- Inspection year
- 2022
- Report date
- 20-Dec-2023
- PCAOB release
- 104-2024-044
- Audits reviewed
- 15
- Audits w/ Part I.A deficiencies
- 12
- Part I.A deficiency rate
- 80%
- Part I.A deficiencies
- 32
- Part I.B deficiencies
- 6
- Report
- View PDF ↗
Deficiencies (32)
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 | Business Combinations | During the year the issuer acquired multiple businesses and determined the fair values of certain acquired intangible assets using forecasted cash flows and related assumptions. The firm's approach for substantively testing the fair values of the acquired intangible assets was to test the issuer's process. With respect to three of the acquired businesses the following deficiency identified: · The firm's procedures to evaluate the reasonableness of the forecasted revenue growth rates for the first two years of the forecast period consisted of comparing these rates to forecasted industry data and historical financial information of the acquired businesses. For two of the acquired businesses the firm did not perform any procedures to evaluate the reliability of the historical financial information. (AS 1105.04 and .06) Financial statement audit only | AS 1105.4; AS 1105.6 | |
| 2 | Business Combinations | During the year the issuer acquired multiple businesses and determined the fair values of certain acquired intangible assets using forecasted cash flows and related assumptions. The firm's approach for substantively testing the fair values of the acquired intangible assets was to test the issuer's process. With respect to three of the acquired businesses the following deficiency identified: · The firm's procedures to evaluate the reasonableness of the forecasted revenue growth rates for the first two years of the forecast period consisted of comparing these rates to forecasted industry data and historical financial information of the acquired businesses. For one of the acquired businesses the firm did not evaluate a significant difference between the industry data and the issuer's forecasted revenue growth rate for the second year of the forecast period. (AS 2501.16). Financial statement audit only | AS 2501.16 | |
| 3 | Business Combinations | During the year the issuer acquired multiple businesses and determined the fair values of certain acquired intangible assets using forecasted cash flows and related assumptions. The firm's approach for substantively testing the fair values of the acquired intangible assets was to test the issuer's process. With respect to three of the acquired businesses the following deficiency identified: · For all three acquired businesses the firm did not perform any procedures beyond inquiring of management to evaluate the reasonableness of the revenue growth rates for the remaining years of the forecasted period and another significant assumption. (AS 2501.16) Financial statement audit only | AS 2501.16 | |
| 4 | Business Combinations | During the year the issuer acquired multiple businesses and determined the fair values of certain acquired intangible assets using forecasted cash flows and related assumptions. The firm's approach for substantively testing the fair values of the acquired intangible assets was to test the issuer's process. With respect to three of the acquired businesses the following deficiency identified: · For certain of the acquired businesses the firm did not perform any substantive procedures to test certain other assets acquired and liabilities assumed. (AS 2301.08; AS 2501.07) Financial statement audit only | AS 2301.8; AS 2501.7 | |
| 5 | Business Combinations | During the year the issuer acquired multiple businesses and determined the fair values of certain acquired intangible assets using forecasted cash flows and related assumptions. The firm's approach for substantively testing the fair values of the acquired intangible assets was to test the issuer's process. With respect to another acquired business the following deficiency was identified: · The issuer initially recorded a liability for contingent consideration related to this acquired business but reclassified this contingent consideration from a liability to equity prior to year end. The firm did not sufficiently evaluate whether this reclassification was appropriate because its procedures were limited to inquiring of management and reading a memorandum prepared by the issuer. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 6 | Business Combinations | During the year the issuer acquired multiple businesses and determined the fair values of certain acquired intangible assets using forecasted cash flows and related assumptions. The firm's approach for substantively testing the fair values of the acquired intangible assets was to test the issuer's process. With respect to another acquired business the following deficiency was identified: · The issuer assumed liabilities related to warrants as a result of this acquisition and recorded a gain related to the change in the fair values of these liabilities between the acquisition date and year end. The firm did not sufficiently test this gain because it did not perform any procedures to evaluate the reasonableness of the fair values of these liabilities recorded at the acquisition date. (AS 2501.07) Financial statement audit only | AS 2501.7 | |
| 7 | Business Combinations | During the year the issuer acquired multiple businesses and determined the fair values of certain acquired intangible assets using forecasted cash flows and related assumptions. The firm's approach for substantively testing the fair values of the acquired intangible assets was to test the issuer's process. With respect to another acquired business the following deficiency was identified: · The firm did not identify and evaluate a misstatement in the issuer's disclosure related to the valuation of the acquired net assets that was required under FASB ASC Topic 805 Business Combinations. (AS 2810.30 and .31) Financial statement audit only | AS 2810.30; AS 2810.31 | |
| 8 | Revenue | The issuer used information it obtained from an external party to record revenue for services provided to its customers. The firm obtained this information from the issuer and used it in its substantive procedures to test this revenue but did not perform any procedures to evaluate the reliability of the information beyond validating that the issuer had not made any changes to the information after obtaining it from the external party. (AS 1105.04 and .06) Financial statement audit only | AS 1105.4; AS 1105.6 | |
| 9 | Journal Entries | The firm identified fraud criteria for journal entries and obtained a list of all journal entries that met the criteria. The firm did not perform sufficient procedures to test those journal entries because it examined the underlying support for only certain journal entries without having an appropriate rationale for limiting its testing to those journal entries. (AS 2401.61) Financial statement audit only | AS 2401.61 |
Issuer B6 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Business Combinations | During the year the issuer acquired a business. The issuer assumed a liability related to warrants as a result of this acquisition and engaged a specialist to determine the fair values of these warrants. The firm did not perform any procedures to test the fair values of the warrants beyond reading the specialist's report. (AS 2501.07) Financial statement audit only | AS 2501.7 | Significant risk |
| 2 | Business Combinations | The firm did not identify and evaluate a misstatement in a required disclosure under FASB ASC Topic 805 Business Combinations. (AS 2810.30 and .31) Financial statement audit only | AS 2810.30; AS 2810.31 | Significant risk |
| 3 | Business Combinations | During the year the issuer acquired multiple other businesses. The issuer engaged specialists to determine the fair values of the acquired intangible assets using forecasted cash flows provided by the issuer and related assumptions developed by the specialists. The firm's approach for substantively testing the fair values of the acquired intangible assets was to test the issuer's process and the firm used an auditor-employed specialist to evaluate the methods and certain significant assumptions that the company's specialists used. The following deficiency was identified: · The firm did not perform any procedures beyond inquiring of management to evaluate the reasonableness of certain significant assumptions developed by the issuer for periods beyond the first year of the forecasted cash flows. (AS 2501.16) Financial statement audit only | AS 2501.16 | Significant risk |
| 4 | Business Combinations | During the year the issuer acquired multiple other businesses. The issuer engaged specialists to determine the fair values of the acquired intangible assets using forecasted cash flows provided by the issuer and related assumptions developed by the specialists. The firm's approach for substantively testing the fair values of the acquired intangible assets was to test the issuer's process and the firm used an auditor-employed specialist to evaluate the methods and certain significant assumptions that the company's specialists used. The following deficiency was identified: · The firm did not identify that the auditor-employed specialist did not sufficiently evaluate the reasonableness of certain significant assumptions developed by the company's specialists because its procedures were limited to inquiring of management and reading an issuer-prepared memorandum and the valuation reports that were prepared by the company's specialists. (AS 1105.A8b; AS 1201.C6 and .C7) Financial statement audit only | AS 1105.A8b; AS 1201.C6; AS 1201.C7 | Significant risk |
| 5 | Revenue | The issuer recorded certain revenue based on data in an electronic environment that were tracked and provided by a service organization. The firm used certain information produced by this service organization in its substantive testing of this revenue but did not test or test any controls over the accuracy and completeness of this information. (AS 2301.08 and .13) Financial statement audit only | AS 2301.8; AS 2301.13 | |
| 6 | Journal Entries | The firm identified fraud criteria for journal entries and obtained a list of all journal entries that met the criteria. The firm did not perform sufficient procedures to test those journal entries because it examined the underlying support for only certain journal entries without having an appropriate rationale for limiting its testing to those journal entries. (AS 2401.61) Financial statement audit only | AS 2401.61 |
Issuer C5 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Business Combinations | The firm's internal inspection program inspected this audit and reviewed certain of these areas but did not identify certain of the deficiencies below. During the year the issuer acquired multiple businesses and engaged a specialist to determine the fair value of the acquired intangible assets for each acquisition. The firm's approach for substantively testing the fair value of the acquired intangible assets was to test the issuer's process and the firm used an auditor-employed specialist to evaluate the methods and significant assumptions that the company's specialist used including the forecasted cash flows developed by the issuer. The firm did not identify that the auditor-employed specialist did not perform any procedures to evaluate the reasonableness of the forecasted cash flows. (AS 1201.C6 and .C7; AS 2501.16) Financial statement audit only | AS 1201.C6; AS 1201.C7; AS 2501.16 | Significant risk |
| 2 | Business Combinations | The firm's internal inspection program inspected this audit and reviewed certain of these areas but did not identify certain of the deficiencies below. For two of the acquired businesses the firm did not perform any procedures to test the remaining assets acquired and liabilities assumed. (AS 2301.08; AS 2501.07) Financial statement audit only | AS 2301.8; AS 2501.7 | Significant risk |
| 3 | Revenue | The firm's internal inspection program inspected this audit and reviewed certain of these areas but did not identify certain of the deficiencies below. The firm did not perform any procedures to evaluate whether the issuer's contracts with its customers included any terms that could have had an effect on revenue recognition. (AS 2301.08 and .13) Financial statement audit only | AS 2301.8; AS 2301.13 | |
| 4 | Expenses | The firm's internal inspection program inspected this audit and reviewed certain of these areas but did not identify certain of the deficiencies below. The firm's sample for testing expenses related to share-based compensation 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 .19 .23 and .23A) Financial statement audit only | AS 2315.16; AS 2315.19; AS 2315.23; AS 2315.23A | |
| 5 | Expenses | The firm's internal inspection program inspected this audit and reviewed certain of these areas but did not identify certain of the deficiencies below. The firm did not perform any procedures to test certain other expenses beyond (1) comparing the current-year balance to the prior-year balance and (2) tracing certain balances in the general ledger to issuer-prepared reports. (AS 2301.08) Financial statement audit only | AS 2301.8 |
Issuer D2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Intangible Assets | The firm selected for testing a control that included a review of the forecasted cash flows and related assumptions that the issuer used in its assessment of its intangible assets for impairment. The firm did not evaluate the specific review procedures that the control owner performed to assess the reasonableness of the cash flows and related assumptions. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | Significant risk |
| 2 | Intangible Assets | The firm's approach for substantively testing these intangible assets for possible impairment was to test the issuer's process. The firm did not perform any procedures to evaluate the reasonableness of the issuer's forecasted cash flows beyond reading an issuer-prepared memorandum. (AS 2501.16) Both financial statement and ICFR audits | AS 2501.16 | Significant risk |
Issuer E2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Inventory | The firm selected for testing controls over the existence of certain inventory held by external parties that the issuer used to manufacture its products. The firm did not identify and test any controls over the accuracy and completeness of the reports that the issuer obtained from the external parties and used in the operation of these controls. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 2 | Journal Entries | The firm identified fraud criteria for journal entries and obtained a list of all journal entries that met the criteria. The firm did not perform sufficient procedures to test those journal entries because it examined the underlying support for only certain journal entries without having an appropriate rationale for limiting its testing to those journal entries. (AS 2401.61) Both financial statement and ICFR audits | AS 2401.61 |
Issuer F1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Warrants | The issuer engaged a specialist to determine the fair value of its warrants. The firm's approach for substantively testing the fair value of these warrants was to test the issuer's process and the firm used an auditor-employed specialist to evaluate the methods and significant assumptions that the company's specialist used. The firm did not sufficiently test the fair value of these warrants because it did not identify that the auditor-employed specialist did not (1) sufficiently evaluate whether the methods that the company's specialist used were appropriate because it did not evaluate whether the data and significant assumptions used were appropriately applied (2) evaluate whether certain significant assumptions developed by the company's specialist were consistent with other relevant information and whether external data that the company's specialist used to develop one of these significant assumptions were relevant and reliable and (3) perform any procedures to evaluate the reasonableness of a significant assumption developed by the company and used by the company's specialist. (AS 1105.A8a .A8b and .A8c; AS 1201.C6 and .C7; AS 2501.16) Financial statement audit only | AS 1105.A8a; AS 1105.A8b; AS 1105.A8c; AS 1201.C6; AS 1201.C7; AS 2501.16 | Significant risk |
Issuer G2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The issuer recorded revenue based on data in an electronic environment that were tracked and provided by external parties. The firm used these data in its substantive testing of revenue but did not perform any procedures to evaluate the reliability of these data. (AS 1105.04 and 06) Financial statement audit only | AS 1105.4; AS 1105.6 | |
| 2 | Revenue | For certain revenue the issuer used third-party platforms to provide services to its customers. The firm did not perform any procedures to evaluate whether the issuer met certain revenue recognition criteria to satisfy the performance obligation for these services before revenue was recognized. (AS 2301.08 and .13) Financial statement audit only | AS 2301.8; AS 2301.13 |
Issuer H1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Warrants | The issuer engaged a specialist to determine the fair value of its warrants. The firm's approach for substantively testing the fair value of these warrants was to test the issuer's process and the firm used an auditor-employed specialist to evaluate the methods and significant assumptions the company's specialist used. The firm did not sufficiently test the fair value of these warrants because it did not identify that the auditor-employed specialist did not (1) sufficiently evaluate whether certain methods that the company's specialist used were appropriate because it did not evaluate whether the data and significant assumptions used were appropriately applied and (2) perform any procedures to evaluate the reasonableness of certain significant assumptions that the company's specialist developed. (AS 1105.A8b and .A8c; AS 1201.C6 and .C7) Financial statement audit only | AS 1105.A8b; AS 1105.A8c; AS 1201.C6; AS 1201.C7 | Significant risk |
Issuer I1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Warrants | The issuer engaged a specialist to determine the fair value of its warrants. The firm's approach for substantively testing the fair value of these warrants was to test the issuer's process and the firm used an auditor-employed specialist to evaluate the methods and certain significant assumptions the company's specialist used. The firm did not sufficiently evaluate the reasonableness of a significant assumption developed by the company's specialist because it did not identify that the auditor-employed specialist did not evaluate whether this assumption was consistent with relevant information and whether external data that the company's specialist used to develop this assumption were relevant and reliable. (AS 1105. A8a and .A8b; AS 1201.C6 and .C7) Financial statement audit only | AS 1105.A8a; AS 1105.A8b; AS 1201.C6; AS 1201.C7 | Significant risk |
Issuer J1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Business Combinations | During the year the issuer acquired a business. The firm did not identify and evaluate the issuer's omission of certain disclosures required under FASB ASC Topic 805 Business Combinations. (AS 2810.30 and .31) Financial statement audit only | AS 2810.30; AS 2810.31 | Significant risk |
Issuer K1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Warrants | The firm did not identify and evaluate a misstatement in a disclosure required under FASB ASC Topic 820 Fair Value Measurement. (AS 2810.30 and .31) Financial statement audit only | AS 2810.30; AS 2810.31 | Significant risk |
Issuer L1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Warrants | During the year the issuer acquired a business. The issuer assumed a liability related to certain warrants as a result of this acquisition and recorded a gain related to the change in the fair value of this liability between the acquisition date and year end. The firm did not sufficiently test this gain because it did not perform any procedures to evaluate the reasonableness of the fair value of the liability recorded at the acquisition date beyond reading the valuation report that was prepared by the company's specialist. (AS 2501.07) Financial statement audit only | AS 2501.7 | Significant risk |