- Inspection year
- 2024
- Report date
- 30-Jan-2025
- PCAOB release
- 104-2025-034
- Audits reviewed
- 2
- Audits w/ Part I.A deficiencies
- 2
- Part I.A deficiency rate
- 100%
- Part I.A deficiencies
- 18
- Part I.B deficiencies
- 4
- Report
- View PDF ↗
Deficiencies (18)
Grouped by issuer and in the same order as the PCAOB report, so each item ties back directly to the source.
Issuer A11 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Equity | The firm did not identify and evaluate a departure from GAAP related to the issuer not accounting for certain redeemable shares outside of permanent equity in conformity with FASB ASC Topic 480 Distinguishing Liabilities from Equity. (AS 2810.30) Financial statement audit only | AS 2810.30 | |
| 2 | Goodwill and Intangible Assets | During the year the issuer identified indicators of possible impairment for certain of its goodwill and intangible assets and performed a quantitative assessment using a discounted cash flow model to test the associated reporting unit for recoverability. The firm's approach for substantively testing goodwill and intangible assets for impairment was to test the issuer's process used to assess the recoverability of the reporting unit. The following deficiency was identified: · The firm did not perform procedures to evaluate the reasonableness of the significant assumptions related to revenue growth projections used in the recoverability test including taking into account the issuer's intent and ability to achieve the assumed revenue growth rates beyond inquiry obtaining and reviewing certain customer proposals and performing a sensitivity analysis. (AS 2501.16 and .17) Financial statement audit only | AS 2501.16; AS 2501.17 | Significant risk |
| 3 | Goodwill and Intangible Assets | During the year the issuer identified indicators of possible impairment for certain of its goodwill and intangible assets and performed a quantitative assessment using a discounted cash flow model to test the associated reporting unit for recoverability. The firm's approach for substantively testing goodwill and intangible assets for impairment was to test the issuer's process used to assess the recoverability of the reporting unit. The following deficiency was identified: · The firm did not perform any procedures to evaluate the reasonableness of a company-specific risk premium included as a part of the significant assumption related to the discount rate used by the issuer in its recoverability test. (AS 2501.16) Financial statement audit only | AS 2501.16 | Significant risk |
| 4 | Goodwill and Intangible Assets | During the year the issuer identified indicators of possible impairment for certain of its goodwill and intangible assets and performed a quantitative assessment using a discounted cash flow model to test the associated reporting unit for recoverability. The firm's approach for substantively testing goodwill and intangible assets for impairment was to test the issuer's process used to assess the recoverability of the reporting unit. The following deficiency was identified: · The firm did not perform any procedures to evaluate the reasonableness of the significant assumption related to the terminal growth rate used by the issuer in its recoverability test. (AS 2501.16) Financial statement audit only | AS 2501.16 | Significant risk |
| 5 | Goodwill and Intangible Assets | During the year the issuer identified indicators of possible impairment for certain of its goodwill and intangible assets and performed a quantitative assessment using a discounted cash flow model to test the associated reporting unit for recoverability. The firm's approach for substantively testing goodwill and intangible assets for impairment was to test the issuer's process used to assess the recoverability of the reporting unit. The following deficiency was identified: · The firm did not perform procedures to evaluate whether the issuer's method to assess its goodwill and intangible assets for impairment was in conformity with FASB ASC Topic 350 Intangibles — Goodwill and Other. (AS 2501.10) Financial statement audit only | AS 2501.10 | Significant risk |
| 6 | Other Assets | The issuer entered into an agreement with an external party pursuant to which it was to among other things make certain advance payments including common stock and preferred shares to the external party prior to the completion of the transaction which occurred after the year under audit. The following deficiency was identified: · The firm did not perform any procedures to test the fair value of common stock and preferred shares that had been transferred and recorded as a part of the advance payments including consideration of certain contrary evidence regarding the trading value of the issuer's common stock. (AS 2501.07; AS 2810.03) Financial statement audit only | AS 2501.7; AS 2810.3 | |
| 7 | Other Assets | The issuer entered into an agreement with an external party pursuant to which it was to among other things make certain advance payments including common stock and preferred shares to the external party prior to the completion of the transaction which occurred after the year under audit. The following deficiency was identified: · The firm did not perform procedures to evaluate whether the presentation and disclosure of the advance payments was in conformity with GAAP. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 8 | Other Assets | The issuer entered into an agreement with an external party pursuant to which it was to among other things make certain advance payments including common stock and preferred shares to the external party prior to the completion of the transaction which occurred after the year under audit. The following deficiency was identified: · The firm did not evaluate the business purpose (or lack thereof) of the transaction including whether it may have been entered into to engage in fraudulent financial reporting or conceal misappropriation of assets. (AS 2401.67) Financial statement audit only | AS 2401.67 | |
| 9 | Revenue | The issuer recognized certain revenue pursuant to contracts with new customers. The firm did not perform procedures to evaluate whether these customer contracts met the collectability criteria required to recognize revenue. (AS 2301.08 and .13) Financial statement audit only | AS 2301.8; AS 2301.13 | |
| 10 | Revenue | The issuer recognized certain other revenue pursuant to a contract with an external party through which it agreed to provide services in exchange for noncash consideration. The firm did not perform procedures to evaluate whether the issuer recognized this revenue in conformity with FASB ASC Topic 606 Revenue from Contracts with Customers. (AS 2301.08 and .13) Financial statement audit only | AS 2301.8; AS 2301.13 | |
| 11 | Variable Interest Entities | The issuer derives revenue through consolidated VIEs and relies on contractual arrangements with the VIEs and their shareholders to control the business operations of the consolidated VIEs. The issuer engaged an external specialist to provide a legal opinion regarding the issuer's consolidated VIEs including the validity and enforceability of contractual arrangements with the VIEs and their shareholders and the firm used the work of the company's specialist as audit evidence. The firm did not sufficiently evaluate the relevance and reliability of the work performed by the company's specialist and whether the specialist's findings support or contradict the issuer's rights and obligations related to the consolidation of the VIEs because it did not evaluate the nature of uncertainties described in the legal opinion prepared by the company's specialist and perform additional procedures to address the risks associated with those uncertainties. (AS 1105.A9 and .A10) Financial statement audit only | AS 1105.A10; AS 1105.A9 |
Issuer B7 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Deferred Revenue | The firm selected for testing certain controls that consisted of the issuer's reviews of revenue and deferred revenue. The firm did not perform procedures to test or test any controls over the completeness of the system-generated reports from which it made its selections to test certain of these controls. (AS 1105.10) ICFR audit only | AS 1105.10 | |
| 2 | Deferred Revenue | The firm selected for testing certain controls that consisted of the issuer's reviews of revenue and deferred revenue. For one of these controls the firm did not evaluate the review procedures that the control owners performed including the procedures to identify items for follow up and the procedures to determine whether those items were appropriately resolved. (AS 2201.42 and .44) ICFR audit only | AS 2201.42; AS 2201.44 | |
| 3 | Real Estate Investment Properties | The issuer reported real estate investment properties including properties under development and performed an annual assessment of the properties for impairment. The following deficiency was identified: · The firm selected for testing a control that consisted of the issuer's review of the annual assessment of real estate investment properties for potential impairment. The firm did not evaluate the review procedures that the control owner(s) performed including the procedures to identify items for follow up and the procedures to determine whether those items were appropriately resolved. (AS 2201.42 and .44) ICFR audit only | AS 2201.42; AS 2201.44 | Significant risk |
| 4 | Real Estate Investment Properties | The issuer reported real estate investment properties including properties under development and performed an annual assessment of the properties for impairment. The following deficiency was identified: · The firm selected for testing certain other controls that consisted of the issuer's recording and approval of transactions associated with the construction of real estate investment properties. For certain of the controls tested the firm did not perform procedures to test or test any controls over the completeness of system-generated reports from which it made its selections to test these controls. (AS 1105.10) ICFR audit only | AS 1105.10 | Significant risk |
| 5 | Real Estate Investment Properties | The issuer reported real estate investment properties including properties under development and performed an annual assessment of the properties for impairment. The following deficiency was identified: · The firm selected for testing certain other controls that consisted of the issuer's recording and approval of transactions associated with the construction of real estate investment properties. For one of these controls that included the issuer's review of construction in progress the firm did not evaluate the review procedures that the control owners performed including the procedures to identify items for follow up and the procedures to determine whether those items were appropriately resolved. (AS 2201.42 and .44) ICFR audit only | AS 2201.42; AS 2201.44 | Significant risk |
| 6 | Real Estate Investment Properties | The issuer reported real estate investment properties including properties under development and performed an annual assessment of the properties for impairment. The following deficiency was identified: · The firm did not evaluate whether certain misstatements it identified related to real estate investment properties including properties under development should have had an effect on the firm's conclusions about the effectiveness of the issuer's controls over these assets. (AS 2201.68) ICFR audit only | AS 2201.B8 | Significant risk |
| 7 | Related Party Transactions | The firm selected for testing a control that consisted of the issuer's reconciliation of related party balances and transactions. The firm did not identify and test any controls over the completeness of a system-generated report used in the operation of this control. (AS 2201.39) ICFR audit only | AS 2201.39 |