- Inspection year
- 2023
- Report date
- 20-Jun-2024
- PCAOB release
- 104-2024-110
- Audits reviewed
- 26
- Audits w/ Part I.A deficiencies
- 21
- Part I.A deficiency rate
- 81%
- Part I.A deficiencies
- 164
- Part I.B deficiencies
- 12
- Report
- View PDF ↗
Deficiencies (164)
Grouped by issuer and in the same order as the PCAOB report, so each item ties back directly to the source.
Issuer A4 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Long-Lived Assets | The issuer performed an assessment of its long-lived assets for possible impairment at year end using various significant assumptions it developed based on its planned course of action. The firm's approach for substantively testing the issuer's impairment assessment was to test the issuer's process. The following deficiencies were identified: · The firm did not identify and evaluate that the issuer did not comply with FASB ASC Topic 350 Intangibles – Goodwill and Other and FASB ASC Topic 360 Property Plant and Equipment because the issuer performed its impairment assessment of goodwill prior to performing its assessment of long-lived assets for possible impairment. (AS 2810.30) In connection with our review the issuer reevaluated its assessment of long-lived assets for possible impairment and concluded that misstatements existed that had not been previously identified. The issuer subsequently corrected these misstatements in a restatement of its financial statements and the firm revised and reissued its report on the financial statements. Financial statement audit only | AS 2810.30 | Significant riskIncorrect opinion |
| 2 | Long-Lived Assets | The issuer performed an assessment of its long-lived assets for possible impairment at year end using various significant assumptions it developed based on its planned course of action. The firm's approach for substantively testing the issuer's impairment assessment was to test the issuer's process. The following deficiencies were identified: · The firm did not sufficiently evaluate the reasonableness of certain significant assumptions including taking into account factors affecting the issuer's intent and ability to carry out these assumptions because its procedures were limited to inquiring of management and evaluating the assumptions for consistency with recent experience. (AS 2501.16 and .17) In connection with our review the issuer reevaluated its assessment of long-lived assets for possible impairment and concluded that misstatements existed that had not been previously identified. The issuer subsequently corrected these misstatements in a restatement of its financial statements and the firm revised and reissued its report on the financial statements. Financial statement audit only | AS 2501.16; AS 2501.17 | Significant riskIncorrect opinion |
| 3 | Long-Lived Assets | The issuer performed an assessment of its long-lived assets for possible impairment at year end using various significant assumptions it developed based on its planned course of action. The firm's approach for substantively testing the issuer's impairment assessment was to test the issuer's process. The following deficiencies were identified: · The firm did not sufficiently evaluate the reasonableness of certain other significant assumptions because its procedures were limited to evaluating the assumptions for consistency with certain industry information. Further the firm did not perform procedures to evaluate the relevance and reliability of this industry information. (AS 1105.04 and .06; AS 2501.16) In connection with our review the issuer reevaluated its assessment of long-lived assets for possible impairment and concluded that misstatements existed that had not been previously identified. The issuer subsequently corrected these misstatements in a restatement of its financial statements and the firm revised and reissued its report on the financial statements. Financial statement audit only | AS 1105.4; AS 1105.6; AS 2501.16 | Significant riskIncorrect opinion |
| 4 | Journal Entries | The firm identified a fraud risk related to the potential for management to override controls including recording unsupported journal entries. The firm did not perform any substantive procedures to test journal entries to address this risk at certain business units. (AS 2401.58) Financial statement audit only | AS 2401.58 | Incorrect opinion |
Issuer B28 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The issuer used several information-technology (IT) systems to process and record certain revenue at one business unit. The following deficiencies were identified: · The firm did not identify and test any controls that addressed a risk of material misstatement related to the occurrence of revenue. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 2 | Revenue | The issuer used several information-technology (IT) systems to process and record certain revenue at one business unit. The following deficiencies were identified: · The firm selected for testing controls that consisted of the issuer's review of price list changes processed through certain of the issuer's IT systems. The firm did not identify and test any controls over the accuracy and completeness of certain information used in the operation of these controls. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 3 | Revenue | The issuer used several information-technology (IT) systems to process and record certain revenue at one business unit. The following deficiencies were identified: · The firm selected for testing controls that consisted of the issuer's review of price list changes processed through certain of the issuer's IT systems. 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 these controls. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 | |
| 4 | Revenue | The issuer used several information-technology (IT) systems to process and record certain revenue at one business unit. The following deficiencies were identified: · The firm did not identify and test any controls that addressed whether pricing was accurately applied in the recording of revenue. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 5 | Revenue | For revenue at three business units one of which was affected by the audit deficiencies discussed above the following additional deficiencies were identified: · The firm did not evaluate whether the issuer was acting as a principal or as an agent. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 | |
| 6 | Revenue | For revenue at three business units one of which was affected by the audit deficiencies discussed above the following additional deficiencies were identified: · The firm did not test whether revenue was recognized according to the contractual pricing. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 | |
| 7 | Revenue | For revenue at three business units one of which was affected by the audit deficiencies discussed above the following additional deficiencies were identified: · For two of these business units the firm's procedures to test this revenue consisted of testing a sample of transactions from certain periods. The firm did not perform any procedures to test the remaining population of this revenue. (AS 2315.24) Both financial statement and ICFR audits | AS 2315.24 | |
| 8 | Revenue | The issuer used multiple service organizations to host and/or maintain IT systems that the issuer used to initiate process and/or record transactions related to various types of revenue at five other business units. The firm obtained the service auditor's reports for these service organizations and identified certain complementary user controls that the service auditor's reports described as necessary. The following deficiencies were identified: · The firm identified control deficiencies related to several complementary user controls that consisted of the issuer's (1) granting and removal of access to these IT systems and/or (2) monitoring of computer operations. The firm did not evaluate the effect of these deficiencies on the issuer's ability to meet control objectives stated in the service auditor's reports. (AS 2201.62 and .B22) Both financial statement and ICFR audits | AS 2201.62; AS 2201.B22 | |
| 9 | Revenue | The issuer used multiple service organizations to host and/or maintain IT systems that the issuer used to initiate process and/or record transactions related to various types of revenue at five other business units. The firm obtained the service auditor's reports for these service organizations and identified certain complementary user controls that the service auditor's reports described as necessary. The following deficiencies were identified: · The firm did not perform any procedures to evaluate whether the issuer had implemented certain of these controls. (AS 2201.39 and .B22) Both financial statement and ICFR audits | AS 2201.39; AS 2201.B22 | |
| 10 | Revenue | The issuer used multiple service organizations to host and/or maintain IT systems that the issuer used to initiate process and/or record transactions related to various types of revenue at five other business units. The firm obtained the service auditor's reports for these service organizations and identified certain complementary user controls that the service auditor's reports described as necessary. The following deficiencies were identified: · The firm did not identify that certain of these controls were not designed to satisfy the control objectives described in certain of the service auditor's reports. (AS 2201.42 and .B22) Both financial statement and ICFR audits | AS 2201.42; AS 2201.B22 | |
| 11 | Revenue | The issuer used multiple service organizations to host and/or maintain IT systems that the issuer used to initiate process and/or record transactions related to various types of revenue at five other business units. The firm obtained the service auditor's reports for these service organizations and identified certain complementary user controls that the service auditor's reports described as necessary. The following deficiencies were identified: · The firm did not perform sufficient procedures to test the accuracy and completeness of certain reports produced by the service organizations that the firm used in its substantive testing. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 | |
| 12 | Revenue | For revenue at one of these five business units the following additional deficiencies were identified: · The firm did not perform any substantive procedures to evaluate the terms and conditions included in customer contracts. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 | |
| 13 | Revenue | For revenue at one of these five business units the following additional deficiencies were identified: · The firm did not identify and evaluate the issuer's omission of certain required disclosures related to this revenue. (AS 2810.30 and .31) Both financial statement and ICFR audits | AS 2810.30; AS 2810.31 | |
| 14 | Revenue | For revenue at another business unit the following deficiencies were identified: · The firm did not evaluate the reliability of certain external information that it used in its substantive testing. (AS 1105.04 and .06) Both financial statement and ICFR audits | AS 1105.4; AS 1105.6 | |
| 15 | Revenue | For revenue at another business unit the following deficiencies were identified: · The issuer recorded this revenue net of certain deductions. The firm did not perform any substantive procedures to test these sales deductions. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 | |
| 16 | Revenue | The firm subjected certain other of the issuer's business units to less extensive audit procedures. The following deficiencies were identified: · To address the risks of material misstatement related to revenue for these business units the firm selected for testing controls that included the issuer's comparisons and reviews of the (1) budget to actual results and (2) prior-period actual results to current-period actual results. The firm did not evaluate the specific review procedures that the control owners performed to investigate identified variances and determine whether items identified for follow up had been appropriately resolved. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 17 | Revenue | The firm subjected certain other of the issuer's business units to less extensive audit procedures. The following deficiencies were identified: · To address the risks of material misstatement related to revenue for these business units the firm selected for testing controls that included the issuer's comparisons and reviews of the (1) budget to actual results and (2) prior-period actual results to current-period actual results. The firm did not identify and test any controls over the review of the budget used in the operation of one of these controls. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 18 | Revenue | The firm subjected certain other of the issuer's business units to less extensive audit procedures. The following deficiencies were identified: · For certain of these business units the firm did not perform any procedures to test or test controls over the accuracy and completeness of certain issuer-produced information the firm used in its substantive testing including substantive analytical procedures. (AS 1105.10; AS 2305.16) Both financial statement and ICFR audits | AS 1105.10; AS 2305.16 | |
| 19 | Certain Assets | The firm's internal inspection program inspected this audit and reviewed the investments area but did not identify the deficiencies below. The issuer held certain investments and assets and engaged specialists to assist it in determining the fair values of these investments and assets using various significant assumptions developed by the issuer or the company's specialists. The following deficiencies were identified: · The firm selected for testing controls that consisted of the issuer's review of the fair values of these investments and/or assets. The firm did not evaluate the specific review procedures that the control owners performed to assess the reasonableness of the methods inputs and assumptions used to determine the fair values. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | Significant risk |
| 20 | Certain Assets | The firm's internal inspection program inspected this audit and reviewed the investments area but did not identify the deficiencies below. The issuer held certain investments and assets and engaged specialists to assist it in determining the fair values of these investments and assets using various significant assumptions developed by the issuer or the company's specialists. The following deficiencies were identified: · The firm identified misstatements in its substantive testing of certain investments. The firm did not evaluate whether the misstatements it identified should have had an effect on the firm's conclusion about the effectiveness of the issuer's controls. (AS 2201.B8) Both financial statement and ICFR audits | AS 2201.B22 | Significant risk |
| 21 | Investments | The firm's internal inspection program inspected this audit and reviewed the investments area but did not identify the deficiencies below. For certain investments the following additional deficiencies were identified: · For certain of these investments the firm did not perform any procedures to test the fair values. (AS 2501.07) Both financial statement and ICFR audits | AS 2501.7 | |
| 22 | Investments | The firm's internal inspection program inspected this audit and reviewed the investments area but did not identify the deficiencies below. For certain investments the following additional deficiencies were identified: · For another investment the firm did not perform any procedures to evaluate the reasonableness of a significant assumption developed by the issuer. (AS 2501.16) Both financial statement and ICFR audits | AS 2501.16 | |
| 23 | Investments | The firm's internal inspection program inspected this audit and reviewed the investments area but did not identify the deficiencies below. For certain investments the following additional deficiencies were identified: · For certain other investments the issuer used the investees' unaudited financial results in estimating the fair values. The firm did not sufficiently evaluate the investees' financial results it used as audit evidence because it did not apply or request that another auditor apply appropriate auditing procedures to the unaudited financial statements. (AS 1105.B3) Both financial statement and ICFR audits | AS 1105.B3 | |
| 24 | Certain Assets | For certain of these assets the firm used an auditor-employed specialist to assist it with testing the fair values of these assets. The following additional deficiencies were identified: · The firm did not perform any procedures to evaluate the reasonableness of certain significant assumptions developed by the issuer. (AS 2501.16) Both financial statement and ICFR audits | AS 2501.16 | |
| 25 | Certain Assets | For certain of these assets the firm used an auditor-employed specialist to assist it with testing the fair values of these assets. The following additional deficiencies were identified: · The firm did not identify that the auditor-employed specialist did not perform procedures to evaluate the reasonableness of certain significant assumptions developed by certain of the company's specialists. (AS 1105.A8b; AS 1201.C6 and .C7) Both financial statement and ICFR audits | AS 1105.A8b; AS 1201.C6; AS 1201.C7 | |
| 26 | Certain Assets | For certain other of these assets the following additional deficiencies were identified: · The issuer used a service organization for the recordkeeping of these assets and this service organization used sub-service organizations for certain functions. The firm did not obtain an understanding of or test any relevant controls at these sub-service organizations. (AS 2201.39 and .B19) Both financial statement and ICFR audits | AS 2201.39; AS 2201.B19 | |
| 27 | Certain Assets | For certain other of these assets the following additional deficiencies were identified: · The firm did not perform procedures to evaluate the reasonableness of a significant assumption developed by one of the company's specialists. (AS 1105.A8b) Both financial statement and ICFR audits | AS 1105.A8b | |
| 28 | Certain Assets | For certain other of these assets the following additional deficiencies were identified: · The firm did not perform procedures to test or sufficiently test controls over the relevance and reliability of information produced by the service organization discussed above and used by the company's specialist to estimate the fair value of these assets. (AS 1105.A8a) Both financial statement and ICFR audits | AS 1105.A8b |
Issuer C17 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The firm's internal inspection program inspected this audit and reviewed the Revenue and Business Combination areas but did not identify the deficiencies below. The issuer used various service organizations to host and/or maintain IT systems that the issuer used to initiate process and record transactions related to revenue at one business unit. In its testing of controls over this account the firm tested certain IT-dependent manual controls that used data and reports generated or maintained by these IT systems. As a result of the deficiencies in the firm's testing of IT general controls (ITGCs) the firm's testing of these IT-dependent manual controls was not sufficient. (AS 2201.46) Both financial statement and ICFR audits | AS 2201.46 | |
| 2 | Revenue | The firm's internal inspection program inspected this audit and reviewed the Revenue and Business Combination areas but did not identify the deficiencies below. The firm obtained the service auditor's reports for these service organizations and identified certain complementary user controls that the service auditor's reports described as necessary. The following deficiencies were identified: · The firm identified control deficiencies related to various complementary user controls that consisted of the issuer's reviews of user access to these IT systems. The firm did not sufficiently evaluate the severity of these control deficiencies because it did not evaluate or fully evaluate the magnitude of the potential misstatements resulting from these deficiencies. (AS 2201.62 and .B22) Both financial statement and ICFR audits | AS 2201.62; AS 2201.B22 | |
| 3 | Revenue | The firm's internal inspection program inspected this audit and reviewed the Revenue and Business Combination areas but did not identify the deficiencies below. The firm obtained the service auditor's reports for these service organizations and identified certain complementary user controls that the service auditor's reports described as necessary. The following deficiencies were identified: · With respect to change management the firm did not test the design and operating effectiveness of certain complementary user controls that the service auditor's report described as necessary. (AS 2201.39 and .B22) Both financial statement and ICFR audits | AS 2201.39; AS 2201.B22 | |
| 4 | Revenue | The firm's internal inspection program inspected this audit and reviewed the Revenue and Business Combination areas but did not identify the deficiencies below. For revenue at this business unit which was affected by the audit deficiencies discussed above the following additional deficiencies related to the firm's testing of controls were identified: · The firm identified various control deficiencies in its testing of controls. The firm did not perform sufficient procedures to evaluate the severity of these control deficiencies because it did not evaluate the magnitude of the potential misstatements resulting from the deficiencies. (AS 2201.62) Both financial statement and ICFR audits | AS 2201.62 | |
| 5 | Revenue | The firm's internal inspection program inspected this audit and reviewed the Revenue and Business Combination areas but did not identify the deficiencies below. For revenue at this business unit which was affected by the audit deficiencies discussed above the following additional deficiencies related to the firm's testing of controls were identified: · The firm identified multiple misstatements in its substantive testing. The firm did not evaluate whether the misstatements it identified should have had an effect on the firm's conclusion about the effectiveness of the issuer's controls. (AS 2201.B8) Both financial statement and ICFR audits | AS 2201.B8 | |
| 6 | Revenue | The firm's internal inspection program inspected this audit and reviewed the Revenue and Business Combination areas but did not identify the deficiencies below. For revenue at this business unit which was affected by the audit deficiencies discussed above the following additional deficiencies related to the firm's testing of controls were identified: · For one type of revenue 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 | |
| 7 | Revenue | The firm's internal inspection program inspected this audit and reviewed the Revenue and Business Combination areas but did not identify the deficiencies below. For revenue at this business unit which was affected by the audit deficiencies discussed above the following additional deficiencies related to the firm's testing of controls were identified: · The firm selected for testing a control that included the issuer's review of the accuracy of pricing information used to record this first type of revenue. The firm did not identify and test any controls over the accuracy of certain information used in the operation of this control. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 8 | Revenue | The firm's internal inspection program inspected this audit and reviewed the Revenue and Business Combination areas but did not identify the deficiencies below. For revenue at this business unit which was affected by the audit deficiencies discussed above the following additional deficiencies related to the firm's testing of controls were identified: · For a second type of revenue the firm did not identify and test any controls over the accuracy and completeness of certain information the issuer used to record revenue. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 9 | Revenue | The firm's internal inspection program inspected this audit and reviewed the Revenue and Business Combination areas but did not identify the deficiencies below. For revenue at this business unit which was affected by the audit deficiencies discussed above the following additional deficiencies related to the firm's testing of controls were identified: · For the second type of revenue the firm selected for testing a control consisting of the issuer's review of recorded revenue. The firm did not evaluate the specific review procedures that the control owner performed to assess the allocation of revenue. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 10 | Revenue | The firm's internal inspection program inspected this audit and reviewed the Revenue and Business Combination areas but did not identify the deficiencies below. For revenue at this business unit which was affected by the audit deficiencies discussed above the following additional deficiencies related to the firm's testing of controls were identified: · For the second type of revenue the firm selected for testing a control consisting of the issuer's review of recorded revenue. The firm did not identify and test any controls over the accuracy and completeness of certain information used in the operation of this control. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 11 | Revenue | The firm's internal inspection program inspected this audit and reviewed the Revenue and Business Combination areas but did not identify the deficiencies below. For two types of revenue at two business units one of which was affected by certain of the audit deficiencies discussed above the firm used certain issuer-produced information in its substantive testing of this revenue. The firm did not perform any procedures to test or test any controls over the accuracy and completeness of this information. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 | |
| 12 | Business Combinations | The firm's internal inspection program inspected this audit and reviewed the Revenue and Business Combination areas but did not identify the deficiencies below. During the year the issuer acquired a business and engaged a specialist to assist it in determining the fair values of certain acquired assets using various significant assumptions. The following deficiencies were identified: · The firm selected for testing a control that consisted of the issuer's review of the recognition and fair values of acquired assets including the assumptions used. The firm did not evaluate the specific review procedures that the control owners performed to assess (1) the reasonableness of certain assumptions and (2) whether all identifiable intangible assets were recognized. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | Significant risk |
| 13 | Business Combinations | The firm's internal inspection program inspected this audit and reviewed the Revenue and Business Combination areas but did not identify the deficiencies below. During the year the issuer acquired a business and engaged a specialist to assist it in determining the fair values of certain acquired assets using various significant assumptions. The following deficiencies were identified: · The firm did not perform procedures beyond inquiry to evaluate the reasonableness of a significant assumption developed by the issuer. (AS 2501.16) Both financial statement and ICFR audits | AS 2501.16 | Significant risk |
| 14 | Business Combinations | The firm's internal inspection program inspected this audit and reviewed the Revenue and Business Combination areas but did not identify the deficiencies below. During the year the issuer acquired a business and engaged a specialist to assist it in determining the fair values of certain acquired assets using various significant assumptions. The following deficiencies were identified: · The firm did not sufficiently evaluate the reasonableness of another significant assumption developed by the issuer because it did not evaluate significant differences between this assumption and the issuer's historical and recent experience. (AS 2501.16) Both financial statement and ICFR audits | AS 2501.16 | Significant risk |
| 15 | Business Combinations | The firm's internal inspection program inspected this audit and reviewed the Revenue and Business Combination areas but did not identify the deficiencies below. During the year the issuer acquired a business and engaged a specialist to assist it in determining the fair values of certain acquired assets using various significant assumptions. The following deficiencies were identified: · The firm did not evaluate the relevance and reliability of external information it used in its substantive testing of certain significant assumptions. (AS 1105.04 and .06) Both financial statement and ICFR audits | AS 1105.4; AS 1105.6 | Significant risk |
| 16 | Business Combinations | The firm's internal inspection program inspected this audit and reviewed the Revenue and Business Combination areas but did not identify the deficiencies below. During the year the issuer acquired a business and engaged a specialist to assist it in determining the fair values of certain acquired assets using various significant assumptions. The following deficiencies were identified: · The firm used an auditor-employed specialist to evaluate a significant assumption developed by the company's specialist. The firm did not identify that the work of the auditor-employed specialist did not provide sufficient appropriate audit evidence because the auditor-employed specialist did not evaluate the relevance and reliability of external information the company's specialist used. (AS 1105.A8a; AS 1201.C6 and .C7) Both financial statement and ICFR audits | AS 1105.A8a; AS 1201.C6; AS 1201.C7 | Significant risk |
| 17 | Business Combinations | The firm's internal inspection program inspected this audit and reviewed the Revenue and Business Combination areas but did not identify the deficiencies below. The firm did not evaluate whether separately identifiable intangible assets should have been recorded related to (1) certain technology in development and (2) technical expertise possessed by the acquired business. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 | Significant risk |
Issuer D13 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Inventory | The firm's internal inspection program inspected this audit and reviewed the Inventory and Journal Entries areas but did not identify the deficiencies below. For certain business units the issuer used an IT system to initiate process and record transactions related to inventory and revenue. In its testing of controls over these accounts the firm tested various automated controls that used data generated or maintained by this IT system. The firm selected for testing a control over change management for this system but did not evaluate whether this control was designed to address all program changes. (AS 2201.42) Both financial statement and ICFR audits | AS 2201.42 | |
| 2 | Inventory | The firm's internal inspection program inspected this audit and reviewed the Inventory and Journal Entries areas but did not identify the deficiencies below. For certain business units the issuer used an IT system to initiate process and record transactions related to inventory and revenue. In its testing of controls over these accounts the firm tested various automated controls that used data generated or maintained by this IT system. The firm selected for testing a control over change management for this system but did not evaluate whether this control was designed to address all program changes. As a result of the deficiency in the firm's testing of the ITGC the firm's testing of these automated controls was not sufficient. (AS 2201.46) Both financial statement and ICFR audits | AS 2201.46 | |
| 3 | Inventory | The firm's internal inspection program inspected this audit and reviewed the Inventory and Journal Entries areas but did not identify the deficiencies below. For certain inventory which was affected by the ITGC testing deficiencies discussed above the following additional deficiencies related to the firm's testing of controls were identified: · The firm selected for testing an automated control over inventory costing. The firm did not sufficiently test the design and operating effectiveness of this control as it limited its testing to only certain scenarios without identifying and evaluating all relevant configurations. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 4 | Inventory | The firm's internal inspection program inspected this audit and reviewed the Inventory and Journal Entries areas but did not identify the deficiencies below. For certain inventory which was affected by the ITGC testing deficiencies discussed above the following additional deficiencies related to the firm's testing of controls were identified: · The firm selected for testing an automated control over inventory costing. The firm did not identify that this control was not designed to address whether inventory was valued in accordance with the issuer's policy. (AS 2201.42) Both financial statement and ICFR audits | AS 2201.42 | |
| 5 | Inventory | The firm's internal inspection program inspected this audit and reviewed the Inventory and Journal Entries areas but did not identify the deficiencies below. For certain inventory which was affected by the ITGC testing deficiencies discussed above the following additional deficiencies related to the firm's testing of controls were identified: · The firm did not identify and test any controls over an input the issuer used in determining the cost of inventory. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 6 | Inventory | The firm's internal inspection program inspected this audit and reviewed the Inventory and Journal Entries areas but did not identify the deficiencies below. For certain inventory which was affected by the ITGC testing deficiencies discussed above the following additional deficiencies related to the firm's testing of controls were identified: · The issuer performed cycle counts of inventory and the issuer's cycle-count policy required inventory to be counted at specific frequencies during the year. The firm selected for testing controls that consisted of the issuer's review of cycle-count results. The firm did not test the aspects of one of these controls that addressed whether inventory counts were performed in accordance with the issuer's designated count frequency in its cycle-count policy. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 7 | Inventory | The firm's internal inspection program inspected this audit and reviewed the Inventory and Journal Entries areas but did not identify the deficiencies below. For certain inventory which was affected by the ITGC testing deficiencies discussed above the following additional deficiencies related to the firm's testing of controls were identified: · The issuer performed cycle counts of inventory and the issuer's cycle-count policy required inventory to be counted at specific frequencies during the year. The firm selected for testing controls that consisted of the issuer's review of cycle-count results. The firm did not identify and test any controls over the accuracy and completeness of certain information used in the operation of these controls. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 8 | Inventory | The firm's internal inspection program inspected this audit and reviewed the Inventory and Journal Entries areas but did not identify the deficiencies below. For certain inventory which was affected by the ITGC testing deficiencies discussed above the following additional deficiencies related to the firm's testing of controls were identified: · The firm identified exceptions in its substantive testing of the existence of inventory but did not evaluate the effect of these exceptions on the effectiveness of the issuer's cycle-count controls. (AS 2201.B8) Both financial statement and ICFR audits | AS 2201.B8 | |
| 9 | Inventory | The firm's internal inspection program inspected this audit and reviewed the Inventory and Journal Entries areas but did not identify the deficiencies below. The firm's substantive procedures to test the unit cost of this inventory consisted of selecting a sample of items for testing. The firm did not perform sufficient procedures to test the unit cost because it inspected supporting documentation for only a portion of the quantity of these items held at year end. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 | |
| 10 | Inventory | The firm's internal inspection program inspected this audit and reviewed the Inventory and Journal Entries areas but did not identify the deficiencies below. The firm's substantive procedures to test the unit cost of this inventory consisted of selecting a sample of items for testing. The firm did not perform any substantive procedures to test an input used in determining the cost of this inventory. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 | |
| 11 | Inventory | The firm's internal inspection program inspected this audit and reviewed the Inventory and Journal Entries areas but did not identify the deficiencies below. The firm's approach to substantively test certain of the issuer's reserve for excess and obsolete inventory was to develop an independent expectation of the estimate. The firm did not perform procedures to demonstrate it had a reasonable basis for an assumption and the method used to develop its independent expectation. (AS 2501.22) Both financial statement and ICFR audits | AS 2501.22 | |
| 12 | Revenue | For certain revenue which was affected by the ITGC testing deficiencies discussed above the issuer recognized revenue when a product was shipped. The firm selected for testing various automated controls over revenue recognition but did not test the aspects of these controls that addressed whether shipment had occurred before revenue was recognized. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 13 | Journal Entries | The firm's internal inspection program inspected this audit and reviewed the Inventory and Journal Entries areas but did not identify the deficiencies below. The firm identified a fraud risk related to the potential for management to override controls including recording unsupported journal entries. The firm did not perform any substantive procedures to test journal entries to address this risk at certain business units. (AS 2401.58) Both financial statement and ICFR audits | AS 2401.58 |
Issuer E12 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | For one type of revenue the firm selected the revenue transactions from the issuer's largest customers for testing but did not perform any substantive procedures to test the remaining portion of this revenue. (AS 1105.27; AS 2301.08 and .13) Financial statement audit only | AS 1105.27; AS 2301.8; AS 2301.13 | |
| 2 | Revenue | For another type of revenue the firm did not perform any substantive procedures to test whether certain performance obligations had been satisfied before revenue was recognized. (AS 2301.08 and .13) Financial statement audit only | AS 2301.8; AS 2301.13 | |
| 3 | Revenue | For both of these types of revenue certain of the issuer's arrangements included multiple performance obligations. The firm did not perform any substantive procedures to evaluate whether the issuer's allocation of revenue to separate performance obligations was based on the relative standalone selling prices. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 4 | Deferred Revenue | The firm did not perform procedures beyond inquiring of management to test certain deferred revenue. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 5 | Long-Lived Assets | During the year events or changes in circumstances existed indicating that the carrying value of the issuer's long-lived assets may not be recoverable and the issuer performed assessments of its long-lived assets for possible impairment. The following deficiencies were identified: · The firm did not evaluate whether the issuer in conformity with FASB ASC Topic 350 and FASB ASC Topic 360 performed its assessments of long-lived assets for possible impairment prior to performing an impairment assessment of goodwill. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 6 | Long-Lived Assets | During the year events or changes in circumstances existed indicating that the carrying value of the issuer's long-lived assets may not be recoverable and the issuer performed assessments of its long-lived assets for possible impairment. The following deficiencies were identified: · The issuer concluded that the carrying amount of one asset group was recoverable. The firm did not identify that the issuer did not consider certain indicators of possible impairment in its assessment of these assets. (AS 2301.08; AS 2810.03) Financial statement audit only | AS 2301.8; AS 2810.3 | |
| 7 | Long-Lived Assets | During the year events or changes in circumstances existed indicating that the carrying value of the issuer's long-lived assets may not be recoverable and the issuer performed assessments of its long-lived assets for possible impairment. The following deficiencies were identified: · The firm's approach for substantively testing the issuer's impairment assessment for a second asset group was to test the issuer's process. The firm did not evaluate whether the issuer had a reasonable basis for its selection of a significant assumption from a range of potential assumptions. (AS 2501.16) Financial statement audit only | AS 2501.16 | |
| 8 | Long-Lived Assets | During the year events or changes in circumstances existed indicating that the carrying value of the issuer's long-lived assets may not be recoverable and the issuer performed assessments of its long-lived assets for possible impairment. The following deficiencies were identified: · The firm's approach for substantively testing the issuer's impairment assessment for a third asset group was to develop independent expectations of the fair values of these assets. The firm did not perform sufficient procedures to demonstrate it had a reasonable basis for certain significant assumptions it developed because it did not (1) take into account the issuer's intent and ability to carry out these assumptions and (2) demonstrate it had a reasonable basis for its selection of these assumptions from a range of potential assumptions. (AS 2501.22) Financial statement audit only | AS 2501.22 | |
| 9 | Long-Lived Assets | During the year events or changes in circumstances existed indicating that the carrying value of the issuer's long-lived assets may not be recoverable and the issuer performed assessments of its long-lived assets for possible impairment. The following deficiencies were identified: · The firm's approach for substantively testing the issuer's impairment assessment for a third asset group was to develop independent expectations of the fair values of these assets. The firm did not evaluate the relevance and reliability of external information used in developing its independent expectations. (AS 1105.04 and .06) Financial statement audit only | AS 1105.4; AS 1105.6 | |
| 10 | Long-Lived Assets | The firm did not sufficiently evaluate whether the issuer's method to estimate depreciation expense for certain assets was in conformity with FASB ASC Topic 360 because it did not evaluate whether the issuer's method of when to start depreciating an asset represented when the asset was placed in service. (AS 2501.10) Financial statement audit only | AS 2501.10 | |
| 11 | Long-Lived Assets | The firm did not perform any procedures to evaluate a difference it identified in its testing of long-lived assets. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 12 | 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 F8 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The issuer recorded certain revenue based on data in an electronic environment that were tracked and provided by a service organization. The firm used certain information produced by this service organization in its substantive testing of this revenue but did not test or test any controls over the accuracy and completeness of this information. (AS 2301.08 and .13) Financial statement audit only | AS 2301.8; AS 2301.13 | |
| 2 | Revenue | For a second type of revenue the firm did not evaluate whether revenue was recognized in conformity with certain relevant requirements of FASB ASC Topic 606 Revenue from Contracts with Customers. (AS 2301.08 and .13) Financial statement audit only | AS 2301.8; AS 2301.13 | |
| 3 | Revenue | For a second type of revenue the firm did not evaluate the reliability of certain external information it used in its substantive testing of this revenue. (AS 1105.04 and .06) Financial statement audit only | AS 1105.4; AS 1105.6 | |
| 4 | Revenue | For a third type of revenue the firm did not perform any substantive procedures to test whether performance obligations had been satisfied before revenue was recognized. (AS 2301.08 and .13) Financial statement audit only | AS 2301.8; AS 2301.13 | |
| 5 | Goodwill | The issuer engaged a specialist to perform an assessment of its goodwill for possible impairment. The firm's approach for substantively testing the issuer's impairment assessment was to test the issuer's process and the firm used an auditor-employed specialist to evaluate certain significant assumptions used. The following deficiencies were identified: · The firm did not evaluate the reasonableness of certain significant assumptions developed by the company's specialist or developed by the issuer. (AS 1105.A8b; AS 2501.16) Financial statement audit only | AS 1105.A8b; AS 2501.16 | Significant risk |
| 6 | Goodwill | The issuer engaged a specialist to perform an assessment of its goodwill for possible impairment. The firm's approach for substantively testing the issuer's impairment assessment was to test the issuer's process and the firm used an auditor-employed specialist to evaluate certain significant assumptions used. The following deficiencies were identified: · The firm did not identify that the auditor-employed specialist did not evaluate the relevance of external information used by the company's specialist to develop certain other significant assumptions. (AS 1105.A8a; AS 1201.C6 and .C7) Financial statement audit only | AS 1105.A8a; AS 1201.C6; AS 1201.C7 | Significant risk |
| 7 | Goodwill | During the year events or changes in circumstances existed indicating that the carrying value of the issuer's long-lived assets may not be recoverable. The firm did not evaluate whether the issuer performed an assessment of long-lived assets for possible impairment which in conformity with FASB ASC Topic 350 and FASB ASC Topic 360 was required to be performed prior to performing an impairment assessment of goodwill. (AS 2301.08 and .11) Financial statement audit only | AS 2301.8; AS 2301.11 | Significant risk |
| 8 | Digital Assets | The issuer performed an assessment of its digital assets for possible impairment. The firm used certain external information in its testing of the issuer's impairment assessment but did not evaluate the relevance and reliability of this information. (AS 1105.04 and .06) Financial statement audit only | AS 1105.4; AS 1105.6 | Significant risk |
Issuer G14 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The issuer recognized certain revenue over time based on labor costs incurred to date relative to total estimated labor costs to complete the contract. The following deficiencies were identified: · For projects designated as complete the firm did not perform sufficient procedures to evaluate whether the method used by the issuer to record revenue was in conformity with FASB ASC Topic 606 because it did not evaluate (1) whether the performance obligations were satisfied and (2) certain evidence that suggested these projects were not complete. (AS 2501.10; AS 2810.03) Financial statement audit only | AS 2501.10; AS 2810.3 | |
| 2 | Revenue | The issuer recognized certain revenue over time based on labor costs incurred to date relative to total estimated labor costs to complete the contract. The following deficiencies were identified: · For projects designated as in-process the firm did not sufficiently evaluate the reasonableness of the issuer's significant assumption related to total estimated labor hours because it did not evaluate significant differences between this assumption and the issuer's recent experience. (AS 2501.16) Financial statement audit only | AS 2501.16 | |
| 3 | Revenue | The issuer recognized certain revenue over time based on labor costs incurred to date relative to total estimated labor costs to complete the contract. The following deficiencies were identified: · The firm did not perform any procedures to evaluate certain differences it identified in its testing of labor costs incurred. (AS 2301.08 and .13) Financial statement audit only | AS 2301.8; AS 2301.13 | |
| 4 | Revenue | For another type of revenue the firm did not perform any substantive 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 | |
| 5 | Revenue | For a third type of revenue the firm did not perform any substantive procedures to evaluate the terms and conditions included in customer contracts. (AS 2301.08 and .13) Financial statement audit only | AS 2301.8; AS 2301.13 | |
| 6 | Revenue | The firm did not identify and evaluate the issuer's omission of certain disclosures required under FASB ASC Topic 606. (AS 2810.30 and .31) Financial statement audit only | AS 2810.30; AS 2810.31 | |
| 7 | Accounts Receivable | The firm sent positive confirmation requests to the issuer's customers for a sample of accounts receivable. The following deficiencies were identified: · For one confirmation that was returned with exceptions the firm did not evaluate the nature of those exceptions. (AS 2310.33) Financial statement audit only | AS 2310.33 | |
| 8 | Accounts Receivable | The firm sent positive confirmation requests to the issuer's customers for a sample of accounts receivable. The following deficiencies were identified: · For certain confirmations that were not returned the firm did not perform alternative procedures that provided sufficient appropriate audit evidence that these balances represented valid receivables as of the confirmation date. (AS 2310.31) Financial statement audit only | AS 2310.31 | |
| 9 | Inventory | The firm observed the issuer's physical counts and performed independent test counts of inventory after year end. The following deficiencies were identified: · The firm did not perform any procedures to test the existence of a certain type of inventory. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 10 | Inventory | The firm observed the issuer's physical counts and performed independent test counts of inventory after year end. The following deficiencies were identified: · The firm did not perform procedures beyond inquiring of management to test intervening transactions between year end and the date of its inventory observations. (AS 2510.12) Financial statement audit only | AS 2510.12 | |
| 11 | Inventory | The firm's substantive procedures to test the unit cost of inventory consisted of selecting a sample of items for testing. For certain items in its sample the firm did not perform sufficient procedures to test the unit cost because its procedures were limited to comparing the recorded raw materials cost to supporting documentation for the most recent purchase. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 12 | Inventory | The firm's substantive procedures to test the unit cost of inventory consisted of selecting a sample of items for testing. For certain other items in its sample the firm did not perform any procedures to test the raw materials cost and/or the labor and overhead costs allocated to these items. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 13 | Inventory | The firm did not perform any procedures to evaluate whether certain inventory was recorded at the lower of cost or net realizable value. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 14 | Inventory | The firm did not perform any procedures to test or test controls over the accuracy and completeness of certain information produced by the issuer that the firm used in its testing of the net realizable value of certain other inventory. (AS 1105.10) Financial statement audit only | AS 1105.10 |
Issuer H8 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The issuer recorded revenue net of customer discounts returns rebates and other deductions. The firm did not perform any substantive procedures to test these revenue deductions. (AS 2301.08 and .13) Financial statement audit only | AS 2301.8; AS 2301.13 | |
| 2 | Revenue | For one type of revenue the firm did not perform any substantive procedures to test whether performance obligations had been satisfied before revenue was recognized. (AS 2301.08 and .13) Financial statement audit only | AS 2301.8; AS 2301.13 | |
| 3 | Revenue | The firm did not identify and evaluate the issuer's omission of certain disclosures required under FASB ASC Topic 606. (AS 2810.30 and .31) Financial statement audit only | AS 2810.30; AS 2810.31 | |
| 4 | Long-Lived Assets | The issuer capitalized certain labor costs and external costs associated with the development of this asset. Capitalized labor costs were estimated using a significant assumption. The following deficiencies were identified: · The firm did not perform any procedures to evaluate the reasonableness of this significant assumption. (AS 2501.16) Financial statement audit only | AS 2501.16 | Significant risk |
| 5 | Long-Lived Assets | The issuer capitalized certain labor costs and external costs associated with the development of this asset. Capitalized labor costs were estimated using a significant assumption. The following deficiencies were identified: · The firm used certain issuer-produced reports in its substantive testing of this asset but did not perform any procedures to test or test controls over the accuracy and completeness of these reports. (AS 1105.10) Financial statement audit only | AS 1105.10 | Significant risk |
| 6 | Long-Lived Assets | The issuer capitalized certain labor costs and external costs associated with the development of this asset. Capitalized labor costs were estimated using a significant assumption. The following deficiencies were identified: · The firm did not evaluate whether the issuer's capitalization of external costs was in conformity with FASB ASC Topic 350. (AS 2301.08 and .11) Financial statement audit only | AS 2301.8; AS 2301.11 | Significant risk |
| 7 | Long-Lived Assets | The firm did not evaluate whether the method used by the issuer to estimate amortization expense for capitalized external costs was in conformity with certain requirements of FASB ASC Topic 350. (AS 2501.10) Financial statement audit only | AS 2501.10 | Significant risk |
| 8 | Long-Lived Assets | The issuer performed an assessment of this long-lived asset for possible impairment and concluded that it was recoverable. The firm did not identify that the issuer did not consider certain indicators of possible impairment in its assessment of this asset. (AS 2301.08 and .11; AS 2810.03) Financial statement audit only | AS 2301.8; AS 2301.11; AS 2810.3 | Significant risk |
Issuer I10 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Inventory | The issuer performed full physical counts of inventory at various locations before year end. For certain locations the firm observed the issuer's physical counts and performed independent test counts. The following deficiencies were identified: · The firm did not perform any procedures to test the existence of a type of work-in-process inventory at the locations observed. (AS 2301.08 and .11) Financial statement audit only | AS 2301.8; AS 2301.11 | Significant risk |
| 2 | Inventory | The issuer performed full physical counts of inventory at various locations before year end. For certain locations the firm observed the issuer's physical counts and performed independent test counts. The following deficiencies were identified: · For certain inventory the firm did not apply appropriate tests of intervening transactions between the date of the issuer's counts and year end. (AS 2510.12) Financial statement audit only | AS 2510.12 | Significant risk |
| 3 | Inventory | For certain other locations the firm did not perform any procedures to test the existence of inventory. (AS 2510.09) Financial statement audit only | AS 2510.9 | Significant risk |
| 4 | Inventory | For certain locations the firm's substantive procedures to test the unit cost of inventory consisted of selecting a sample of items for testing. The following deficiencies were identified: · The firm did not perform procedures to evaluate certain differences it identified in its testing. (AS 2301.08 and .11) Financial statement audit only | AS 2301.8; AS 2301.11 | Significant risk |
| 5 | Inventory | For certain locations the firm's substantive procedures to test the unit cost of inventory consisted of selecting a sample of items for testing. The following deficiencies were identified: · The firm did not perform sufficient procedures to test the labor and overhead costs the issuer capitalized to inventory because its procedures were limited to comparing the costs to those capitalized in the prior year. (AS 2301.08 and .11) Financial statement audit only | AS 2301.8; AS 2301.11 | Significant risk |
| 6 | Inventory | For certain locations the firm's substantive procedures to test the unit cost of inventory consisted of selecting a sample of items for testing. The following deficiencies were identified: · The firm did not perform any procedures to test or test controls over the accuracy and completeness of certain issuer-produced information used in its substantive testing. (AS 1105.10) Financial statement audit only | AS 1105.10 | Significant risk |
| 7 | Inventory | For certain other locations the firm did not perform any substantive procedures to test the unit cost of inventory. (AS 2301.08 and .11) Financial statement audit only | AS 2301.8; AS 2301.11 | Significant risk |
| 8 | Inventory | The firm did not perform substantive procedures to test the issuer's inventory reserves. (AS 2501.07) Financial statement audit only | AS 2501.7 | Significant risk |
| 9 | Revenue | The firm's substantive procedures to test certain revenue included selecting a sample of transactions for testing. The firm's sample 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 | |
| 10 | Revenue | The firm did not identify and evaluate a misstatement in a disclosure required under FASB ASC Topic 606. (AS 2810.30 and .31) Financial statement audit only | AS 2810.30; AS 2810.31 |
Issuer J6 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Business Combinations | During the year the issuer acquired a business and engaged a specialist to assist it in determining the fair values of an acquired intangible asset and the consideration transferred using various significant assumptions. The firm's approach for substantively testing the fair values of the acquired intangible asset and the consideration transferred was to test the issuer's process. The following deficiencies were identified: · With respect to the fair value of a portion of the consideration transferred the firm did not evaluate whether the method used by the issuer to determine the fair value was in conformity with FASB ASC Topic 820 Fair Value Measurement. Further the firm did not evaluate certain information provided by the company's specialist that suggested that the issuer's method to determine the fair value of this consideration may not be appropriate. (AS 2501.10; AS 2810.03) Financial statement audit only | AS 2501.10; AS 2810.3 | Significant risk |
| 2 | Business Combinations | During the year the issuer acquired a business and engaged a specialist to assist it in determining the fair values of an acquired intangible asset and the consideration transferred using various significant assumptions. The firm's approach for substantively testing the fair values of the acquired intangible asset and the consideration transferred was to test the issuer's process. The following deficiencies were identified: · With respect to the fair value of the remaining consideration transferred the firm did not perform procedures beyond inquiring of management to evaluate the reasonableness of certain significant assumptions developed by the company's specialist or by the issuer. (AS 1105.A8b; AS 2501.16) Financial statement audit only | AS 1105.A8b; AS 2501.16 | Significant risk |
| 3 | Business Combinations | During the year the issuer acquired a business and engaged a specialist to assist it in determining the fair values of an acquired intangible asset and the consideration transferred using various significant assumptions. The firm's approach for substantively testing the fair values of the acquired intangible asset and the consideration transferred was to test the issuer's process. The following deficiencies were identified: · With respect to the intangible asset the firm used an auditor-employed specialist to evaluate a significant assumption developed by the issuer. The firm did not identify that the auditor-employed specialist did not perform procedures beyond inquiring of management to evaluate the reasonableness of this assumption. (AS 1201.C6 and .C7; AS 2501.16) Financial statement audit only | AS 1201.C6; AS 1201.C7; AS 2501.16 | Significant risk |
| 4 | Business Combinations | During the year the issuer acquired a business and engaged a specialist to assist it in determining the fair values of an acquired intangible asset and the consideration transferred using various significant assumptions. The firm's approach for substantively testing the fair values of the acquired intangible asset and the consideration transferred was to test the issuer's process. The following deficiencies were identified: · With respect to the intangible asset the firm used an auditor-employed specialist to evaluate a significant assumption developed by the issuer. The firm did not perform procedures beyond inquiring of management to evaluate the reasonableness of another significant assumption developed by the issuer. (AS 2501.16) Financial statement audit only | AS 2501.16 | Significant risk |
| 5 | Business Combinations | The firm did not identify and evaluate the issuer's omission of certain disclosures required under FASB ASC Topic 805 Business Combinations and FASB ASC Topic 820 related to certain assets acquired. (AS 2810.30 and .31) Financial statement audit only | AS 2810.30; AS 2810.31 | Significant risk |
| 6 | Revenue | The firm did not identify and evaluate the issuer's omission of a disclosure required under FASB ASC Topic 250 Accounting Changes and Error Corrections related to a change in estimate. (AS 2810.30 and .31) Financial statement audit only | AS 2810.30; AS 2810.31 |
Issuer K5 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Business Combinations | The issuer acquired multiple businesses which included acquiring intangible assets. In addition during the year events or changes in circumstances existed indicating that the carrying value of these acquired intangible assets may not be recoverable. The issuer engaged a specialist to assist it in (1) determining the initial fair values of these acquired intangible assets and the provision for contingent consideration to be paid to the sellers and (2) performing an assessment of these acquired intangible assets for impairment. The following deficiencies were identified as of the acquisition date and/or at year end: · The firm used an auditor-employed specialist to evaluate certain significant assumptions developed by the company's specialist and used in the measurement or assessment of these acquired intangible assets. The firm did not identify that the auditor-employed specialist did not perform any procedures beyond inquiring of management to evaluate these assumptions. (AS 1105.A8b; AS 1201.C6 and .C7) Financial statement audit only | AS 1105.A8b; AS 1201.C6; AS 1201.C7 | Significant risk |
| 2 | Business Combinations | The issuer acquired multiple businesses which included acquiring intangible assets. In addition during the year events or changes in circumstances existed indicating that the carrying value of these acquired intangible assets may not be recoverable. The issuer engaged a specialist to assist it in (1) determining the initial fair values of these acquired intangible assets and the provision for contingent consideration to be paid to the sellers and (2) performing an assessment of these acquired intangible assets for impairment. The following deficiencies were identified as of the acquisition date and/or at year end: · The firm did not sufficiently evaluate the reasonableness of certain other significant assumptions developed by the issuer and used in the measurement or assessment of these acquired intangible assets because the firm did not evaluate the relevance and reliability of external information it used. (AS 1105.04 and .06) Financial statement audit only | AS 1105.4; AS 1105.6 | Significant risk |
| 3 | Business Combinations | The issuer acquired multiple businesses which included acquiring intangible assets. In addition during the year events or changes in circumstances existed indicating that the carrying value of these acquired intangible assets may not be recoverable. The issuer engaged a specialist to assist it in (1) determining the initial fair values of these acquired intangible assets and the provision for contingent consideration to be paid to the sellers and (2) performing an assessment of these acquired intangible assets for impairment. The following deficiencies were identified as of the acquisition date and/or at year end: · The firm did not perform any procedures to evaluate the relevance and reliability of certain of this information used by the company's specialist in determining the fair value of the contingent consideration. (AS 1105.A8a) Financial statement audit only | AS 1105.A8a | Significant risk |
| 4 | Business Combinations | The issuer acquired multiple businesses which included acquiring intangible assets. In addition during the year events or changes in circumstances existed indicating that the carrying value of these acquired intangible assets may not be recoverable. The issuer engaged a specialist to assist it in (1) determining the initial fair values of these acquired intangible assets and the provision for contingent consideration to be paid to the sellers and (2) performing an assessment of these acquired intangible assets for impairment. The following deficiencies were identified as of the acquisition date and/or at year end: · The firm did not sufficiently evaluate the reasonableness of certain other significant assumptions developed by the issuer and used in the measurement or assessment of these acquired intangible assets because it did not (1) evaluate a significant difference between one of these assumptions and the issuer's experience or (2) take into account the issuer's intent and ability to carry out certain of these assumptions. (AS 2501.16 and .17) Financial statement audit only | AS 2501.16; AS 2501.17 | Significant risk |
| 5 | Business Combinations | For these business combinations the firm did not identify and evaluate the issuer's omission of certain required disclosures related to contingent considerations. (AS 2810.30 and .31) Financial statement audit only | AS 2810.30; AS 2810.31 | Significant risk |
Issuer L7 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 firm selected a sample of these arrangements for testing. The following deficiencies were identified: · The firm did not perform any substantive procedures to evaluate whether the issuer's identification of performance obligations was in conformity with FASB ASC Topic 606. (AS 2301.08 and .13) Financial statement audit only | AS 2301.8; AS 2301.13 | |
| 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 firm selected a sample of these arrangements for testing. The following deficiencies were identified: · The firm did not perform any substantive procedures to test whether the allocation of the transaction prices was based on standalone selling prices. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 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 firm selected a sample of these arrangements for testing. The following deficiencies were identified: · For certain of the arrangements selected for testing the firm did not perform any procedures to test whether certain performance obligations had been satisfied before revenue was recognized. (AS 2301.08 and .13) Financial statement audit only | AS 2301.8; AS 2301.13 | |
| 4 | Inventory | For certain inventory the firm's approach for substantively testing the reserve for excess and obsolete inventory was to test the issuer's process. The following deficiencies were identified: · The firm did not sufficiently evaluate whether the method used by the issuer to develop the reserve was appropriate because it did not evaluate whether the issuer's reserve took into account the issuer's forecasted sales. (AS 2501.10) Financial statement audit only | AS 2501.10 | Significant risk |
| 5 | Inventory | For certain inventory the firm's approach for substantively testing the reserve for excess and obsolete inventory was to test the issuer's process. The following deficiencies were identified: · The firm did not sufficiently evaluate the reasonableness of certain significant assumptions used by the issuer to estimate the reserve for excess and obsolete inventory because its procedures were limited to inquiry of management and performing a sensitivity analysis that indicated that if certain alternative assumptions were used the reserve would change by a significant amount. (AS 2501.16) Financial statement audit only | AS 2501.16 | Significant risk |
| 6 | Inventory | For certain inventory the firm's approach for substantively testing the reserve for excess and obsolete inventory was to test the issuer's process. The following deficiencies were identified: · The firm did not perform any procedures to test or test controls over the accuracy and completeness of an issuer-produced report the firm used in its substantive testing of the reserve for excess and obsolete inventory. (AS 1105.10) Financial statement audit only | AS 1105.10 | Significant risk |
| 7 | Inventory | For certain other inventory the firm did not perform sufficient substantive procedures to test whether this inventory was recorded at the lower of cost or net realizable value because its procedures were limited to a year over year comparison of product-level gross margins. (AS 2301.08 and .11) Financial statement audit only | AS 2301.8; AS 2301.11 | Significant risk |
Issuer M5 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Derivative Asset | The issuer engaged a valuation specialist to assist in determining the fair value of this derivative asset. The firm's approach for substantively testing the fair value of this derivative asset was to develop an independent expectation using certain assumptions developed by the issuer or the company's specialist. The following deficiencies were identified: · The firm did not sufficiently evaluate the reasonableness of a significant assumption developed by the issuer because the firm did not take into account management's written plans that indicated the issuer may not have the intent and ability to carry out the assumption. (AS 2501.16 and .17) Financial statement audit only | AS 2501.16; AS 2501.17 | Significant risk |
| 2 | Derivative Asset | The issuer engaged a valuation specialist to assist in determining the fair value of this derivative asset. The firm's approach for substantively testing the fair value of this derivative asset was to develop an independent expectation using certain assumptions developed by the issuer or the company's specialist. The following deficiencies were identified: · The firm used an auditor-employed specialist to evaluate the reasonableness of a significant assumption developed by the company's specialist. The firm did not identify that the work of the auditor-employed specialist did not provide sufficient appropriate audit evidence because it did not (1) perform procedures to evaluate the reasonableness of a significant assumption developed by the company's specialist and (2) evaluate the relevance and reliability of information from external sources the company's specialist used to develop this assumption. (AS 1105.A8a and .A8b; AS 1201.C6 and .C7) Financial statement audit only | AS 1105.A8a; AS 1105.A8b; AS 1201.C6; AS 1201.C7 | Significant risk |
| 3 | Long-Lived Assets | During the year the issuer identified events indicating that the carrying value of its long-lived assets may not be recoverable. The issuer performed an impairment analysis using forecasted cash flows that it developed using various assumptions. The following deficiencies were identified: · The firm did not perform any procedures to evaluate the reasonableness of certain significant assumptions. (AS 2501.16) Financial statement audit only | AS 2501.16 | Significant risk |
| 4 | Long-Lived Assets | During the year the issuer identified events indicating that the carrying value of its long-lived assets may not be recoverable. The issuer performed an impairment analysis using forecasted cash flows that it developed using various assumptions. The following deficiencies were identified: · The firm did not perform procedures to evaluate the reasonableness of another significant assumption beyond reviewing the effect that certain external events would have on the assumption. (AS 2501.16) Financial statement audit only | AS 2501.16 | Significant risk |
| 5 | Long-Lived Assets | During the year the issuer identified events indicating that the carrying value of its long-lived assets may not be recoverable. The issuer performed an impairment analysis using forecasted cash flows that it developed using various assumptions. The following deficiencies were identified: · The firm did not perform sufficient procedures to evaluate whether the method used by the issuer to develop its impairment analysis was in conformity with the requirements of FASB ASC Topic 360 because it did not evaluate whether certain assets were (1) assets under development at the time of the impairment analysis and as a result the issuer should have included the carrying value of these assets in its impairment analysis or (2) capital expenditures that would increase the service potential of the long-lived asset group and as a result the issuer should have excluded the cash flows associated with these assets in its impairment analysis. (AS 2501.10) Financial statement audit only | AS 2501.10 | Significant risk |
Issuer N2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Accrued Commissions | The firm did not perform any procedures to test or test controls over the accuracy and/or completeness of issuer-produced reports that the firm used in its substantive testing of certain deferred revenue certain commissions expense and certain accrued commissions. (AS 1105.10) Financial statement audit only | AS 1105.10 | Significant risk |
| 2 | Commissions Expense | The firm's substantive procedures to test commissions expense included substantive analytical procedures. The firm did not develop expectations at a level of precision that provided the desired level of assurance that differences that could be potential material misstatements individually or in the aggregate would be identified for investigation. (AS 2305.17) Financial statement audit only | AS 2305.17 |
Issuer O3 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The issuer recorded certain revenue based on data in an electronic environment that were tracked and provided by two service organizations. The firm used information produced by these service organizations in its substantive testing of this revenue but did not test or test any controls over the accuracy and completeness of this information. (AS 2301.08 and .13) Financial statement audit only | AS 2301.8; AS 2301.13 | |
| 2 | Business Combinations | During the year the issuer acquired a business and determined the fair value of a liability assumed in connection with the acquisition using various significant assumptions. The following deficiencies were identified: · The firm did not sufficiently evaluate the reasonableness of a significant assumption because it did not (1) take into account the issuer's intent and ability to carry out this assumption and (2) evaluate a significant difference between this assumption and the issuer's recent experience. (AS 2501.16 and .17) Financial statement audit only | AS 2501.16; AS 2501.17 | Significant risk |
| 3 | Business Combinations | During the year the issuer acquired a business and determined the fair value of a liability assumed in connection with the acquisition using various significant assumptions. The following deficiencies were identified: · The firm did not perform any procedures to evaluate the reasonableness of another significant assumption. (AS 2501.16) Financial statement audit only | AS 2501.16 | Significant risk |
Issuer P6 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Business Combinations | During the year the issuer acquired a business and engaged specialists to determine the fair values of certain acquired assets using various significant assumptions. The following deficiencies were identified: · The firm selected for testing controls that consisted of the issuer's reviews of the recognition and fair values of acquired assets including the assumptions used. The firm did not evaluate the specific review procedures that the control owners performed to assess (1) the reasonableness of certain assumptions (2) the fair value of acquired inventory and (3) whether all identifiable intangible assets were recognized. (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 engaged specialists to determine the fair values of certain acquired assets using various significant assumptions. The following deficiencies were identified: · The firm did not perform any substantive procedures to test the fair value of acquired inventory. (AS 2501.07) Both financial statement and ICFR audits | AS 2501.7 | Significant risk |
| 3 | Business Combinations | During the year the issuer acquired a business and engaged specialists to determine the fair values of certain acquired assets using various significant assumptions. The following deficiencies were identified: · The firm used certain issuer-produced reports in its substantive testing of the existence of acquired inventory but did not perform procedures to test or test controls over the accuracy and completeness of these reports. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 | Significant risk |
| 4 | Business Combinations | During the year the issuer acquired a business and engaged specialists to determine the fair values of certain acquired assets using various significant assumptions. The following deficiencies were identified: · The firm's approach for substantively testing the fair value of an acquired intangible asset was to test the issuer's process and the firm used an auditor-employed specialist to evaluate a significant assumption developed by one of the company's specialists. The firm did not identify that the work of the auditor-employed specialist did not provide sufficient appropriate audit evidence because the auditor-employed specialist did not evaluate the relevance and reliability of external information it used in evaluating the reasonableness of this assumption. (AS 1105.04 and .06; AS 1201.C6 and .C7) Both financial statement and ICFR audits | AS 1105.4; AS 1105.6; AS 1201.C6; AS 1201.C7 | Significant risk |
| 5 | Business Combinations | During the year the issuer acquired a business and engaged specialists to determine the fair values of certain acquired assets using various significant assumptions. The following deficiencies were identified: · The sample size the firm used in its substantive procedures to test the fair values of certain other acquired assets was too small to provide sufficient appropriate audit evidence because in determining the sample size the firm did not take into account the tolerable misstatement for the population. (AS 2315.16 .23 and .23A) Both financial statement and ICFR audits | AS 2315.16; AS 2315.23; AS 2315.23A | Significant risk |
| 6 | Business Combinations | The firm did not evaluate whether a separately identifiable intangible asset should have been recorded related to certain rights held by the acquired business. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 | Significant risk |
Issuer Q5 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | For three types of revenue the firm selected a sample of revenue transactions for testing. The following deficiencies were identified: · For two of these types of revenue the firm did not test whether revenue was recognized according to the contractual terms for certain of the transactions selected for testing. (AS 2301.08 and .13) Financial statement audit only | AS 2301.8; AS 2301.13 | |
| 2 | Revenue | For three types of revenue the firm selected a sample of revenue transactions for testing. The following deficiencies were identified: · For two of these types of revenue the firm did not perform any procedures to test or test controls over the accuracy and completeness of issuer-prepared reports that the firm used in its substantive testing. (AS 1105.10) Financial statement audit only | AS 1105.10 | |
| 3 | Revenue | For three types of revenue the firm selected a sample of revenue transactions for testing. The following deficiencies were identified: · For one of these types of revenue the firm did not perform any substantive procedures to test whether certain performance obligations had been satisfied before revenue was recognized. (AS 2301.08 and .13) Financial statement audit only | AS 2301.8; AS 2301.13 | |
| 4 | Revenue | The firm did not identify and evaluate the issuer's omission of and a misstatement in certain disclosures required under FASB ASC Topic 606. (AS 2810.30 and .31) Financial statement audit only | AS 2810.30; AS 2810.31 | |
| 5 | Revenue | The firm used an issuer-prepared schedule in its substantive testing of a revenue disclosure. The firm did not perform any procedures to test or test controls over the accuracy and completeness of this schedule. (AS 1105.10) Financial statement audit only | AS 1105.10 |
Issuer R4 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | For four types of revenue the firm selected a sample of revenue transactions for testing. The following deficiencies were identified: · For three of these types of revenue the firm did not test whether revenue was recognized according to the contractual terms for certain of the transactions selected for testing. (AS 2301.08 and .13) Financial statement audit only | AS 2301.8; AS 2301.13 | |
| 2 | Revenue | For four types of revenue the firm selected a sample of revenue transactions for testing. The following deficiencies were identified: · For three of these types of revenue the firm did not perform any substantive procedures to test whether performance obligations had been satisfied before revenue was recognized. (AS 2301.08 and .13) Financial statement audit only | AS 2301.8; AS 2301.13 | |
| 3 | Revenue | For four types of revenue the firm selected a sample of revenue transactions for testing. The following deficiencies were identified: · For one of these types of revenue the firm did not evaluate whether the issuer was acting as a principal or as an agent. (AS 2301.08 and .13) Financial statement audit only | AS 2301.8; AS 2301.13 | |
| 4 | Revenue | The firm did not identify and evaluate the issuer's omission of certain disclosures required under FASB ASC Topic 606. (AS 2810.30 and .31) Financial statement audit only | AS 2810.30; AS 2810.31 |
Issuer S2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The issuer recognized revenue from certain arrangements as single performance obligations satisfied over time on a straight-line basis. The firm selected a sample of these arrangements for testing. The following deficiencies were identified: · The firm did not perform substantive procedures to evaluate whether recognizing revenue for multiple services as a single performance obligation recognized over time on a straight-line basis was in conformity with FASB ASC Topic 606 beyond reading an issuer-prepared memorandum. (AS 2301.08 and .13) Financial statement audit only | AS 2301.8; AS 2301.13 | |
| 2 | Revenue | The issuer recognized revenue from certain arrangements as single performance obligations satisfied over time on a straight-line basis. The firm selected a sample of these arrangements for testing. The following deficiencies were identified: · For certain of the arrangements selected for testing the firm did not perform any procedures to test whether the performance obligation was being satisfied before revenue was recognized. (AS 2301.08 and .13) Financial statement audit only | AS 2301.8; AS 2301.13 |
Issuer T3 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Investments | The issuer used two service organizations for the custody recordkeeping and processing of certain transactions related to an investment and these service organizations used sub-service organizations for certain functions. The firm obtained the service auditor's reports for these service organizations and identified certain complementary user controls that the service auditor's reports described as necessary. The following deficiencies were identified: · The firm selected for testing controls over the issuer's authorization of these transactions with the custodian. The firm did not test the aspects of these controls that addressed whether the custodian's system was configured to require appropriate authorizations prior to completing these transactions. (AS 2201.42 .44 and .B22) ICFR audit only | AS 2201.42; AS 2201.44; AS 2201.B22 | Significant risk |
| 2 | Investments | The issuer used two service organizations for the custody recordkeeping and processing of certain transactions related to an investment and these service organizations used sub-service organizations for certain functions. The firm obtained the service auditor's reports for these service organizations and identified certain complementary user controls that the service auditor's reports described as necessary. The following deficiencies were identified: · The firm selected for testing controls over the issuer's authorization of these transactions with the custodian. The firm did not identify and test any controls over an authentication device that the issuer used to authorize these transactions. (AS 2201.39) ICFR audit only | AS 2201.39 | Significant risk |
| 3 | Investments | The issuer used two service organizations for the custody recordkeeping and processing of certain transactions related to an investment and these service organizations used sub-service organizations for certain functions. The firm obtained the service auditor's reports for these service organizations and identified certain complementary user controls that the service auditor's reports described as necessary. The following deficiencies were identified: · The firm did not obtain an understanding of or test any relevant controls at certain sub-service organizations. (AS 2201.39 and .B19) ICFR audit only | AS 2201.39; AS 2201.B19 | Significant risk |
Issuer U2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Warrants | During the year the issuer issued warrants that were recorded as liabilities. The firm's approach for substantively testing the fair value of these warrants at issuance was to develop an independent expectation of the estimate using an auditor-employed specialist. The following deficiencies were identified: · The firm did not identify that the auditor-employed specialist did not perform procedures to demonstrate it had a reasonable basis for the method it used to develop its independent expectation. (AS 1201.C6 and .C7; AS 2501.22) Financial statement audit only | AS 1201.C6; AS 1201.C7; AS 2501.22 | Significant risk |
| 2 | Warrants | During the year the issuer issued warrants that were recorded as liabilities. The firm's approach for substantively testing the fair value of these warrants at issuance was to develop an independent expectation of the estimate using an auditor-employed specialist. The following deficiencies were identified: · The firm did not identify that the auditor-employed specialist did not perform sufficient procedures to demonstrate it had a reasonable basis for a significant assumption it developed because the auditor-employed specialist did not (1) evaluate whether the external data it used to develop this assumption were relevant to the assumption beyond observing that the data were from companies with similar market capitalization and (2) evaluate the reasonableness of using the low end of the range of the comparable company data in developing this assumption. (AS 1105.04 and .06; AS 1201.C6 and .C7; AS 2501.22) Financial statement audit only | AS 1105.4; AS 1105.6; AS 1201.C6; AS 1201.C7; AS 2501.22 | Significant risk |