- Inspection year
- 2023
- Report date
- 20-Jun-2024
- PCAOB release
- 104-2024-107
- Audits reviewed
- 12
- Audits w/ Part I.A deficiencies
- 8
- Part I.A deficiency rate
- 67%
- Part I.A deficiencies
- 40
- Part I.B deficiencies
- 9
- Report
- View PDF ↗
Deficiencies (40)
Grouped by issuer and in the same order as the PCAOB report, so each item ties back directly to the source.
Issuer A10 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Inventory | The firm selected for testing various controls over revenue and inventory but did not identify and test any controls over the accuracy and completeness of certain system-generated data or reports that were used in the operation of these controls. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 2 | Revenue | The firm selected for testing controls that consisted of the issuer's reviews of gross margins estimates of revenue deductions and customer shipments and invoices. The firm did not evaluate the review procedures that the control owners performed including the procedures to identify items for follow up and/or 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 | |
| 3 | Revenue | The firm selected for testing a control that consisted of the issuer's review and approval of customer price changes. The firm did not evaluate the specific review procedures that the control owners performed to assess the appropriateness of the price changes and whether they were appropriately approved. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 4 | Revenue | The firm's substantive procedures to test revenue consisted of selecting a sample of transactions for testing. The firm did not perform sufficient procedures to test these transactions because it did not test (1) whether the issuer had a valid contract with the customer and (2) the issuer's determination of the transaction price. (AS 2301.08 and .13) Both financial statement and ICFR audits | AS 2301.8; AS 2301.13 | |
| 5 | Inventory | The firm selected for testing a control that consisted of the issuer's review of standard costs for its inventory items. The firm did not evaluate the specific review procedures that the control owner performed to assess the reasonableness of the standard costs included in the issuer's inventory system. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 6 | Inventory | The firm did not identify and test any controls that addressed whether variances between actual and standard costs were appropriately calculated and recorded in the issuer's inventory system. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 7 | Inventory | The firm did not identify and test any controls over the completeness of the issuer's in-transit inventory. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 8 | Inventory | For in-transit inventory and freight included in inventory the firm did not perform procedures to test or test any controls over the accuracy and completeness of certain system-generated data or reports the firm used in its substantive testing including its substantive analytical procedures. (AS 1105.10; AS 2305.16) Both financial statement and ICFR audits | AS 1105.10; AS 2305.16 | |
| 9 | Foreign Currency Translation | The firm did not identify and test any controls over the issuer's foreign currency translation adjustments. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 10 | Foreign Currency Translation | The firm did not perform sufficient substantive procedures to test the issuer's foreign currency translation adjustments because the firm did not test the exchange rates that the issuer used in the translation of certain accounts. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 |
Issuer B7 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue and Related Accounts | For certain contracts the issuer recognized revenue over time based on costs incurred to date relative to total estimated costs to complete. The firm's substantive procedures to test this revenue and the related accounts included (1) selecting a sample of contracts that exceeded a monetary threshold (2) selecting a sample of costs incurred and billings to customers during the year and (3) performing analytical procedures. The following deficiencies were identified: · For certain contracts selected for testing the firm did not perform procedures to test whether the performance obligations had been satisfied before revenue was recognized beyond comparisons to issuer-produced reports and invoices. (AS 2301.08 and .13) Financial statement audit only | AS 2301.8; AS 2301.13 | |
| 2 | Revenue and Related Accounts | For certain contracts the issuer recognized revenue over time based on costs incurred to date relative to total estimated costs to complete. The firm's substantive procedures to test this revenue and the related accounts included (1) selecting a sample of contracts that exceeded a monetary threshold (2) selecting a sample of costs incurred and billings to customers during the year and (3) performing analytical procedures. The following deficiencies were identified: · The firm's sample sizes to test costs incurred and billings to customers 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) Financial statement audit only | AS 2315.16; AS 2315.23; AS 2315.23A | |
| 3 | Revenue and Related Accounts | For certain contracts the issuer recognized revenue over time based on costs incurred to date relative to total estimated costs to complete. The firm's substantive procedures to test this revenue and the related accounts included (1) selecting a sample of contracts that exceeded a monetary threshold (2) selecting a sample of costs incurred and billings to customers during the year and (3) performing analytical procedures. The following deficiencies were identified: · The firm used certain labor rates in its substantive testing of costs incurred but did not perform procedures to test or test any controls over the accuracy of these labor rates. (AS 1105.10) Financial statement audit only | AS 1105.10 | |
| 4 | Revenue and Related Accounts | For certain contracts the issuer recognized revenue over time based on costs incurred to date relative to total estimated costs to complete. The firm's substantive procedures to test this revenue and the related accounts included (1) selecting a sample of contracts that exceeded a monetary threshold (2) selecting a sample of costs incurred and billings to customers during the year and (3) performing analytical procedures. The following deficiencies were identified: · The firm did not perform substantive procedures to test the occurrence of revenue or the existence of contract assets for contracts below the monetary threshold beyond performing the procedures to test a sample of costs incurred and billings to customers discussed above. (AS 1105.27; AS 2301.08 and .13) Financial statement audit only | AS 1105.27; AS 2301.8; AS 2301.13 | |
| 5 | Revenue and Related Accounts | For certain contracts the issuer recognized revenue over time based on costs incurred to date relative to total estimated costs to complete. The firm's substantive procedures to test this revenue and the related accounts included (1) selecting a sample of contracts that exceeded a monetary threshold (2) selecting a sample of costs incurred and billings to customers during the year and (3) performing analytical procedures. The following deficiencies were identified: · For the analytical procedures over certain revenue the firm developed its expectations in part using data derived from the recorded amounts of revenue. The firm did not evaluate whether these data were sufficiently relevant and reliable for the purpose of achieving its audit objectives. (AS 1105.04 and .06; AS 2305.16) Financial statement audit only | AS 1105.4; AS 1105.6; AS 2305.16 | |
| 6 | Revenue and Related Accounts | For certain contracts the issuer recognized revenue over time based on costs incurred to date relative to total estimated costs to complete. The firm's substantive procedures to test this revenue and the related accounts included (1) selecting a sample of contracts that exceeded a monetary threshold (2) selecting a sample of costs incurred and billings to customers during the year and (3) performing analytical procedures. The following deficiencies were identified: · For the analytical procedures over certain other revenue the firm identified a difference in excess of the firm's established threshold but did not obtain any evidential matter to evaluate the difference. (AS 2305.21) Financial statement audit only | AS 2305.21 | |
| 7 | 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 |
Issuer C3 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The firm relied on controls it selected for testing in its approach to testing revenue at two of the issuer's business units. The following deficiencies were identified: · For the first business unit the only control the firm selected for testing over the occurrence of revenue consisted of the issuer's reconciliation of the sales subledger to the general ledger and its review of this reconciliation. The firm did not evaluate whether the design of this control was sufficient to address the risks of material misstatement related to the occurrence of sales transactions in the sales subledger. (AS 2301.19) Financial statement audit only | AS 2301.19 | |
| 2 | Revenue | The firm relied on controls it selected for testing in its approach to testing revenue at two of the issuer's business units. The following deficiencies were identified: · For the second business unit the firm selected for testing a control that consisted of the issuer's review of sales transactions included in the general ledger. The firm's testing of this control was not sufficient because the firm did not directly test the review procedures that the control owner performed. (AS 2301.19 .21 and .23) Financial statement audit only | AS 2301.19; AS 2301.21; AS 2301.23 | |
| 3 | Revenue | The firm relied on controls it selected for testing in its approach to testing revenue at two of the issuer's business units. The following deficiencies were identified: · The sample sizes the firm used in certain of its substantive procedures to test this 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) Financial statement audit only | AS 2301.16; AS 2301.18; AS 2301.37; AS 2315.19; AS 2315.23; AS 2315.23A |
Issuer D7 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The firm's substantive procedures to test revenue consisted of selecting a sample of transactions for testing. The following deficiencies were identified: · For certain transactions selected for testing the firm did not perform any procedures to test whether the performance obligations had been satisfied before revenue was recognized. (AS 2301.08 and .13) Financial statement audit only | AS 2301.8; AS 2301.13 | |
| 2 | Revenue | The firm's substantive procedures to test revenue consisted of selecting a sample of transactions for testing. The following deficiencies were identified: · For certain other transactions selected for testing the firm used issuer-produced data or information from external sources in its testing. The firm did not (1) test or test any controls over the accuracy and completeness of the issuer-produced data or (2) evaluate the reliability of the external information. (AS 1105.04 .06 and .10) Financial statement audit only | AS 1105.4; AS 1105.6; AS 1105.10 | |
| 3 | Revenue | The firm's substantive procedures to test revenue consisted of selecting a sample of transactions for testing. The following deficiencies were identified: · The firm did not evaluate whether the issuer (1) was acting as a principal or as an agent and (2) appropriately disclosed whether revenue was recognized at a point in time or over time. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 4 | Intangible Assets | The issuer used forecasted cash flows in its assessment of certain amortizable intangible assets for possible impairment. The firm's approach for substantively testing the valuation of these intangible assets was to test the issuer's process. The following deficiencies were identified: · For one of the issuer's asset groups the firm did not evaluate whether the issuer's inclusion of expected cash flows from a certain product in its forecasted cash flows was in conformity with FASB ASC Topic 360 Property Plant and Equipment. (AS 2501.10) Financial statement audit only | AS 2501.10 | Significant risk |
| 5 | Intangible Assets | The issuer used forecasted cash flows in its assessment of certain amortizable intangible assets for possible impairment. The firm's approach for substantively testing the valuation of these intangible assets was to test the issuer's process. The following deficiencies were identified: · For one of the issuer's asset groups the firm did not evaluate the reasonableness of the significant assumptions the issuer used related to the expected cash flows from this product beyond obtaining evidence from an external party that this product was under development. (AS 2501.16) Financial statement audit only | AS 2501.16 | Significant risk |
| 6 | Intangible Assets | The issuer used forecasted cash flows in its assessment of certain amortizable intangible assets for possible impairment. The firm's approach for substantively testing the valuation of these intangible assets was to test the issuer's process. The following deficiencies were identified: · For the other asset groups the firm used an issuer-prepared spreadsheet in its substantive testing of the issuer's allocation of historical revenue to these asset groups. The firm did not test or test any controls over the accuracy of this spreadsheet. (AS 1105.10) Financial statement audit only | AS 1105.10 | Significant risk |
| 7 | Intangible Assets | The firm did not identify and evaluate the issuer's omission of certain required disclosures under FASB ASC Topic 350 Intangibles – Goodwill and Other. (AS 2810.30 and .31) Financial statement audit only | AS 2810.30; AS 2810.31 | Significant risk |
Issuer E9 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Inventory | The firm's internal inspection program had inspected this audit reviewed these areas and also identified the deficiencies below. The issuer used multiple information-technology (IT) systems to initiate process and record transactions related to inventory. The firm selected for testing an automated control that used data generated or maintained by these IT systems. As a result of the deficiencies in the firm's testing of IT general controls the firm's testing of this automated control was not sufficient. (AS 2201.46) Both financial statement and ICFR audits | AS 2201.46 | |
| 2 | Inventory | The firm's internal inspection program had inspected this audit reviewed these areas and also identified the deficiencies below. The issuer used multiple information-technology (IT) systems to initiate process and record transactions related to inventory. The firm selected for testing an automated control that used data generated or maintained by these IT systems. · The firm selected for testing two controls over change management and one control over transaction processing within these IT systems. The firm did not evaluate whether user access to perform the control over transaction processing was appropriately restricted for one of these IT systems. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 1105.10 | |
| 3 | Inventory | The firm's internal inspection program had inspected this audit reviewed these areas and also identified the deficiencies below. The issuer used multiple information-technology (IT) systems to initiate process and record transactions related to inventory. The firm selected for testing an automated control that used data generated or maintained by these IT systems. · The firm selected for testing a control over user access to these IT systems but did not perform procedures to test or test any controls over the accuracy and completeness of certain reports that the firm used in its testing. (AS 1105.10) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 4 | Inventory | The firm's internal inspection program had inspected this audit reviewed these areas and also identified the deficiencies below. The issuer used multiple information-technology (IT) systems to initiate process and record transactions related to inventory. The firm selected for testing an automated control that used data generated or maintained by these IT systems. · The firm selected for testing two controls over change management and one control over transaction processing within these IT systems. 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 | |
| 5 | Inventory | The firm's internal inspection program had inspected this audit reviewed these areas and also identified the deficiencies below. The firm did not identify and test any controls that addressed the risk related to the accuracy and completeness of data transferred from the issuer's inventory subledger to the general ledger. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 6 | Inventory | The firm's internal inspection program had inspected this audit reviewed these areas and also identified the deficiencies below. The firm selected for testing controls over the calculation of the issuer's excess and obsolete inventory reserve and inventory unit costs. The firm did not identify and test any controls over the accuracy and completeness of certain system-generated data or reports that were used in the operation of these controls. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 7 | Inventory | The firm's internal inspection program had inspected this audit reviewed these areas and also identified the deficiencies below. As a result of the firm's control testing deficiencies the firm did not perform sufficient substantive procedures to test the valuation of inventory as follows: · The sample size the firm used in certain of its substantive procedures to test inventory 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. (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 | |
| 8 | Inventory | The firm's internal inspection program had inspected this audit reviewed these areas and also identified the deficiencies below. As a result of the firm's control testing deficiencies the firm did not perform sufficient substantive procedures to test the valuation of inventory as follows: · The firm did not perform procedures to test or test any controls over the accuracy and/or completeness of certain system-generated data or reports that the firm used in its substantive testing. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 | |
| 9 | Business Combinations | The firm's internal inspection program had inspected this audit reviewed these areas and also identified the deficiencies below. During the year the issuer acquired a business. The firm selected for testing controls that consisted of the issuer's reviews of the fair values of tangible assets acquired and liabilities assumed. The firm did not evaluate the specific review procedures that the control owners performed to assess the reasonableness of the fair values of certain of these tangible assets acquired and liabilities assumed. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | Significant risk |
Issuer F2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Allowance for Credit/Loan Losses | The firm's approach for substantively testing the allowance for loan losses (ALL) was to test the issuer's process. The following deficiencies were identified: · For loans that were collectively evaluated for impairment the issuer determined the qualitative reserve component of the ALL using various qualitative factors. The firm did not evaluate whether the issuer had a reasonable basis for the significant assumptions the issuer used to develop these qualitative factors. (AS 2501.16) Financial statement audit only | AS 2501.16 | Significant risk |
| 2 | Allowance for Credit/Loan Losses | The firm's approach for substantively testing the allowance for loan losses (ALL) was to test the issuer's process. The following deficiencies were identified: · The issuer also reported an unallocated reserve component of the ALL. The firm did not evaluate the reasonableness of the significant assumptions the issuer used to develop this component. (AS 2501.16) Financial statement audit only | AS 2501.16 | Significant risk |
Issuer G1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Payroll Expenses | The issuer used a service organization to process and record transactions related to payroll expense and the firm used a report produced by the service organization in its substantive testing. The firm did not perform any procedures that addressed the accuracy and completeness of this report. (AS 2301.08) Financial statement audit only | AS 2301.8 |
Issuer H1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Operating Expenses | The issuer included payroll costs as a component of various operating expenses it reported. The firm did not perform any substantive procedures to test whether the issuer had appropriately classified these payroll costs. (AS 2301.08) Financial statement audit only | AS 2301.8 |