- Inspection year
- 2022
- Report date
- 07-Nov-2023
- PCAOB release
- 104-2024-042
- Audits reviewed
- 12
- Audits w/ Part I.A deficiencies
- 3
- Part I.A deficiency rate
- 25%
- Part I.A deficiencies
- 14
- Part I.B deficiencies
- 4
- Report
- View PDF ↗
Deficiencies (14)
Grouped by issuer and in the same order as the PCAOB report, so each item ties back directly to the source.
Issuer A7 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Inventory | The issuer used an information-technology (IT) system to process and record transactions related to revenue and inventory. The firm selected for testing controls over the issuer's granting and monitoring of user access to this system but did not evaluate the specific review procedures that the control owners performed to determine whether to grant access to users or whether access that had been previously approved continued to be appropriate. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 2 | Inventory | The firm selected for testing certain automated and IT-dependent manual controls over revenue and inventory. The firm's approach to testing the accuracy and completeness of the data used in these controls depended on effective IT general controls including controls over user access. As a result of the deficiency in the firm's testing of the controls 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 certain automated and IT-dependent manual controls over revenue and inventory. The firm's approach to testing the accuracy and completeness of the data used in these controls depended on effective IT general controls including controls over user access. As a result of the deficiency in the firm's testing of the controls the firm's testing of the automated controls 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 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 4 | Revenue | For certain automated controls over revenue the firm tested a sample of one transaction for each control in the issuer's IT testing environment rather than in its production environment. The firm's testing of certain of these controls was not sufficient because the firm did not perform any procedures to determine whether the testing environment was consistent with the production environment. (AS 2201.44)For certain automated controls over revenue the firm tested a sample of one transaction for each control in the issuer's IT testing environment rather than in its production environment. The firm's testing of certain of these controls was not sufficient because the firm did not perform any procedures to determine whether the testing environment was consistent with the production environment. (AS 2201.44) Both financial statement and ICFR audits | AS 2201.44 | |
| 5 | Inventory | For two business units the issuer held certain inventory at locations owned by external parties. The firm performed confirmation procedures to test the existence of this inventory but did not maintain control over the confirmation requests because the issuer sent the requests. (AS 2310.28) Both financial statement and ICFR audits | AS 2310.28 | |
| 6 | Inventory | For certain inventory at another business unit the firm did not identify and test any controls over the issuer's process to record costs related to this inventory including the calculation of variances between standard and actual costs. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 7 | Cash | The firm excluded from the scope of its financial statement and ICFR audits cash related to certain business units but did not evaluate certain factors that were relevant to the assessment of the risks of material misstatement associated with this cash including the materiality of the recorded cash balances and the location of certain of these business units. (AS 2101.11 and .12; AS 2201.B10) Both financial statement and ICFR audits | AS 2101.11; AS 2101.12; AS 2201.B10 |
Issuer B5 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Certain Liabilities | The issuer recorded an estimated liability for certain known and expected losses. The firm's approach for substantively testing this liability was to develop an independent expectation. The firm developed its expectation primarily based on historical losses that included (1) various loss information produced from certain of the issuer's IT systems and (2) a recorded accrual for certain known losses. The following deficiencies were identified: · The firm did not perform any procedures to determine whether it had a reasonable basis for using historical losses to estimate losses for the current year. (AS 2501.22) Financial statement audit only | AS 2501.22 | |
| 2 | Certain Liabilities | The issuer recorded an estimated liability for certain known and expected losses. The firm's approach for substantively testing this liability was to develop an independent expectation. The firm developed its expectation primarily based on historical losses that included (1) various loss information produced from certain of the issuer's IT systems and (2) a recorded accrual for certain known losses. The following deficiencies were identified: · The firm did not perform any substantive procedures to test or test any controls over the completeness of certain of the loss information used in its expectation. (AS 1105.10) Financial statement audit only | AS 1105.10 | |
| 3 | Certain Liabilities | The issuer recorded an estimated liability for certain known and expected losses. The firm's approach for substantively testing this liability was to develop an independent expectation. The firm developed its expectation primarily based on historical losses that included (1) various loss information produced from certain of the issuer's IT systems and (2) a recorded accrual for certain known losses. The following deficiencies were identified: · The firm did not sufficiently test the accuracy of this information because it did not subject certain types of losses to testing. (AS 1105.10) Financial statement audit only | AS 1105.10 | |
| 4 | Certain Liabilities | The issuer recorded an estimated liability for certain known and expected losses. The firm's approach for substantively testing this liability was to develop an independent expectation. The firm developed its expectation primarily based on historical losses that included (1) various loss information produced from certain of the issuer's IT systems and (2) a recorded accrual for certain known losses. The following deficiencies were identified: · The firm did not perform any procedures to test the reliability of the recorded accrual used in its expectation. (AS 1105.04 and .06) Financial statement audit only | AS 1105.4; AS 1105.6 | |
| 5 | Revenue | The issuer's process related to revenue was highly automated with transactions being initiated processed and recorded by numerous information-technology (IT) systems. The issuer identified a material weakness related to ineffective IT general controls over certain IT systems. For the sample of revenue transactions that the firm selected for testing the firm did not perform any procedures to test whether certain information that the issuer used to record revenue was appropriate beyond comparing it to information that was generated by and maintained in certain of the issuer's systems that were affected by the material weakness. (AS 2301.08)The issuer's process related to revenue was highly automated with transactions being initiated processed and recorded by numerous information-technology (IT) systems. The issuer identified a material weakness related to ineffective IT general controls over certain IT systems. For the sample of revenue transactions that the firm selected for testing the firm did not perform any procedures to test whether certain information that the issuer used to record revenue was appropriate beyond comparing it to information that was generated by and maintained in certain of the issuer's systems that were affected by the material weakness. (AS 2301.08) Financial statement audit only | AS 2301.8 |
Issuer C2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | For three types of revenue the firm used certain system-generated information in its substantive testing of revenue but did not perform any procedures to test or test any controls over the accuracy and completeness of this information. (AS 1105.10) Financial statement audit only | AS 1105.10 | |
| 2 | Revenue | For two other types of revenue the issuer recorded revenue based on information provided by an external service provider. The firm used this information in its substantive testing of this revenue but did not perform any procedures to test the accuracy and completeness of this information. (AS 2301.08) Financial statement audit only | AS 2301.8 |