- Inspection year
- 2023
- Report date
- 12-Jun-2024
- PCAOB release
- 104-2024-106
- Audits reviewed
- 17
- Audits w/ Part I.A deficiencies
- 8
- Part I.A deficiency rate
- 47%
- Part I.A deficiencies
- 20
- Part I.B deficiencies
- 6
- Report
- View PDF ↗
Deficiencies (20)
Grouped by issuer and in the same order as the PCAOB report, so each item ties back directly to the source.
Issuer A3 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The issuer recognized certain revenue over time based on costs incurred to date relative to total estimated costs to complete the contract. The following deficiencies were identified: · The firm selected for testing controls that consisted of the issuer's reviews of project budgets and status by contract including the estimated costs to complete. The firm did not evaluate the specific review procedures that the control owners performed to evaluate the reasonableness of the project budgets and related assumptions. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 2 | Revenue | The issuer recognized certain revenue over time based on costs incurred to date relative to total estimated costs to complete the contract. The following deficiencies were identified: · The firm did not perform any procedures beyond inquiring of project managers to evaluate the reasonableness of the significant assumptions that the issuer used to develop the estimated costs to complete the contracts the firm selected for testing. (AS 2501.16) Both financial statement and ICFR audits | AS 2501.16 | |
| 3 | Long-Lived Assets | The firm selected for testing various controls that consisted of the issuer's reviews of additions to long-lived assets. The firm did not evaluate the specific review procedures that the control owners performed to evaluate whether additions were properly capitalized and allocated to the correct asset group. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 |
Issuer B5 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The issuer recognized certain revenue over time based on costs incurred to date relative to total estimated costs to complete the contract. The firm did not perform any procedures beyond inquiring of management to evaluate the reasonableness of the significant assumptions that the issuer used to develop the estimated costs to complete the contracts the firm selected for testing. (AS 2501.16) Financial statement audit only | AS 2501.16 | |
| 2 | Income Taxes | The issuer recorded a partial valuation allowance against its recorded deferred tax assets based on forecasted taxable income which included various significant assumptions. The following deficiencies were identified: · For the first year of the forecast period the firm did not sufficiently evaluate the reasonableness of a significant assumption because its procedures were limited to comparing the assumption to the issuer's recent experience. (AS 2501.16) Financial statement audit only | AS 2501.16 | |
| 3 | Income Taxes | The issuer recorded a partial valuation allowance against its recorded deferred tax assets based on forecasted taxable income which included various significant assumptions. The following deficiencies were identified: · For the remaining years of the forecast period the firm did not perform any procedures to evaluate the reasonableness of the significant assumptions. (AS 2501.16) Financial statement audit only | AS 2501.16 | |
| 4 | Income Taxes | The issuer recorded a partial valuation allowance against its recorded deferred tax assets based on forecasted taxable income which included various significant assumptions. The following deficiencies were identified: · The firm did not perform procedures to test or test controls over the accuracy and completeness of certain information produced by the issuer that the firm used in its substantive testing of the deferred tax assets that were subject to the valuation allowance. (AS 1105.10) Financial statement audit only | AS 1105.10 | |
| 5 | Income Taxes | The issuer recorded a partial valuation allowance against its recorded deferred tax assets based on forecasted taxable income which included various significant assumptions. The following deficiencies were identified: · The firm did not identify and evaluate a misstatement in a required disclosure under FASB ASC Topic 740 Income Taxes. (AS 2810.30 and .31) Financial statement audit only | AS 2810.30; AS 2810.31 |
Issuer C4 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Inventory | The issuer performed a combination of cycle counts and full physical counts of inventory held at certain locations. To test the existence of inventory at these locations the firm performed independent physical counts of inventory before year end. The firm did not test any intervening transactions and did not inspect any records of the issuer's counts and procedures on which the year-end inventory was based. (AS 2510.12) Financial statement audit only | AS 2510.12 | Significant risk |
| 2 | Inventory | The firm's sample to test the issuer's reserve for excess and obsolete inventory at one business unit 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 .23 and .23A) Financial statement audit only | AS 2315.16; AS 2315.23; AS 2315.23A | Significant risk |
| 3 | Inventory | The firm's sample was not representative of the population because the firm selected inventory items that had a recorded reserve but did not select any items that did not have a recorded reserve. (AS 2315.24) Financial statement audit only | AS 2315.24 | Significant risk |
| 4 | Intangible Assets | The issuer evaluated an intangible asset for possible impairment using various assumptions it developed including forecasted revenue that assumed significant growth. The firm did not perform any procedures beyond inquiring of management to evaluate the reasonableness of the significant revenue growth assumptions. (AS 2501.16) Financial statement audit only | AS 2501.16 |
Issuer D2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Inventory | During the year the issuer recorded certain revenue from consignment arrangements whereby revenue was recognized and inventory was relieved when products were shipped to customers by resellers. The firm did not perform any procedures to evaluate the reliability of the information that it obtained from resellers and used to test this revenue and the inventory held on consignment. (AS 1105.04 and .06) Financial statement audit only | AS 1105.4; AS 1105.6 | Significant risk |
| 2 | Inventory | The firm did not sufficiently test a component of the issuer's reserve for excess and obsolete inventory because its procedures were limited to recalculating the reserve using information obtained from the issuer's external warehouse manager without evaluating the reliability of this information. (AS 1105.04 and 06) Financial statement audit only | AS 1105.4; AS 1105.6 |
Issuer E2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The issuer recognized certain revenue from a contract with a customer based on specific formulas that measured the amount of consideration the issuer would receive for satisfaction of its performance obligation. The firm's substantive procedures to test this revenue included testing a sample of revenue transactions. For the transactions selected for testing the firm did not recalculate the consideration that the issuer used to record revenue to determine whether the consideration was calculated in accordance with the contract. (AS 2301.08 and .13) Financial statement audit only | AS 2301.8; AS 2301.13 | |
| 2 | Long-Lived Assets | The firm did not perform any procedures to evaluate certain indicators of potential impairment that existed at year end. (AS 2301.08; AS 2810.03) Financial statement audit only | AS 2301.8; AS 2810.3 |
Issuer F2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The issuer initiated and processed sales transactions at numerous business units. The firm designated certain business units as subject to more extensive audit procedures and used an other accounting firm to test one of these business units. The following deficiencies were identified: · The firm did not identify and test any controls over the accuracy of the pricing information the issuer used to record revenue at the business units it tested. (AS 2201.39) ICFR audit only | AS 2201.39 | |
| 2 | Revenue | The issuer initiated and processed sales transactions at numerous business units. The firm designated certain business units as subject to more extensive audit procedures and used an other accounting firm to test one of these business units. The following deficiencies were identified: · The firm identified a risk of material misstatement that applied to all of these business units and tested a control that addressed this risk at the business units it tested but it did not instruct the other accounting firm to test this control at the business unit that firm tested. (AS 2101.11 and .12; AS 2201.B10) ICFR audit only | AS 2101.11; AS 2101.12; AS 2201.B10 |
Issuer G1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The issuer recognized certain revenue over time based on costs incurred to date relative to total estimated costs to complete the contract. The firm did not perform any procedures beyond inquiring of management to evaluate the reasonableness of the significant assumptions that the issuer used to develop the estimated costs to complete the contracts the firm selected for testing. (AS 2501.16) Financial statement audit only | AS 2501.16 |
Issuer H1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Investments | The firm selected for testing a control that included the issuer's review of the fair values of certain investments. The firm did not evaluate the specific review procedures that the control owner performed to assess the reasonableness of certain assumptions the issuer used to determine the fair values of these investments. (AS 2201.42 and .44) ICFR audit only | AS 2201.42; AS 2201.44 |