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BDO China Shu Lun Pan Certified Public Accountants LLP
China · BDO International Limited · Triennially Inspected
- Inspection year
- 2024
- Report date
- 28-Apr-2025
- PCAOB release
- 104-2025-067
- Audits reviewed
- 3
- Audits w/ Part I.A deficiencies
- 2
- Part I.A deficiency rate
- 67%
- Part I.A deficiencies
- 10
- Part I.B deficiencies
- 3
- Report
- View PDF ↗
Deficiencies (10)
Grouped by issuer and in the same order as the PCAOB report, so each item ties back directly to the source.
Issuer A8 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Inventory | The issuer used multiple information-technology (IT) systems to initiate process and record inventory and inventory-related transactions. The firm relied on controls it selected for testing in its approach to testing inventory. In its testing of controls over inventory the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by these IT systems. As a result of the following deficiencies in the firm's testing of IT general controls (ITGCs) over certain of these IT systems the firm's testing of these automated and IT-dependent controls was not sufficient. (AS 2301.18) Financial statement audit only | AS 2301.18 | |
| 2 | Inventory | The issuer used multiple information-technology (IT) systems to initiate process and record inventory and inventory-related transactions. The firm relied on controls it selected for testing in its approach to testing inventory. In its testing of controls over inventory the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by these IT systems. ? The firm selected for testing certain controls over change management and user access but did not perform procedures to test or test any controls over the completeness of the population of items from which it made its selections for testing. (AS 1105.10) Financial statement audit only | AS 1105.10 | |
| 3 | Inventory | The issuer used multiple information-technology (IT) systems to initiate process and record inventory and inventory-related transactions. The firm relied on controls it selected for testing in its approach to testing inventory. In its testing of controls over inventory the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by these IT systems. ? The firm selected for testing a control that consisted of the issuer's periodic review of user access to one of its IT systems. The firm however did not perform procedures to test the design and operating effectiveness of this control. (AS 2301.19 and .21) Financial statement audit only | AS 2301.19; AS 2301.21 | |
| 4 | Inventory | The issuer used multiple information-technology (IT) systems to initiate process and record inventory and inventory-related transactions. The firm relied on controls it selected for testing in its approach to testing inventory. In its testing of controls over inventory the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by these IT systems. ? The firm selected for testing a control over the authorization and restriction of privileged access to one of its systems. The firm did not perform sufficient procedures to test this control because it limited its procedures to testing that one type of privileged access was restricted at a point in time during the year. (AS 2301.16 and .21) Financial statement audit only | AS 2301.16; AS 2301.21 | |
| 5 | Inventory | The issuer used multiple information-technology (IT) systems to initiate process and record inventory and inventory-related transactions. The firm relied on controls it selected for testing in its approach to testing inventory. In its testing of controls over inventory the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by these IT systems. ? For one of its IT systems the firm identified control deficiencies related to (1) developers having inappropriate access to the production environment and (2) the lack of monitoring of user activity. The firm did not evaluate the severity of these deficiencies and the effect on its control risk assessments. (AS 2301.34) Financial statement audit only | AS 2301.34 | |
| 6 | Inventory | The firm selected for testing certain controls that consisted of the issuer's review of the costs at which inventory is recorded. For 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 2301.19 and .21) Financial statement audit only | AS 2301.19; AS 2301.21 | |
| 7 | Inventory | The sample sizes the firm used in certain of its substantive procedures to test inventory costs were too small to provide sufficient appropriate audit evidence because these procedures were designed based on a level of control reliance that was not supported due to the deficiencies in the firm's control testing discussed above. (AS 2301.16 .18 and .37; AS 2315.19 .23 and .23A) Financial statement audit only | AS 2301.16; AS 2301.18; AS 2301.37; AS 2315.19; AS 2315.23; AS 2315.23A | |
| 8 | Inventory | For certain inventory the firm did not perform any procedures to test or as discussed above sufficiently test controls over the accuracy and completeness of an inventory aging report generated from the one of the issuer's IT systems it used to test the issuer's obsolete inventory reserve. (AS 1105.10) Financial statement audit only | AS 1105.10 |
Issuer B2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Possible Illegal Acts | The firm became aware through discussions with the issuer's audit committee and a review of whistleblower program records of two incidents involving the improper authorization of lease agreements by a manager acting on behalf of the issuer. The firm did not take sufficient action in response to these possible illegal acts because (1) it limited its procedures to inquiry and reading the issuer's whistleblower reporting summary and (2) it did not evaluate the effect on the financial statements as well as consider the implications for other aspects of the audit. (AS 2405.10 and .12) Both financial statement and ICFR audits | AS 2405.10; AS 2405.12 | |
| 2 | Possible Illegal Acts | The firm became aware through discussions with the issuer's audit committee and a review of whistleblower program records of two incidents involving the improper authorization of lease agreements by a manager acting on behalf of the issuer. The firm did not evaluate the effect of these possible illegal acts on the effectiveness of the issuer's internal control over financial reporting. (AS 2201.B8) Both financial statement and ICFR audits | AS 2201.B8 |