- Inspection year
- 2023
- Report date
- 28-Apr-2025
- PCAOB release
- 104-2025-069
- Audits reviewed
- 3
- Audits w/ Part I.A deficiencies
- 2
- Part I.A deficiency rate
- 67%
- Part I.A deficiencies
- 16
- Part I.B deficiencies
- 1
- 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 A9 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The firm's substantive procedures to test certain revenue included testing a sample of transactions. The sample size the firm used to perform these substantive procedures was too small to provide sufficient appropriate audit evidence because the firm did not take into account the relevant factors in determining its sample size including the relationship of the samples to the relevant audit objective and the characteristics of the population. (AS 2315.16 .19 .23 and .23A) Both financial statement and ICFR audits | AS 2315.16; AS 2315.19; AS 2315.23; AS 2315.23A | |
| 2 | Accounts Receivable | The firm sent positive confirmation requests via email to a sample of customers as part of its substantive testing of accounts receivable and the email address for each customer was provided by the issuer. The firm received the responses for all but one of the confirmation requests sent via email. The firm did not consider performing procedures to address the risks associated with electronic responses such as verifying the source of the confirmation responses. (AS 2310.29) Both financial statement and ICFR audits | AS 2310.29 | |
| 3 | Long-Lived Assets | The firm's internal inspection program had inspected this audit and reviewed the Long-Lived Assets area but did not identify certain of the deficiencies below related to this area. The issuer utilized internal specialists (company's employed specialists) including reserve engineers to estimate its proved and expected oil and gas reserves (“reserve estimates”). Proved reserves were used in the calculation of depreciation depletion and amortization of production plants and oil and gas assets and expected reserve estimates were used in the impairment analyses of production plants and oil and gas assets including assets under development. The issuer also engaged an external specialist (company's engaged specialist) to evaluate its proved reserve estimates. The firm selected for testing certain controls over the reserve estimates that consisted of the issuer's (1) review of changes to the expected future production volumes (“production profile”) (2) review of key assumptions within the remaining expected production profile estimates (3) assessment of deviations between the expected reserve estimates the company's employed specialists developed and the expected reserve estimates the company's engaged specialist developed (4) review of changes in proved developed and undeveloped reserves (5) review of the proved reserve estimates volumetric inputs in the standardized measure of value and (6) review of the final proved reserve estimates. The following deficiency was identified: · The firm did not identify and test any controls over the accuracy and completeness of certain non-financial data the issuer produced and/or the evaluation of the relevance and reliability of certain non-financial data from external sources that was (1) used in developing the reserves production profiles and/or standardized measure of value (2) used in the operation of certain of the above controls and (3) provided to the company's engaged specialist to evaluate the issuer's reserve estimates. (AS 2201.39) · The firm did not identify and test any controls over the reasonableness of the methods and assumptions the company's employed specialists used to develop the reserve estimates. (AS 2201.39) · The firm did not evaluate the specific review procedures that the control owners performed to evaluate the accuracy and completeness of the underlying non-financial data used in developing the reserves production profiles and/or standardized measure of value used in the operation of certain of the above controls. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.39 | Significant risk |
| 4 | Long-Lived Assets | The firm's internal inspection program had inspected this audit and reviewed the Long-Lived Assets area but did not identify certain of the deficiencies below related to this area. The issuer utilized internal specialists (company's employed specialists) including reserve engineers to estimate its proved and expected oil and gas reserves (“reserve estimates”). Proved reserves were used in the calculation of depreciation depletion and amortization of production plants and oil and gas assets and expected reserve estimates were used in the impairment analyses of production plants and oil and gas assets including assets under development. The issuer also engaged an external specialist (company's engaged specialist) to evaluate its proved reserve estimates. The firm selected for testing certain controls over the reserve estimates that consisted of the issuer's (1) review of changes to the expected future production volumes (“production profile”) (2) review of key assumptions within the remaining expected production profile estimates (3) assessment of deviations between the expected reserve estimates the company's employed specialists developed and the expected reserve estimates the company's engaged specialist developed (4) review of changes in proved developed and undeveloped reserves (5) review of the proved reserve estimates volumetric inputs in the standardized measure of value and (6) review of the final proved reserve estimates. The following deficiency was identified: · The firm did not identify and test any controls over the accuracy and completeness of certain non-financial data the issuer produced and/or the evaluation of the relevance and reliability of certain non-financial data from external sources that was (1) used in developing the reserves production profiles and/or standardized measure of value (2) used in the operation of certain of the above controls and (3) provided to the company's engaged specialist to evaluate the issuer's reserve estimates. (AS 2201.39) · The firm did not identify and test any controls over the reasonableness of the methods and assumptions the company's employed specialists used to develop the reserve estimates. (AS 2201.39) · The firm did not evaluate the specific review procedures that the control owners performed to evaluate the accuracy and completeness of the underlying non-financial data used in developing the reserves production profiles and/or standardized measure of value used in the operation of certain of the above controls. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.39 | Significant risk |
| 5 | Long-Lived Assets | The firm's internal inspection program had inspected this audit and reviewed the Long-Lived Assets area but did not identify certain of the deficiencies below related to this area. The issuer utilized internal specialists (company's employed specialists) including reserve engineers to estimate its proved and expected oil and gas reserves (“reserve estimates”). Proved reserves were used in the calculation of depreciation depletion and amortization of production plants and oil and gas assets and expected reserve estimates were used in the impairment analyses of production plants and oil and gas assets including assets under development. The issuer also engaged an external specialist (company's engaged specialist) to evaluate its proved reserve estimates. The firm selected for testing certain controls over the reserve estimates that consisted of the issuer's (1) review of changes to the expected future production volumes (“production profile”) (2) review of key assumptions within the remaining expected production profile estimates (3) assessment of deviations between the expected reserve estimates the company's employed specialists developed and the expected reserve estimates the company's engaged specialist developed (4) review of changes in proved developed and undeveloped reserves (5) review of the proved reserve estimates volumetric inputs in the standardized measure of value and (6) review of the final proved reserve estimates. The following deficiency was identified: · The firm did not identify and test any controls over the accuracy and completeness of certain non-financial data the issuer produced and/or the evaluation of the relevance and reliability of certain non-financial data from external sources that was (1) used in developing the reserves production profiles and/or standardized measure of value (2) used in the operation of certain of the above controls and (3) provided to the company's engaged specialist to evaluate the issuer's reserve estimates. (AS 2201.39) · The firm did not identify and test any controls over the reasonableness of the methods and assumptions the company's employed specialists used to develop the reserve estimates. (AS 2201.39) · The firm did not evaluate the specific review procedures that the control owners performed to evaluate the accuracy and completeness of the underlying non-financial data used in developing the reserves production profiles and/or standardized measure of value used in the operation of certain of the above controls. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | Significant risk |
| 6 | Long-Lived Assets | The firm's internal inspection program had inspected this audit and reviewed the Long-Lived Assets area but did not identify certain of the deficiencies below related to this area. The issuer utilized internal specialists (company's employed specialists) including reserve engineers to estimate its proved and expected oil and gas reserves (“reserve estimates”). Proved reserves were used in the calculation of depreciation depletion and amortization of production plants and oil and gas assets and expected reserve estimates were used in the impairment analyses of production plants and oil and gas assets including assets under development. The issuer also engaged an external specialist (company's engaged specialist) to evaluate its proved reserve estimates. The firm's approach for substantively testing the reserve estimates was to test the issuer's process. The firm did not perform sufficient procedures to test the reserve estimates because the firm did not: · Perform procedures to test or test any controls over the accuracy and completeness of certain non-financial data the issuer prepared and the company's employed specialists used to develop the reserve estimates; (AS 1105.A8a) Both financial statement and ICFR audits | AS 1105.A8a | Significant risk |
| 7 | Long-Lived Assets | The firm's internal inspection program had inspected this audit and reviewed the Long-Lived Assets area but did not identify certain of the deficiencies below related to this area. The issuer utilized internal specialists (company's employed specialists) including reserve engineers to estimate its proved and expected oil and gas reserves (“reserve estimates”). Proved reserves were used in the calculation of depreciation depletion and amortization of production plants and oil and gas assets and expected reserve estimates were used in the impairment analyses of production plants and oil and gas assets including assets under development. The issuer also engaged an external specialist (company's engaged specialist) to evaluate its proved reserve estimates. The firm's approach for substantively testing the reserve estimates was to test the issuer's process. The firm did not perform sufficient procedures to test the reserve estimates because the firm did not: · Evaluate the relevance and reliability of external non-financial data the company's employed specialists used to develop the reserve estimates; (AS 1105.A8a) Both financial statement and ICFR audits | AS 1105.A8a | Significant risk |
| 8 | Long-Lived Assets | The firm's internal inspection program had inspected this audit and reviewed the Long-Lived Assets area but did not identify certain of the deficiencies below related to this area. The issuer utilized internal specialists (company's employed specialists) including reserve engineers to estimate its proved and expected oil and gas reserves (“reserve estimates”). Proved reserves were used in the calculation of depreciation depletion and amortization of production plants and oil and gas assets and expected reserve estimates were used in the impairment analyses of production plants and oil and gas assets including assets under development. The issuer also engaged an external specialist (company's engaged specialist) to evaluate its proved reserve estimates. The firm's approach for substantively testing the reserve estimates was to test the issuer's process. The firm did not perform sufficient procedures to test the reserve estimates because the firm did not: · Evaluate the reasonableness of the significant assumptions developed by the issuer and the company's employed specialists that were used by the company's employed specialists to develop the reserve estimates; (AS 1105.A8b; AS 2501.16) and Both financial statement and ICFR audits | AS 1105.A8b; AS 2501.16 | Significant risk |
| 9 | Long-Lived Assets | The firm's internal inspection program had inspected this audit and reviewed the Long-Lived Assets area but did not identify certain of the deficiencies below related to this area. The issuer utilized internal specialists (company's employed specialists) including reserve engineers to estimate its proved and expected oil and gas reserves (“reserve estimates”). Proved reserves were used in the calculation of depreciation depletion and amortization of production plants and oil and gas assets and expected reserve estimates were used in the impairment analyses of production plants and oil and gas assets including assets under development. The issuer also engaged an external specialist (company's engaged specialist) to evaluate its proved reserve estimates. The firm's approach for substantively testing the reserve estimates was to test the issuer's process. The firm did not perform sufficient procedures to test the reserve estimates because the firm did not: · Evaluate whether the methods the company's employed specialists used to develop the reserve estimates were appropriate under the circumstances taking into account the requirements of the applicable financial reporting framework. (AS 1105.A8c) Both financial statement and ICFR audits | AS 1105.A8c | Significant risk |
Issuer B7 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Receivables | The firm's internal inspection program had inspected this audit and reviewed these areas but did not identify certain of the deficiencies below. Among other procedures the principal auditor instructed the firm to (1) compare the contract terms of receivables acquired during the year to the contract summary to ensure that it provided a complete and accurate reflection of the contract details and (2) test the accuracy of key customer data in the component's customer collections system. The firm did not perform these substantive procedures as instructed by the principal auditor. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 | |
| 2 | Deposit Liabilities | The firm's internal inspection program had inspected this audit and reviewed these areas but did not identify certain of the deficiencies below. The firm selected for testing certain controls over deposit liabilities that consisted of the issuer's reconciliation and review of deposit payment requests. The firm did not evaluate the specific review procedures that the control owners performed to ensure that deposits were not refunded incorrectly or fraudulently in the approval of withdrawal requests and to ensure the accuracy of the interest-bearing deposits account reconciliations. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 3 | Deposit Liabilities | The firm's internal inspection program had inspected this audit and reviewed these areas but did not identify certain of the deficiencies below. The firm's substantive procedures to test the existence and completeness of deposit liabilities included sending positive confirmation requests to a sample of customers to confirm the deposits that they made through an interim date. The firm communicated to the principal auditor that it had also examined support for customer account statements and proof of deposits in the accounting system. The following deficiency was identified: · The firm did not perform any substantive procedures to test withdrawal activity during the year. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 | |
| 4 | Deposit Liabilities | The firm's internal inspection program had inspected this audit and reviewed these areas but did not identify certain of the deficiencies below. The firm's substantive procedures to test the existence and completeness of deposit liabilities included sending positive confirmation requests to a sample of customers to confirm the deposits that they made through an interim date. The firm communicated to the principal auditor that it had also examined support for customer account statements and proof of deposits in the accounting system. The following deficiency was identified: · The firm did not perform any procedures to extend its conclusions regarding the existence and completeness of deposit liabilities from the interim date in which the audit procedures were performed to year-end. (AS 2301.45) Both financial statement and ICFR audits | AS 2301.45 | |
| 5 | Deposit Liabilities | The firm's internal inspection program had inspected this audit and reviewed these areas but did not identify certain of the deficiencies below. The firm's substantive procedures to test the existence and completeness of deposit liabilities included sending positive confirmation requests to a sample of customers to confirm the deposits that they made through an interim date. The firm communicated to the principal auditor that it had also examined support for customer account statements and proof of deposits in the accounting system. The following deficiency was identified: · The firm did not perform procedures to test or test any controls over the completeness of the report from which it selected its samples for testing beyond reviewing the parameters used to generate the report. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 | |
| 6 | Deposit Liabilities | The firm's internal inspection program had inspected this audit and reviewed these areas but did not identify certain of the deficiencies below. The firm's substantive procedures to test the existence and completeness of deposit liabilities included sending positive confirmation requests to a sample of customers to confirm the deposits that they made through an interim date. The firm communicated to the principal auditor that it had also examined support for customer account statements and proof of deposits in the accounting system. The following deficiency was identified: · The firm did not examine the support for customer statements and proof of deposits in the accounting system as it had communicated to the principal auditor. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 | |
| 7 | Deposit Liabilities | The firm's internal inspection program had inspected this audit and reviewed these areas but did not identify certain of the deficiencies below. The firm's substantive procedures to test the existence and completeness of deposit liabilities included sending positive confirmation requests to a sample of customers to confirm the deposits that they made through an interim date. The firm communicated to the principal auditor that it had also examined support for customer account statements and proof of deposits in the accounting system. The following deficiency was identified: · The sample size the firm used in its substantive procedures to test deposit liabilities was too small to provide sufficient appropriate audit evidence because these procedures were designed based on a level of control reliance that was not supported due to the deficiencies in the firm's control testing discussed above. (AS 2301.16 .18 and .37; AS 2315.19 .23 and .23A) Both financial statement and ICFR audits | AS 2301.16; AS 2301.18; AS 2301.37; AS 2315.19; AS 2315.23; AS 2315.23A |