- Inspection year
- 2022
- Report date
- 22-Feb-2024
- PCAOB release
- 104-2024-054
- Audits reviewed
- 4
- Audits w/ Part I.A deficiencies
- 3
- Part I.A deficiency rate
- 75%
- Part I.A deficiencies
- 34
- Part I.B deficiencies
- 12
- Report
- View PDF ↗
Deficiencies (34)
Grouped by issuer and in the same order as the PCAOB report, so each item ties back directly to the source.
Issuer A15 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The firm did not perform sufficient procedures to test whether revenue was recognized in accordance with FASB ASC Topic 606 Revenue from Contracts with Customers because it did not evaluate whether contracts were negotiated as a package with a single commercial objective where the amount of consideration to be paid in one contract depended on the price or performance of the other contract or whether goods and services promised in each contract were a single performance obligation when the contracts were entered into at or near the same time with the same customer. (AS 2301.08 and .13) Both financial statement and ICFR audits | AS 2301.8; AS 2301.13 | |
| 2 | Revenue | The firm did not perform sufficient procedures to test whether revenue was recognized in accordance with FASB ASC Topic 606 Revenue from Contracts with Customers because it did not perform procedures to test or test any controls over the completeness and accuracy of the data used in the issuer's revenue analysis. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 | |
| 3 | Revenue | The firm selected for testing certain information technology general controls (ITGCs) automated controls and information technology (IT) dependent manual controls that used data and reports generated or maintained by the issuer's IT systems. The following deficiencies were identified: · The firm did not test the completeness of the population of changes made to various application systems that the firm used to evaluate change controls. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 | |
| 4 | Revenue | The firm selected for testing certain information technology general controls (ITGCs) automated controls and information technology (IT) dependent manual controls that used data and reports generated or maintained by the issuer's IT systems. The following deficiencies were identified: · The firm did not identify and test any controls over the completeness of the population of program code changes the control operators used in the performance of the controls. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 5 | Revenue | The firm selected for testing certain information technology general controls (ITGCs) automated controls and information technology (IT) dependent manual controls that used data and reports generated or maintained by the issuer's IT systems. The following deficiencies were identified: · The firm did not test user access provisioning controls over applications that supported revenue accounting. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 6 | Revenue | The firm selected for testing certain information technology general controls (ITGCs) automated controls and information technology (IT) dependent manual controls that used data and reports generated or maintained by the issuer's IT systems. The following deficiencies were identified: · The firm did not evaluate the design of a periodic access review control. (AS 2201.42) Both financial statement and ICFR audits | AS 2201.42 | |
| 7 | Revenue | The firm selected for testing certain information technology general controls (ITGCs) automated controls and information technology (IT) dependent manual controls that used data and reports generated or maintained by the issuer's IT systems. The following deficiencies were identified: · The firm did not test any controls over the accuracy and completeness of the user profile reports used to perform the periodic access review control. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 8 | Revenue | The firm did not perform sufficient procedures to evaluate and test various controls in the revenue cycle because it did not: · Evaluate the severity of identified control deficiencies to determine whether the deficiencies in combination with other deficiencies constituted a material weakness. (AS 2201.62) Both financial statement and ICFR audits | AS 2201.62 | |
| 9 | Revenue | The firm did not perform sufficient procedures to evaluate and test various controls in the revenue cycle because it did not: · Identify and test controls over the accuracy and completeness of reports that control owners used in the operation of the controls. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 10 | Revenue | The firm did not perform sufficient procedures to evaluate and test various controls in the revenue cycle because it did not: · Evaluate the review procedures the control owner performed including the procedures to identify items for follow up and the procedures to determine whether those items were appropriately resolved. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 11 | Revenue | The firm did not perform sufficient procedures to evaluate and test various controls in the revenue cycle because it did not: · Identify and test controls over the upload of data into certain of the issuer's applications or over the calculation of standalone selling price. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 12 | Revenue | The sample sizes the firm used in certain of its substantive procedures to test revenue 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 deficiencies in the firm's control testing described 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 | |
| 13 | Debt | The firm did not perform procedures to test the design and operating effectiveness of a control over the issuer-specific accounting considerations related to the adoption of new accounting pronouncements. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 14 | Debt | The firm identified for testing four review controls over the issuance and repurchase of debt instruments. The firm did not evaluate the review procedures the control owners performed including the procedures to identify items for follow up and the procedures to determine whether those items were appropriately resolved. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 15 | Debt | For certain debt repurchased during the year the firm did not perform any procedures to test the number of debt holders and aggregate principal amount of the repurchased debt and the fair value of consideration paid to the debt holders upon repurchase. (AS 2301.08; AS 2501.07) Both financial statement and ICFR audits | AS 2301.8; AS 2501.7 |
Issuer B18 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | For product revenue the firm did not evaluate the shipping terms to assess whether it was appropriate to recognize revenue upon shipment. (AS 2301.08 and .13) Financial statement audit only | AS 2301.8; AS 2301.13 | |
| 2 | Revenue | For service revenue the firm did not evaluate whether (1) performance obligations were appropriately identified (2) the allocation of revenue between performance obligations was appropriate and (3) performance obligations were satisfied. (AS 2301.08 and .13) Financial statement audit only | AS 2301.8; AS 2301.13 | |
| 3 | Accounts Receivable | The firm did not perform any procedures to test unbilled accounts receivable balances. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 4 | Accounts Receivable | The firm did not perform any procedures to test or test any controls over the accuracy of the accounts receivable aging reports and the accuracy and completeness of data related to payments collected by the issuer subsequent to year end which were used in its audit procedures. (AS 1105.10) Financial statement audit only | AS 1105.10 | |
| 5 | Business Combinations | The issuer entered into an agreement to acquire the assets and liabilities of an entity. The firm did not perform sufficient procedures to test the acquisition because it did not: · Test the valuation of common stock issued in connection with the acquisition. (AS 2501.07) Financial statement audit only | AS 2501.7 | |
| 6 | Business Combinations | The issuer entered into an agreement to acquire the assets and liabilities of an entity. The firm did not perform sufficient procedures to test the acquisition because it did not: · Test the existence completeness and valuation of the assets acquired and liabilities assumed as of the acquisition date. (AS 2301.08; AS 2501.07) Financial statement audit only | AS 2301.8; AS 2501.7 | |
| 7 | Business Combinations | The issuer entered into an agreement to acquire the assets and liabilities of an entity. The firm did not perform sufficient procedures to test the acquisition because it did not: · Perform any procedures to determine whether the issuer had identified all separately identifiable tangible and intangible assets acquired that required recognition as of the acquisition date. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 8 | Business Combinations | The issuer entered into an agreement to acquire the assets and liabilities of an entity. The firm did not perform sufficient procedures to test the acquisition because it did not: · Test the fair value of the earn-out liability as of the acquisition date and at year end beyond reading an issuer-prepared memorandum. (AS 2501.07) Financial statement audit only | AS 2501.7 | |
| 9 | Business Combinations | The firm did not identify and evaluate a departure from GAAP related to the issuer's omission of certain required disclosures related to major classes of assets acquired and liabilities assumed in accordance with FASB ASC Topic 805 Business Combinations. (AS 2810.30 and .31) Financial statement audit only | AS 2810.30; AS 2810.31 | |
| 10 | Inventory | The issuer maintains inventory at multiple locations and performs physical inventory counts at year end. The following deficiencies were identified: · For one location the firm did not (1) project the misstated results of its sample to the items from which the sample was selected and (2) consider the nature and cause of misstatements identified in the sample of items tested to determine whether there could be additional errors. (AS 2315.26 and .27) Financial statement audit only | AS 2315.26; AS 2315.27 | |
| 11 | Inventory | The issuer maintains inventory at multiple locations and performs physical inventory counts at year end. The following deficiencies were identified: · For another location the firm's counts identified a significant number of misstatements and the firm determined the issuer had not performed a year-end physical inventory count. The issuer then performed a physical inventory count ('subsequent count'). The firm did not perform any testing of the subsequent count or any other procedures to determine the effectiveness of the method used by the issuer to perform the subsequent count and the reliance that could be placed upon the issuer's representations of quantities and physical condition of inventories at that location. (AS 2510.09) Financial statement audit only | AS 2510.9 | |
| 12 | Inventory | The firm did not perform sufficient procedures to test the valuation of inventories because it did not: · Perform any procedures to evaluate whether inventory was measured at the lower of cost or net realizable value at certain locations. (AS 2501.07) Financial statement audit only | AS 2501.7 | |
| 13 | Inventory | The firm did not perform sufficient procedures to test the valuation of inventories because it did not: · Perform any procedures to test or test any controls over the accuracy and completeness of the bill of materials reports. (AS 1105.10) Financial statement audit only | AS 1105.10 | |
| 14 | Inventory | The firm did not perform sufficient procedures to test the valuation of inventories because it did not: · Perform sufficient procedures to test the material costs in work-in-process (WIP) finished goods (FG) and raw materials because it did not perform any procedures to test certain sampled items and limited its procedures for certain other sampled items to comparing the items to a prior-year inventory listing. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 15 | Inventory | The firm did not perform sufficient procedures to test the valuation of inventories because it did not: · Perform any procedures to test or test any control over the accuracy and completeness of the number of labor hours used by the issuer to determine the labor costs allocated to WIP and FG. (AS 1105.10) Financial statement audit only | AS 1105.10 | |
| 16 | Inventory | The firm did not perform sufficient procedures to test the valuation of inventories because it did not: · Perform substantive procedures to test the allocation of overhead costs and the percentage of completion estimate beyond recalculation and inquiry of management. (AS 2501.07) Financial statement audit only | AS 2501.7 | |
| 17 | Inventory | The firm did not perform sufficient procedures to test the valuation of inventories because it did not: · Perform procedures to test the inventory reserve beyond comparing the year-end inventory reserve balance to the prior year amount. (AS 2501.07) Financial statement audit only | AS 2501.7 | |
| 18 | Inventory | The firm did not test shipping terms of inventory purchased from a foreign supplier for inventory received subsequent to year end. (AS 2301.08) Financial statement audit only | AS 2301.8 |
Issuer C1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Debt | The firm did not identify and evaluate a departure from GAAP related to a related party note payable that was not presented on the face of the balance sheet in accordance with FASB ASC Subtopic 235-10-S99 Notes to Financial Statements — Overall — SEC Materials. (AS 2410.17; AS 2810.30 and .31) Financial statement audit only | AS 2810.30; AS 2810.31 |