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Ernst & Young LLP
United States · Ernst & Young Global Limited · Annually Inspected
- Inspection year
- 2023
- Report date
- 12-Jun-2024
- PCAOB release
- 104-2024-095
- Audits reviewed
- 59
- Audits w/ Part I.A deficiencies
- 22
- Part I.A deficiency rate
- 37%
- Part I.A deficiencies
- 91
- Part I.B deficiencies
- 14
- Report
- View PDF ↗
Deficiencies (91)
Grouped by issuer and in the same order as the PCAOB report, so each item ties back directly to the source.
Issuer A17 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Inventory | The issuer used an information-technology (IT) system to initiate process and record transactions related to certain revenue and inventory. 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. As a result of the following 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 | Incorrect opinion |
| 2 | Inventory | The firm selected for testing a control that consisted of the issuer's reviews of changes made to this IT system through administrative user access. 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 the instances selected for testing. Further the firm did not determine whether the control owners possessed the necessary authority and competence to perform this control. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | Incorrect opinion |
| 3 | Inventory | The firm selected for testing controls over managing changes to the issuer's production environment. The following deficiencies were identified: · The firm did not identify and test any controls over the 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 | Incorrect opinion |
| 4 | Inventory | The firm selected for testing controls over managing changes to the issuer's production environment. The following deficiencies were identified: · The firm did not perform any procedures to test or test any controls over the completeness of the population of items from which it selected its samples for testing these controls. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 | Incorrect opinion |
| 5 | Inventory | The firm selected for testing controls over managing changes to the issuer's production environment. The following deficiencies were identified: · One of these controls consisted of the issuer's review and approval of changes made to this IT system. The firm did not evaluate the specific review procedures that the control owners performed to assess whether these changes had met the necessary criteria to be implemented into the production environment. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | Incorrect opinion |
| 6 | Inventory | The sample sizes that the firm used in certain of its substantive procedures to test this 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 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 | Incorrect opinion |
| 7 | Revenue and Related Accounts | The firm selected for testing various controls over the processing and recording of certain revenue. The firm did not identify and test any controls over the accuracy and/or completeness of certain data and reports the control owners used in the operation of these controls. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | Incorrect opinion |
| 8 | Revenue and Related Accounts | The firm selected for testing an automated control over the appropriateness of the prices that the issuer used to record revenue. The firm did not test the programming of this automated control or perform other procedures to test this control that would have provided sufficient appropriate audit evidence that the control was designed and operating effectively. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | Incorrect opinion |
| 9 | Revenue and Related Accounts | The firm selected for testing an automated control over the appropriateness of the prices that the issuer used to record revenue. The firm did not identify and test any controls over the accuracy and completeness of certain pricing data used in the operation of this control. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | Incorrect opinion |
| 10 | Revenue and Related Accounts | The issuer offered various forms of sales incentives to customers that were recorded as deductions from revenue with a corresponding liability for sales incentives. The firm selected for testing controls that consisted of the issuer's review and approval of these sales incentives. The following deficiencies were identified: · For one of these controls the firm did not test the aspect of the control that addressed the control owner's review of the accuracy of certain sales incentives. (AS 2201.42 and .44) In connection with our review the issuer reevaluated its controls over certain of these sales incentives and concluded that a material weakness existed that had not been previously identified. The issuer subsequently reflected this material weakness in a revision to its report on ICFR and the firm revised its opinion on the effectiveness of the issuer's ICFR to express an adverse opinion and reissued its report. Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | Incorrect opinion |
| 11 | Revenue and Related Accounts | The issuer offered various forms of sales incentives to customers that were recorded as deductions from revenue with a corresponding liability for sales incentives. The firm selected for testing controls that consisted of the issuer's review and approval of these sales incentives. The following deficiencies were identified: · For another of these controls the control owner used an automated tool to assess the accuracy of certain other sales incentives. The firm did not test the configuration or programming of this tool or perform other procedures to test this tool that would have provided sufficient appropriate audit evidence that this aspect of the control was designed and operating effectively. (AS 2201.42 and .44) In connection with our review the issuer reevaluated its controls over certain of these sales incentives and concluded that a material weakness existed that had not been previously identified. The issuer subsequently reflected this material weakness in a revision to its report on ICFR and the firm revised its opinion on the effectiveness of the issuer's ICFR to express an adverse opinion and reissued its report. Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | Incorrect opinion |
| 12 | Revenue and Related Accounts | The issuer offered various forms of sales incentives to customers that were recorded as deductions from revenue with a corresponding liability for sales incentives. The firm selected for testing controls that consisted of the issuer's review and approval of these sales incentives. The following deficiencies were identified: · The firm's testing of an aspect of these controls that addressed whether these sales incentives were appropriately recorded in the general ledger was not sufficient because the number of items the firm selected for testing did not provide sufficient appropriate audit evidence given the frequency with which the controls operated. (AS 2201.46) In connection with our review the issuer reevaluated its controls over certain of these sales incentives and concluded that a material weakness existed that had not been previously identified. The issuer subsequently reflected this material weakness in a revision to its report on ICFR and the firm revised its opinion on the effectiveness of the issuer's ICFR to express an adverse opinion and reissued its report. Both financial statement and ICFR audits | AS 2201.46 | Incorrect opinion |
| 13 | Revenue and Related Accounts | The issuer offered various forms of sales incentives to customers that were recorded as deductions from revenue with a corresponding liability for sales incentives. The firm selected for testing controls that consisted of the issuer's review and approval of these sales incentives. The following deficiencies were identified: · The firm did not perform any procedures to test or test any controls over the completeness of the population of items from which it selected its samples for testing these controls. (AS 1105.10) In connection with our review the issuer reevaluated its controls over certain of these sales incentives and concluded that a material weakness existed that had not been previously identified. The issuer subsequently reflected this material weakness in a revision to its report on ICFR and the firm revised its opinion on the effectiveness of the issuer's ICFR to express an adverse opinion and reissued its report. Both financial statement and ICFR audits | AS 1105.10 | Incorrect opinion |
| 14 | Revenue and Related Accounts | The firm performed substantive procedures to test the accuracy of certain issuer-produced data the firm used in its testing of the sales incentive liability. The sample sizes the firm used in certain of these substantive procedures were smaller than the ones the firm determined necessary to provide sufficient appropriate audit evidence. Further the firm did not perform any procedures to test or test any controls over the completeness of these data. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 | Incorrect opinion |
| 15 | Inventory | The issuer held certain inventory at external warehouses. The firm selected for testing controls that consisted of the issuer's review and reconciliation of this inventory to the general ledger. The firm did not identify and test any controls over the (1) accuracy and completeness of certain issuer-produced data and reports and (2) reliability of data and reports that the issuer obtained from the external warehouses that were used in the operation of these controls. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | Incorrect opinion |
| 16 | Inventory | The issuer held certain inventory at external warehouses. The firm selected for testing controls that consisted of the issuer's review and reconciliation of this inventory to the general ledger. The firm did not evaluate the specific review procedures that the control owners performed to determine whether items that met the criteria for investigation were identified for review. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | Incorrect opinion |
| 17 | Business Combinations | The firm selected for testing a control that consisted of the issuer's review of the assets acquired and liabilities assumed. The firm did not evaluate the specific review procedures that the control owner performed to assess the appropriateness of the recorded amounts of certain assets acquired and liabilities assumed. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | Incorrect opinion |
Issuer B3 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | 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 relative standalone selling prices. The following deficiencies were identified: · The firm did not identify and test any controls that addressed whether the methods that the issuer used to estimate the standalone selling prices were in conformity with FASB ASC Topic 606 Revenue from Contracts with Customers. (AS 2201.39) In connection with our review the issuer reevaluated its controls over the methods it used to estimate standalone selling prices and concluded that a material weakness existed that had not been previously identified. The issuer subsequently reflected this material weakness in a revision to its report on ICFR and the firm revised its opinion on the effectiveness of the issuer's ICFR to express an adverse opinion and reissued its report. The issuer also reevaluated its disclosures related to standalone selling prices and determined that a disclosure was misstated. The issuer corrected this misstatement in an amended Form 10-K. Both financial statement and ICFR audits | AS 2201.39 | Incorrect opinion |
| 2 | 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 relative standalone selling prices. The following deficiencies were identified: · The firm did not evaluate whether the methods that the issuer used to estimate the standalone selling prices were in conformity with FASB ASC Topic 606. (AS 2501.10) In connection with our review the issuer reevaluated its controls over the methods it used to estimate standalone selling prices and concluded that a material weakness existed that had not been previously identified. The issuer subsequently reflected this material weakness in a revision to its report on ICFR and the firm revised its opinion on the effectiveness of the issuer's ICFR to express an adverse opinion and reissued its report. The issuer also reevaluated its disclosures related to standalone selling prices and determined that a disclosure was misstated. The issuer corrected this misstatement in an amended Form 10-K. Both financial statement and ICFR audits | AS 2501.10 | Incorrect opinion |
| 3 | 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 relative standalone selling prices. The following deficiencies were identified: · The firm did not perform substantive procedures to evaluate the accuracy of the issuer's disclosures related to standalone selling prices under FASB ASC Topic 606. (AS 2301.08) In connection with our review the issuer reevaluated its controls over the methods it used to estimate standalone selling prices and concluded that a material weakness existed that had not been previously identified. The issuer subsequently reflected this material weakness in a revision to its report on ICFR and the firm revised its opinion on the effectiveness of the issuer's ICFR to express an adverse opinion and reissued its report. The issuer also reevaluated its disclosures related to standalone selling prices and determined that a disclosure was misstated. The issuer corrected this misstatement in an amended Form 10-K. Both financial statement and ICFR audits | AS 2301.8 | Incorrect opinion |
Issuer C11 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Long-Lived Assets | The firm did not identify and test any controls over long-lived assets and depreciation expense. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 2 | Long-Lived Assets | The firm did not perform any substantive procedures to test certain long-lived assets and depreciation expense. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 | |
| 3 | Long-Lived Assets | For certain other long-lived assets the following deficiencies were identified: · The firm did not perform any substantive procedures to test these long-lived assets for possible impairment beyond reading an issuer-prepared memorandum. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 | |
| 4 | Long-Lived Assets | For certain other long-lived assets the following deficiencies were identified: · The sample sizes the firm used in certain of its substantive procedures to test these long-lived assets were too small to provide sufficient appropriate audit evidence because in determining the sample sizes 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 | |
| 5 | Pension Assets and Liabilities | The firm did not identify and test any controls over the issuer's domestic pension assets and liabilities. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 6 | Pension Assets and Liabilities | The firm did not perform any substantive procedures to (1) test the fair value of these pension assets and (2) evaluate the appropriateness of the issuer's categorization of these pension assets within the fair value hierarchy set forth in FASB ASC Topic 820 Fair Value Measurement beyond obtaining a confirmation from the pension asset custodian. (AS 2301.08; AS 2501.07) Both financial statement and ICFR audits | AS 2301.8; AS 2501.7 | |
| 7 | Business Combinations | During the year the issuer acquired multiple businesses and engaged specialists to determine the fair value of certain acquired intangible assets using various assumptions. The following deficiencies were identified: · The firm selected for testing three controls that consisted of the issuer's reviews of the fair value of these acquired intangible assets. For two of these controls the firm did not evaluate the criteria the control owners used to identify items for follow-up when assessing the reasonableness of certain assumptions used. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 8 | Business Combinations | During the year the issuer acquired multiple businesses and engaged specialists to determine the fair value of certain acquired intangible assets using various assumptions. The following deficiencies were identified: · The firm selected for testing three controls that consisted of the issuer's reviews of the fair value of these acquired intangible assets. For the third control 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. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 9 | Business Combinations | During the year the issuer acquired multiple businesses and engaged specialists to determine the fair value of certain acquired intangible assets using various assumptions. The following deficiencies were identified: · The firm did not identify and test any controls over the accuracy and completeness of certain issuer-produced data that the company's specialist used to develop certain of these assumptions. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 10 | Business Combinations | During the year the issuer acquired multiple businesses and engaged specialists to determine the fair value of certain acquired intangible assets using various assumptions. The following deficiencies were identified: · The firm did not test or test any controls over the accuracy and completeness of certain issuer-produced data that the company's specialist used to develop certain of these assumptions. (AS 1105.A8a) Both financial statement and ICFR audits | AS 1105.A8a | |
| 11 | Business Combinations | During the year the issuer acquired multiple businesses and engaged specialists to determine the fair value of certain acquired intangible assets using various assumptions. The following deficiencies were identified: · The firm did not evaluate whether the issuer was required to make certain disclosures related to these business combinations in conformity with FASB ASC Topic 805 Business Combinations beyond asserting that these disclosures were either not material to the financial statements or not applicable. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 |
Issuer D12 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Deferred Revenue | The issuer used multiple IT systems to initiate process and record transactions related to revenue and the related deferred revenue. 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 these IT systems. As a result of the following deficiencies 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 | |
| 2 | Deferred Revenue | The firm selected for testing a control over managing changes to the issuer's production environment for each of these IT systems. The following deficiencies were identified: · For two IT systems the firm did not identify and test any controls over the completeness of the populations of changes that the control owners used in the operation of the control. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 3 | Deferred Revenue | The firm selected for testing a control over managing changes to the issuer's production environment for each of these IT systems. The following deficiencies were identified: · For two other IT systems the firm did not perform sufficient procedures to test controls over the completeness of the populations of changes that the control owners used in the operation of the control because it limited its procedures to inspecting evidence that the control owner traced one system change into the populations used. (AS 2201.46) Both financial statement and ICFR audits | AS 2201.46 | |
| 4 | Deferred Revenue | The firm selected for testing a control over managing changes to the issuer's production environment for each of these IT systems. The following deficiencies were identified: · For another IT system when evaluating the design of the control the firm did not assess whether the control owner's review of system changes was sufficiently precise to achieve the control's objective. (AS 2201.42) Both financial statement and ICFR audits | AS 2201.42 | |
| 5 | Deferred Revenue | The issuer used a service organization to maintain databases that the issuer used in the recognition of revenue and the related deferred revenue. The firm obtained a service auditor's report and identified complementary user entity controls that the service auditor's report described as necessary. The firm did not perform procedures to evaluate whether the issuer had implemented these controls with respect to one of these databases. (AS 2201.39 and .B22) Both financial statement and ICFR audits | AS 2201.39; AS 2201.B22 | |
| 6 | Revenue | As a result of the firm's control testing deficiencies the firm did not perform sufficient substantive procedures over revenue as follows: · 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. (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 | |
| 7 | Revenue | As a result of the firm's control testing deficiencies the firm did not perform sufficient substantive procedures over revenue 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 | |
| 8 | 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 estimated standalone selling prices were based on the expected cost plus a margin approach which included significant assumptions related to the expected costs of satisfying each of the performance obligations. The following deficiencies were identified: · The firm selected for testing controls that included the issuer's reviews of the estimated standalone selling prices including the significant assumptions. The firm did not evaluate the specific review procedures that the control owners performed to assess the reasonableness of these significant assumptions. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 9 | 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 estimated standalone selling prices were based on the expected cost plus a margin approach which included significant assumptions related to the expected costs of satisfying each of the performance obligations. The following deficiencies were identified: · The firm's approach for substantively testing the estimated standalone selling prices was to test the issuer's process. The firm did not perform procedures to evaluate the reasonableness of the expected costs of satisfying each of the performance obligations. (AS 2501.16) Both financial statement and ICFR audits | AS 2501.16 | |
| 10 | Deferred Revenue | The firm selected for testing various manual controls over the issuer's deferred revenue calculation. The following deficiencies were identified: · For three 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 the controls. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 11 | Deferred Revenue | The firm selected for testing various manual controls over the issuer's deferred revenue calculation. The following deficiencies were identified: · For another of these controls the firm did not 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 | |
| 12 | Deferred Revenue | The firm's testing of an automated control over deferred revenue was not sufficient because the firm did not test the configuration or programming of this control or perform other procedures to test this control that would have provided sufficient appropriate audit evidence that this control was designed and operating effectively. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 |
Issuer E12 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Certain Assets and Liabilities | The issuer used multiple IT systems to initiate process and record transactions related to certain revenue and a certain asset and liability. 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 these IT systems. As a result of the following deficiencies 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) ICFR audit only | AS 2201.46 | |
| 2 | Certain Assets and Liabilities | The firm selected for testing controls over change management that consisted of the review and testing of changes to certain IT systems prior to implementation into the production environment. The following deficiencies were identified: · For certain of these controls the firm did not test or test any controls over the completeness of the population of items from which it selected its samples for testing. (AS 1105.10) ICFR audit only | AS 1105.10 | |
| 3 | Certain Assets and Liabilities | The firm selected for testing controls over change management that consisted of the review and testing of changes to certain IT systems prior to implementation into the production environment. The following deficiencies were identified: · When testing the operating effectiveness of certain of these controls the firm did not determine whether the control owners possessed the necessary competence to perform these controls effectively. (AS 2201.44) ICFR audit only | AS 2201.44 | |
| 4 | Certain Assets and Liabilities | The firm selected for testing controls over change management that consisted of the review and testing of changes to certain IT systems prior to implementation into the production environment. The following deficiencies were identified: · The firm's testing of an aspect of one of these controls that involved the use of automated tools was not sufficient because the firm did not test the configuration of these tools or perform other procedures to test these tools that would have provided sufficient appropriate audit evidence that this aspect of the control was designed and operating effectively. (AS 2201.42 and .44) ICFR audit only | AS 2201.42; AS 2201.44 | |
| 5 | Certain Assets and Liabilities | The firm selected for testing controls over change management that consisted of the review and testing of changes to certain IT systems prior to implementation into the production environment. The following deficiencies were identified: · The firm's testing of one of these controls was not sufficient because it did not evaluate whether the changes it selected were appropriately tested by the issuer prior to implementation into the production environment. Further the firm's testing of another control was not sufficient because its procedures to test the control were limited to inquiry. (AS 2201.42 and .44) ICFR audit only | AS 2201.42; AS 2201.44 | |
| 6 | Certain Assets and Liabilities | The firm selected for testing a control that consisted of the issuer's review of user access to another IT system. The firm did not identify and test any controls over the accuracy of certain information that the control owners used in the operation of the control. (AS 2201.39) ICFR audit only | AS 2201.36 | |
| 7 | Certain Assets and Liabilities | The firm selected for testing a control that consisted of the issuer's review of user access to another IT system. The firm did not identify and test any controls that addressed the risk that inappropriate changes could be made to data in this IT system by users with certain access. (AS 2201.39) ICFR audit only | AS 2201.36 | |
| 8 | Certain Assets and Liabilities | During the year the issuer implemented an IT system that was used to initiate process and record transactions related to this asset and liability. The firm did not identify and test any controls that addressed certain risks related to the configurations within this IT system. (AS 2201.39) ICFR audit only | AS 2201.39 | |
| 9 | Certain Assets and Liabilities | The firm selected for testing a control that consisted of the issuer's reconciliation of a portion of this asset and liability to supporting documentation and review of variances. The firm did not evaluate whether the control owners' review of certain variances at an aggregated level was sufficient to address the risks of material misstatement. (AS 2201.42 and .44) ICFR audit only | AS 2201.42; AS 2201.44 | |
| 10 | Certain Assets and Liabilities | The firm selected for testing an automated control over transactions related to this asset and liability. The firm did not identify and test any controls over the accuracy and completeness of certain information that was used in the operation of this automated control. (AS 2201.39) ICFR audit only | AS 2201.39 | |
| 11 | Certain Assets and Liabilities | The firm selected for testing two additional controls over transactions related to this asset and liability but did not test or test any controls over the completeness of the population of items from which it selected its samples for testing. (AS 1105.10) ICFR audit only | AS 1105.10 | |
| 12 | Certain Assets and Liabilities | The firm did not identify and test any controls that addressed certain risks related to the issuer's ability to hold or control rights to this asset. (AS 2201.39) ICFR audit only | AS 2201.39 |
Issuer F4 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | For one type of revenue the firm did not identify and test any controls over the issuer's identification and evaluation of contract terms that could affect revenue recognition. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 2 | Revenue | The firm's substantive procedures to test this revenue included selecting a sample of transactions for testing. For certain of the transactions selected for testing the firm did not obtain and evaluate the customer contract to assess whether revenue was appropriately recognized. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 | |
| 3 | Revenue | For another type of revenue the issuer used models to estimate certain contractual adjustments. The firm selected for testing a control that consisted of the issuer's review of these models. The firm did not evaluate the specific review procedures the control owners performed to assess the reasonableness of the output of these models. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 4 | Revenue | For another type of revenue the issuer used models to estimate certain contractual adjustments. The firm selected for testing a control that consisted of the issuer's review of these models. The firm did not identify and test any controls over the accuracy and completeness 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 G3 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Accounts Receivable | The firm selected for testing two automated controls over certain revenue accounts receivable and inventory. The firm's testing of these automated controls was not sufficient because the firm did not test the programming of these controls or perform other procedures to test these controls 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 | |
| 2 | 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 | |
| 3 | Goodwill | The firm did not evaluate whether the issuer was required to disclose the amount of goodwill allocated to reporting units with zero or negative carrying amounts in conformity with FASB ASC Topic 350 Intangibles – Goodwill and Other beyond asserting that this disclosure would not be material to the financial statements. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 |
Issuer H4 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 issuer recorded subsequent adjustments to the provisional fair value of these acquired intangible assets during the measurement period. The following deficiencies were identified: · The firm selected for testing controls that consisted of the issuer's reviews of the fair value of these acquired intangible assets including the assumptions used in these cash-flow forecasts. The firm did not evaluate the specific review procedures that the control owners performed to assess (1) the reasonableness of certain of these assumptions and (2) whether the subsequent adjustments were based on new information obtained about facts and circumstances that existed as of the acquisition date. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | Significant risk |
| 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 issuer recorded subsequent adjustments to the provisional fair value of these acquired intangible assets during the measurement period. The following deficiencies were 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 | Significant risk |
| 3 | 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 issuer recorded subsequent adjustments to the provisional fair value of these acquired intangible assets during the measurement period. The following deficiencies were identified: · The firm did not perform any substantive procedures to evaluate whether the issuer's subsequent adjustments were based on new information obtained about facts and circumstances that existed as of the acquisition date. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 | Significant risk |
| 4 | Revenue | The issuer recognized revenue from one of its products net of rebates and other sales incentives that it estimated based on certain historical data. The firm did not sufficiently test the completeness of these data because it did not test whether these data included all contractual rebates and other sales incentives owed to the customer. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 |
Issuer I2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Deferred Revenue | For certain revenue and deferred revenue the firm did not perform any procedures to test or test any 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) Financial statement audit only | AS 1105.10; AS 2305.16 | |
| 2 | Revenue | The firm's procedures to test the accuracy of certain other issuer-produced data the firm used in its substantive testing of certain of this revenue consisted of selecting a sample of items for testing. 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) Financial statement audit only | AS 1105.10 |
Issuer J4 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue and Related Accounts | With respect to two types of revenue the following deficiencies were identified: · The firm did not identify and test any controls that addressed whether the performance obligation was satisfied before revenue was recognized. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 2 | Revenue and Related Accounts | With respect to two types of revenue the following deficiencies were identified: · For the first type of revenue the firm did not perform any substantive procedures to test whether the performance obligation was satisfied before revenue was recognized. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 | |
| 3 | Revenue and Related Accounts | With respect to two types of revenue the following deficiencies were identified: · For the second type of revenue the firm used issuer-produced delivery data in its substantive testing 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 | |
| 4 | Revenue and Related Accounts | The firm did not perform procedures beyond inquiring of management and reading an issuer-prepared memorandum to evaluate whether the issuer's balance sheet presentation of certain customer deposits and sales commissions was in conformity with GAAP. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 |
Issuer K3 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 following deficiencies were identified: · The firm selected for testing controls that consisted of the issuer's reviews of the fair value of these acquired intangible assets including the assumptions and data used in these cash-flow forecasts. For one of these controls the firm did not evaluate the specific review procedures that the control owner 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 multiple businesses and determined the fair value of certain acquired intangible assets using cash-flow forecasts. The following deficiencies were identified: · The firm selected for testing controls that consisted of the issuer's reviews of the fair value of these acquired intangible assets including the assumptions and data used in these cash-flow forecasts. For one of these controls the firm did not identify and test any controls over the accuracy and completeness of certain of these data for one of these acquired businesses. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 3 | 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 following deficiencies were identified: · The firm used certain data in its substantive testing of one of these acquired businesses 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 L2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | 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 allowance for credit losses (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 was too small to provide sufficient appropriate audit evidence because in determining its sample the firm did not consider the characteristics of the population. (AS 2315.16 .23 and .23A) Financial statement audit only | AS 2315.16; AS 2315.23; AS 2315.23A | |
| 2 | Loans | The firm did not identify and evaluate a misstatement in a required disclosure under FASB ASC Topic 820 related to the carrying value of loans compared to their fair value. (AS 2810.30 and 31) Financial statement audit only | AS 2810.30; AS 2810.31 |
Issuer M2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Business Combinations | During the year the issuer entered into a transaction and engaged a specialist to assist it in determining the fair value of certain long-lived assets recorded in connection with the transaction. The following deficiencies were identified: · The firm did not identify and test any controls over the accuracy of certain issuer-produced data that the company's specialist used to determine the fair value of these long-lived assets. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 2 | Business Combinations | During the year the issuer entered into a transaction and engaged a specialist to assist it in determining the fair value of certain long-lived assets recorded in connection with the transaction. The following deficiencies were identified: · The firm did not test or test any controls over the accuracy of these issuer-produced data that the company's specialist used to determine the fair value of these long-lived assets. (AS 1105.A8a) Both financial statement and ICFR audits | AS 1105.A8a |
Issuer N2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Inventory | The issuer recorded the cost of certain manufactured inventory based on the weight of the raw materials included in the inventory items. The firm did not identify and test any controls over the accuracy of these weights. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 2 | Inventory | The firm's substantive procedures to test the existence of inventory at one of the issuer's locations were not suitable because they did not provide any evidence of the quantity and physical condition of the inventory. (AS 2510.09) Both financial statement and ICFR audits | AS 2510.9 |
Issuer O2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Mortgage Servicing Rights | The issuer used multiple service organizations to initiate process and record transactions related to mortgage servicing rights (MSRs). The valuation of MSRs was determined based on certain loan data that these service organizations provided to the issuer. The following deficiencies were identified: · The firm did not identify and test any controls over the accuracy of these data. (AS 2201.39 and .B19) Both financial statement and ICFR audits | AS 2201.39; AS 2201.B19 | |
| 2 | Mortgage Servicing Rights | The issuer used multiple service organizations to initiate process and record transactions related to mortgage servicing rights (MSRs). The valuation of MSRs was determined based on certain loan data that these service organizations provided to the issuer. The following deficiencies were identified: · The firm did not identify and test any controls over the accuracy of these data. (AS 2201.39 and .B19) Both financial statement and ICFR audits | AS 2301.8 |
Issuer P2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Derivatives | The firm did not evaluate whether the issuer had appropriately calculated and presented certain derivative losses in the statement of cash flows. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 2 | Derivatives | The firm did not identify and evaluate the issuer's omission of certain disclosures related to these derivative losses that were required under FASB ASC Topic 230 Statement of Cash Flows. (AS 2810.30 and .31) Financial statement audit only | AS 2810.30; AS 2810.31 |
Issuer Q1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The firm's substantive procedures to test certain revenue included selecting a sample of transactions for testing. The firm did not perform sufficient procedures to test these transactions because its procedures were limited to comparing the transactions to information from the same system from which the transactions were selected. (AS 2301.08) Financial statement audit only | AS 2301.8 |
Issuer R1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | 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 allowance for credit losses (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 was too small to provide sufficient appropriate audit evidence because in determining its sample the firm did not consider the relationship of the sample to the relevant audit objective and the allowable risk of incorrect acceptance. (AS 2315.16 .23 and .23A) Financial statement audit only | AS 2315.16; AS 2315.23; AS 2315.23A |
Issuer S1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | For certain revenue the firm selected for testing a control that consisted of the issuer's reviews of monthly revenue compared to the corresponding prior-period revenue. The firm did not identify and test any controls over the accuracy and completeness of certain data that the control owners used in the operation of this control. (AS 2201.39) ICFR audit only | AS 2201.39 |
Issuer T1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Journal Entries | To identify and select journal entries for testing the firm identified fraud characteristics and obtained a list of all journal entries with these characteristics. 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 certain journal entries. (AS 2401.61) Financial statement audit only | AS 2401.61 |
Issuer U1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Investment Securities | The firm did not perform any substantive procedures to evaluate the appropriateness of the issuer's categorization of its investment securities within the fair value hierarchy set forth in FASB ASC Topic 820. (AS 2301.08) Financial statement audit only | AS 2301.8 |
Issuer V1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Investment Securities | To test the fair value of certain investment securities the firm selected a sample of investments for testing. The firm did not select sample items in such a way that could be expected to be representative of the population because it excluded a portion of the population when selecting sample items to test. (AS 2315.24) Financial statement audit only | AS 2315.24 |