- Inspection year
- 2023
- Report date
- 20-Jun-2024
- PCAOB release
- 104-2024-111
- Audits reviewed
- 15
- Audits w/ Part I.A deficiencies
- 6
- Part I.A deficiency rate
- 40%
- Part I.A deficiencies
- 16
- Part I.B deficiencies
- 7
- Report
- View PDF ↗
Deficiencies (16)
Grouped by issuer and in the same order as the PCAOB report, so each item ties back directly to the source.
Issuer A7 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The firm did not identify and evaluate the issuer's omission of a required disclosure under FASB ASC Topic 606 Revenue from Contracts with Customers related to significant payment terms. (AS 2810.30 and .31) In connection with our review the issuer reevaluated this disclosure and concluded that a misstatement existed that had not been previously identified. The issuer subsequently corrected this misstatement in a restatement of its financial statements. Financial statement audit only | AS 2810.30; AS 2810.31 | Incorrect opinion |
| 2 | Revenue | For one type of revenue the issuer determined that it was the agent in the arrangements with its customers and recognized revenue on a net basis. The firm did not identify and evaluate a misstatement in the issuer's disclosures related to this revenue in which the issuer disclosed it was the principal and recognized revenue on a gross basis. (AS 2810.30 and .31) In connection with our review the issuer reevaluated this disclosure and concluded that a misstatement existed that had not been previously identified. The issuer subsequently corrected this misstatement in a restatement of its financial statements. Financial statement audit only | AS 2810.30; AS 2810.31 | Incorrect opinion |
| 3 | Revenue | For another type of revenue the firm did not perform any substantive procedures beyond reading an issuer-prepared memorandum to evaluate whether the issuer's recognition of this revenue and related disclosure was in conformity with FASB ASC Topic 606. (AS 2301.08 and .13) Financial statement audit only | AS 2301.8; AS 2301.13 | Incorrect opinion |
| 4 | Revenue | For both types of revenue at one of the issuer's business units the firm did not perform any procedures to test whether the performance obligation had been satisfied when revenue was recognized for certain transactions that the firm selected for testing. (AS 2301.08 and .13) Financial statement audit only | AS 2301.8; AS 2301.13 | Incorrect opinion |
| 5 | Business Combinations | During the year the issuer acquired two businesses and determined the fair values of certain acquired intangible assets using cash-flow forecasts. For one business combination the issuer engaged a specialist to determine the fair values of certain acquired intangible assets and contingent consideration. The firm's approach for substantively testing the fair values of these intangible assets and the contingent consideration was to test the issuer's process. The following deficiencies were identified: · The firm did not sufficiently evaluate the reasonableness of certain significant assumptions developed by the company's specialist or the issuer and used by the company's specialist including not sufficiently taking into account the issuer's intent and ability to carry out the cash-flow forecasts that assumed significant revenue growth because its procedures were limited to inquiring of management comparing these assumptions to historical financial information and for the first year of the cash-flow forecasts using historical financial information to corroborate management's explanations for certain differences between these assumptions and actual results. (AS 1105.A8b; AS 2501.16 and .17) Financial statement audit only | AS 1105.A8b; AS 2501.16; AS 2501.17 | Significant riskIncorrect opinion |
| 6 | Business Combinations | During the year the issuer acquired two businesses and determined the fair values of certain acquired intangible assets using cash-flow forecasts. For one business combination the issuer engaged a specialist to determine the fair values of certain acquired intangible assets and contingent consideration. The firm's approach for substantively testing the fair values of these intangible assets and the contingent consideration was to test the issuer's process. The following deficiencies were identified: · The firm did not perform any procedures to test or test any controls over the accuracy and completeness of the historical financial information that (1) it used in evaluating the reasonableness of the significant assumptions discussed above and (2) the company's specialist used in determining the fair value of the contingent consideration. (AS 1105.10 and .A8a) Financial statement audit only | AS 1105.10; AS 1105.A8a | Significant riskIncorrect opinion |
| 7 | Business Combinations | For both 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 Fair Value Measurement. (AS 2810.30 and .31) In connection with our review the issuer reevaluated its disclosures related to these business combinations and determined that certain disclosures were omitted. The issuer did not file an amended Form 10-K or Form 8-K indicating that its previously issued financial statements should not be relied on. Instead the issuer corrected these omissions in a subsequent filing. Financial statement audit only | AS 2810.30; AS 2810.31 | Significant riskIncorrect opinion |
Issuer B3 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The issuer recognized revenue from a contract over time based on costs incurred to date relative to total estimated costs to complete. The firm did not perform any substantive procedures to evaluate the reasonableness of the significant assumptions that the issuer used to develop the estimated costs to complete this contract beyond inquiring of project managers. (AS 2501.16) Financial statement audit only | AS 2501.16 | |
| 2 | Intangible Assets | The issuer performed a qualitative assessment of possible impairment for one intangible asset and a quantitative assessment of possible impairment for another intangible asset. The following deficiencies were identified: · The firm did not perform any substantive procedures to test the issuer's quantitative assessment beyond reading an issuer-prepared memorandum and inquiring of issuer personnel. (AS 2501.07) Financial statement audit only | AS 2501.7 | Significant risk |
| 3 | Intangible Assets | The issuer performed a qualitative assessment of possible impairment for one intangible asset and a quantitative assessment of possible impairment for another intangible asset. The following deficiencies were identified: · The firm did not perform any substantive procedures to test the issuer's quantitative assessment beyond reading an issuer-prepared memorandum and inquiring of issuer personnel. (AS 2501.07) Financial statement audit only | AS 2301.8; AS 2301.11; AS 2810.3 | Significant risk |
Issuer C2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Business Combinations | During the year the issuer acquired a business and determined the fair value of certain acquired intangible assets using cash-flow forecasts. The following deficiencies were identified: · The firm did not perform any procedures to evaluate the reasonableness of certain significant assumptions that the issuer used in these cash-flow forecasts. (AS 2501.16) Financial statement audit only | AS 2501.16 | Significant risk |
| 2 | Business Combinations | During the year the issuer acquired a business and determined the fair value of certain acquired intangible assets using cash-flow forecasts. The following deficiencies were identified: · The firm did not sufficiently evaluate the reasonableness of certain other significant assumptions that the issuer used in these cash-flow forecasts including not sufficiently taking into account the issuer's intent and ability to carry out these cash-flow forecasts because its procedures were limited to comparing these assumptions to historical financial information and reading a purchase commitment agreement for one customer. (AS 2501.16 and .17) Financial statement audit only | AS 2501.16; AS 2501.17 | Significant risk |
Issuer D2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Business Combinations | During the year the issuer acquired a business and engaged a specialist to determine the fair values of the acquired assets including certain intangible assets. The following deficiencies were identified: · The firm did not evaluate the relevance and reliability of the external data that the company's specialist used to determine the fair values of these intangible assets. (AS 1105.A8a) Financial statement audit only | AS 1105.A8a | Significant risk |
| 2 | Business Combinations | During the year the issuer acquired a business and engaged a specialist to determine the fair values of the acquired assets including certain intangible assets. The following deficiencies were identified: Financial statement audit only | AS 1105.A8b; AS 2501.16 | Significant risk |
Issuer E1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The issuer recognized revenue from certain contracts over time based on costs incurred to date relative to total estimated costs to complete. The firm did not perform any substantive procedures to evaluate the reasonableness of the significant assumptions that the issuer used to develop the estimated costs to complete the contracts that the firm selected for testing. (AS 2501.16) Financial statement audit only | AS 2501.16 |
Issuer F1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The firm's substantive procedures to test certain revenue consisted of performing substantive analytical procedures. The firm used data produced by the issuer to develop its expectations but did not test or test controls over the accuracy and completeness of certain of these data. (AS 2305.16) Financial statement audit only | AS 2305.16 |