- Inspection year
- 2023
- Report date
- 12-Jun-2024
- PCAOB release
- 104-2024-103
- Audits reviewed
- 12
- Audits w/ Part I.A deficiencies
- 5
- Part I.A deficiency rate
- 42%
- Part I.A deficiencies
- 14
- Part I.B deficiencies
- 6
- 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 A5 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | For certain business units the firm identified a fraud risk but did not perform any tests of details to address this fraud risk. (AS 2301.13) Both financial statement and ICFR audits | AS 2301.13 | |
| 2 | Revenue | For certain of these business units and another business unit the firm did not perform any substantive procedures to test the completeness of revenue. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 | |
| 3 | Inventory | The firm used data produced by the issuer in its substantive procedures to test the reserve for excess and obsolete inventory. The firm did not perform any procedures to test or test any controls over the accuracy and completeness of certain of these data. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 | Significant risk |
| 4 | Inventory | For one business unit the firm selected for testing a control that included the issuer's reviews of the accuracy and completeness of reports that were used in the operation of the issuer's controls over revenue and inventory. The firm did not test the aspects of this control that addressed the accuracy and/or completeness of certain of these reports. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 5 | Inventory | The firm subjected certain other of the issuer's business units to less extensive audit procedures. With respect to revenue and/or inventory for these business units in determining the extent to which audit procedures should be performed the firm did not evaluate (1) the materiality of these business units (2) the nature of the recorded balances and/or (3) whether the risks of material misstatement that the firm identified for the business units subject to more extensive audit procedures also applied to 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 B4 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The issuer recorded certain revenue net of allowances for contractual adjustments. The firm's procedures to test the estimated portion of these contractual adjustments consisted of (1) developing an independent expectation (2) testing the issuer's process and (3) evaluating transactions occurring after the measurement date. The following deficiencies were identified: · When developing its independent expectation the firm did not perform procedures beyond inquiry to demonstrate it had a reasonable basis for a certain assumption it independently derived. (AS 2501.22) Financial statement audit only | AS 2501.22 | Significant risk |
| 2 | Revenue | The issuer recorded certain revenue net of allowances for contractual adjustments. The firm's procedures to test the estimated portion of these contractual adjustments consisted of (1) developing an independent expectation (2) testing the issuer's process and (3) evaluating transactions occurring after the measurement date. The following deficiencies were identified: · When testing the issuer's process and evaluating transactions occurring after the measurement date the firm used certain issuer-produced reports but did not perform any procedures to test or test any controls over the accuracy and/or completeness of these reports. (AS 1105.10) Financial statement audit only | AS 1105.10 | Significant risk |
| 3 | Inventory | The firm's substantive procedures to test the unit cost of inventory included selecting a sample of inventory items for testing. For certain items in its sample the firm did not perform procedures to test the cost of the raw materials included in the selected items. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 4 | Inventory | The firm used certain data in its substantive testing of the reserve for excess and obsolete inventory but did not perform any procedures to test or test any controls over the accuracy and completeness of these data. (AS 1105.10) Financial statement audit only | AS 1105.10 |
Issuer C2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Allowance for Credit/Loan Losses | For loans that were collectively evaluated for impairment the issuer estimated the qualitative reserve component of the allowance for loan losses (ALL) using qualitative factors. The firm's approach for substantively testing the ALL was to test the issuer's process. The firm did not evaluate whether the issuer had a reasonable basis for a significant assumption the issuer used to develop certain of these qualitative factors. (AS 2501.16) Financial statement audit only | AS 2501.16 | |
| 2 | Allowance for Credit/Loan Losses | For loans that were collectively evaluated for impairment the issuer estimated the qualitative reserve component of the allowance for loan losses (ALL) using qualitative factors. The firm's approach for substantively testing the ALL was to test the issuer's process. The issuer used information from a service organization to estimate this component of the ALL. The firm did not perform procedures to test the completeness of certain of this information. (AS 2301.08) Financial statement audit only | AS 2301.8 |
Issuer D2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The firm selected for testing a control that consisted of the issuer's review of new or amended customer contracts for appropriate revenue recognition. The firm did not evaluate the specific review procedures that the control owner performed to identify and evaluate all relevant terms and conditions. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 2 | 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 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 |
Issuer E1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | For certain contracts the issuer recognized revenue over time based on costs incurred to date relative to total estimated costs to complete. This revenue included an estimate of variable consideration in the transaction price. The firm selected for testing controls that consisted of the issuer's review of revenue recognition for these contracts. The firm did not evaluate the specific review procedures that the control owners performed to assess the reasonableness of the significant assumptions used to estimate the total costs to complete the contracts and the variable consideration included in the transaction prices. (AS 2201.42 and .44) ICFR audit only | AS 2201.42; AS 2201.44 |