certain acquisitions beyond obtaining and reading the issuer's accounting memorandum and the valuation reports prepared by the company's specialist. Further the firm did not perform any procedures with respect to its use of the work of the company's specialist as audit evidence. (AS 1105.A1 - .A10; AS 2301.08) 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 2301.8 | |
| 2 | Business Combinations | During the year the issuer acquired several businesses and engaged a specialist to determine the fair value of the acquired intangible assets and goodwill at the acquisition dates. The following deficiencies were identified: · The firm did not perform substantive procedures to test another acquisition beyond obtaining and reading the purchase agreement settlement statement and valuation report prepared by the company's specialist. Further the firm did not perform any procedures with respect to its use of the work of the company's specialist as audit evidence. (AS 1105.A1 - .A10; AS 2301.08) 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 2301.8 | |
| 3 | Convertible Notes and a Derivative Liability | During the year the issuer issued convertible notes and recorded a derivative liability related to the notes. The issuer engaged a specialist to determine the fair value of the derivative liability on the issuance date. The following deficiencies were identified: · The firm did not perform substantive procedures to test the convertible notes beyond obtaining and reading certain legal agreements including not evaluating whether the issuer's accounting for and presentation of the convertible notes and related derivative liability were in accordance with FASB ASC Topic 470 Debt and FASB ASC Topic 815 Derivatives and Hedging. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 4 | Convertible Notes and a Derivative Liability | During the year the issuer issued convertible notes and recorded a derivative liability related to the notes. The issuer engaged a specialist to determine the fair value of the derivative liability on the issuance date. The following deficiencies were identified: · The firm did not perform substantive procedures to test the valuation of the derivative liability as of the issuance date beyond obtaining and reading the company's specialist's valuation report. Further the firm did not perform any procedures with respect to its use of the work of the company's specialist as audit evidence. (AS 1105.A1 - .A10; AS 2501.07) 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 2501.7 | |
| 5 | Convertible Notes and a Derivative Liability | During the year the issuer issued convertible notes and recorded a derivative liability related to the notes. The issuer engaged a specialist to determine the fair value of the derivative liability on the issuance date. The following deficiencies were identified: · The firm did not perform any substantive procedures to test the valuation of the derivative liability at year end and the unrealized gain on the derivative liability for the year. (AS 2501.07) Financial statement audit only | AS 2501.7 | |
| 6 | Convertible Notes and a Derivative Liability | During the year the issuer issued convertible notes and recorded a derivative liability related to the notes. The issuer engaged a specialist to determine the fair value of the derivative liability on the issuance date. The following deficiencies were identified: · The firm did not identify and evaluate the issuer's omission of disclosures related to the inputs and quantitative information about significant unobservable inputs used to measure the fair value of the derivative liability that were required by FASB ASC Topic 820 Fair Value Measurement. (AS 2810.30 and .31) Financial statement audit only | AS 2810.30; AS 2810.31 | |
| 7 | Journal Entries | The firm did not identify and select journal entries and other adjustments for testing to address the potential for material misstatement due to fraud. (AS 2401.58) Financial statement audit only | AS 2401.58 |
Issuer H4 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The firm performed procedures to test one revenue transaction. The firm did not perform substantive procedures to test the remaining revenue transactions beyond tracing them to cash receipts and for certain of these transactions to certain fee information provided by customers for which the firm traced the underlying fee rates to customer contracts. Further the firm did not perform any procedures to evaluate certain evidence included in the work papers that indicated the issuer may have recognized revenue on the cash basis of accounting. (AS 2301.08 and .13; AS 2810.03) Financial statement audit only | AS 2301.8; AS 2301.13; AS 2810.3 | |
| 2 | Revenue | The firm did not identify and evaluate the issuer's omission of disclosures related to the amount of revenue recognized in the current year from performance obligations satisfied (or partially satisfied) in previous years that were required by FASB ASC Topic 606 Revenue from Contracts with Customers. (AS 2810.30 and .31) Financial statement audit only | AS 2810.30; AS 2810.31 | |
| 3 | Investments | The firm did not perform any substantive procedures to test an investment. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 4 | Variable Interest Entities | The firm did not perform substantive procedures to test the issuer's consolidation of VIEs beyond obtaining and reading an issuer memorandum. (AS 2301.08) Financial statement audit only | AS 2301.8 |
Issuer I6 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The firm selected key item transactions for testing revenue. The firm did not perform substantive procedures to test those transactions beyond comparing them to invoices. (AS 2301.08 and .13) Financial statement audit only | AS 2301.8; AS 2301.13 | |
| 2 | Revenue | The firm selected key item transactions for testing revenue. The firm did not perform any substantive procedures to test the remaining population of revenue transactions. (AS 1105.27; AS 2301.08 and .13) Financial statement audit only | AS 1105.27; AS 2301.8; AS 2301.13 | |
| 3 | Accounts Receivable | The firm selected an account receivable for testing but did not perform substantive procedures to test it beyond comparing it to invoices. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 4 | Accounts Receivable | The firm selected an account receivable for testing but did not perform any substantive procedures to test whether the account receivable was fully collectible. (AS 2501.07) Financial statement audit only | AS 2501.7 | |
| 5 | Inventory | The firm did not perform substantive procedures to test inventory beyond comparing the balance to an issuer-produced report. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 6 | Journal Entries | The firm did not identify and select journal entries and other adjustments for testing to address the potential for material misstatement due to fraud. (AS 2401.58) Financial statement audit only | AS 2401.58 |
Issuer J3 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Cash | The firm did not perform substantive procedures to test cash beyond comparing the amount to a copy of the bank statement obtained from the issuer. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 2 | Warrants | The issuer engaged a specialist to determine the fair value of certain warrants at year end. The firm did not perform substantive procedures to test the fair value of these warrants beyond obtaining and reading the valuation report prepared by the company's specialist. Further the firm did not perform any procedures with respect to its use of the work of the company's specialist as audit evidence. (AS 1105.A1 - .A10; AS 2501.07) 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 2501.7 | |
| 3 | Warrants | The firm did not identify and evaluate the issuer's omission of disclosures related to the inputs and quantitative information about significant unobservable inputs used to measure the fair value of these warrants that were required by FASB ASC Topic 820 Fair Value Measurements. (AS 2810.30 and .31) Financial statement audit only | AS 2810.30; AS 2810.31 |
Issuer K7 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Inventory | The firm did not perform substantive procedures to test the excess or obsolete inventory reserve and inventory that had been written off during the year beyond obtaining and reading an issuer memorandum. (AS 2301.08; AS 2501.07) Financial statement audit only | AS 2301.8; AS 2501.7 | |
| 2 | Derivatives | The issuer reported convertible debt agreements that included embedded conversion options; the issuer accounted for these options as derivative liabilities. The firm's approach for substantively testing the fair value of the derivative liabilities was to test the issuer's process. The following deficiencies were identified: · The firm did not perform any substantive procedures to evaluate whether the issuer's accounting for the conversion options embedded in the convertible debt agreements as derivative liabilities was in conformity with FASB ASC Topic 815 Derivative and Hedging Activities. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 3 | Derivatives | The issuer reported convertible debt agreements that included embedded conversion options; the issuer accounted for these options as derivative liabilities. The firm's approach for substantively testing the fair value of the derivative liabilities was to test the issuer's process. The following deficiencies were identified: · The firm did not evaluate the reliability of certain data the issuer used to determine the fair value of the derivative liabilities. (AS 1105.04 and .06) Financial statement audit only | AS 1105.4; AS 1105.6 | |
| 4 | Derivatives | The issuer reported convertible debt agreements that included embedded conversion options; the issuer accounted for these options as derivative liabilities. The firm's approach for substantively testing the fair value of the derivative liabilities was to test the issuer's process. The following deficiencies were identified: · The firm did not perform sufficient substantive procedures to evaluate whether the method used by the issuer to develop the fair value of the derivative liabilities was in conformity with the requirements of GAAP and appropriate for the nature of the account including whether the data was appropriately used and significant assumptions were appropriately applied under GAAP because the firm did not test the formulas embedded in the issuer's schedules to determine whether they produced substantially the same result as the model the issuer purportedly used. (AS 2501.10) Financial statement audit only | AS 2501.10 | |
| 5 | Derivatives | The issuer reported convertible debt agreements that included embedded conversion options; the issuer accounted for these options as derivative liabilities. The firm's approach for substantively testing the fair value of the derivative liabilities was to test the issuer's process. The following deficiencies were identified: · The firm did not identify and evaluate the issuer's omission of disclosures related to the inputs and quantitative information about the significant unobservable inputs used to measure the fair value of the derivative liabilities that were required by FASB ASC Topic 820 Fair Value Measurement. (AS 2810.30 and .31) Financial statement audit only | AS 2810.30; AS 2810.31 | |
| 6 | Expenses | To test certain expenses the firm selected a sample of transactions. The sample size the firm used in this substantive procedure was too small to provide sufficient appropriate audit evidence because the firm did not take into account the relevant factors in determining its sample size including tolerable misstatement for the population the allowable risk of incorrect acceptance and the characteristics of the population. (AS 2315.16 .19 .23 and .23A) Financial statement audit only | AS 2315.16; AS 2315.19; AS 2315.23; AS 2315.23A | |
| 7 | Expenses | The firm did not perform substantive procedures to test payroll expense beyond comparing it to issuer-provided payroll reports prepared by an external party and tax filings. (AS 2301.08) Financial statement audit only | AS 2301.8 |