- Inspection year
- 2023
- Report date
- 28-Apr-2025
- PCAOB release
- 104-2025-073
- Audits reviewed
- 3
- Audits w/ Part I.A deficiencies
- 3
- Part I.A deficiency rate
- 100%
- Part I.A deficiencies
- 28
- Part I.B deficiencies
- 24
- Report
- View PDF ↗
Deficiencies (28)
Grouped by issuer and in the same order as the PCAOB report, so each item ties back directly to the source.
Issuer A13 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Litigation, Claims, and Assessments | The firm's procedures for identifying litigation claims and assessments and determining whether the financial accounting and reporting of such matters was complete and accurate consisted solely of obtaining letters of audit inquiry from the client's lawyers without evaluating such responses and performing other necessary procedures. (AS 2505.05) Financial statement audit only | AS 2505.5 | |
| 2 | Revenue | The firm did not perform any substantive procedures to test certain revenue. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 3 | Revenue | For certain other revenue the following deficiency was identified: · The firm did not perform procedures to evaluate whether the issuer's recognition of this revenue was in conformity with FASB ASC Topic 606 Revenue from Contracts with Customers. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 4 | Revenue | For certain other revenue the following deficiency was identified: · The sample size the firm used in its substantive procedures to test this revenue was too small to provide sufficient appropriate audit evidence because in determining its sample the firm did not take into account the relevant factors in determining its sample size including tolerable misstatement the allowable risk of incorrect acceptance and the characteristics of the population. (AS 2315.16 .19 .23 and .23A) Financial statement audit only | AS 2315.16; AS 2315.19; AS 2315.23; AS 2315.23A | |
| 5 | Revenue | For certain other revenue the following deficiency was identified: · The firm did not identify and evaluate a GAAP departure related to the issuer's omission of disclosures related to significant payment terms for its customer contracts as required by FASB ASC Topic 606. (AS 2810.30 and .31) Financial statement audit only | AS 2810.30; AS 2810.31 | |
| 6 | Convertible Debt | The issuer reported convertible notes payable with conversion features that were recorded as derivative liabilities. The following deficiency was identified with respect to convertible notes payable: · The firm did not perform any procedures to test certain convertible notes payable. (AS 2301.08 and .11) Financial statement audit only | AS 2301.8; AS 2301.11 | Significant risk |
| 7 | Convertible Debt | The issuer reported convertible notes payable with conversion features that were recorded as derivative liabilities. The following deficiency was identified with respect to convertible notes payable: · The firm sent a positive confirmation request to the issuer's lender for a convertible note payable. The confirmation was returned with an exception and the firm did not consider the nature of the exception and whether additional evidence was needed. (AS 2310.33) Financial statement audit only | AS 2310.33 | Significant risk |
| 8 | Convertible Debt | The issuer reported convertible notes payable with conversion features that were recorded as derivative liabilities. The following deficiency was identified with respect to convertible notes payable: · The firm did not perform any procedures to test the unamortized debt discount related to the convertible notes payable. (AS 2301.08 and .11) Financial statement audit only | AS 2301.8; AS 2301.11 | Significant risk |
| 9 | Convertible Debt | The issuer reported convertible notes payable with conversion features that were recorded as derivative liabilities. The following deficiency was identified with respect to convertible notes payable: · The firm did not perform any procedures to test the disclosures related to the convertible notes payable. (AS 2301.08 and .11) Financial statement audit only | AS 2301.8; AS 2301.11 | Significant risk |
| 10 | Derivative Liabilities | The following deficiency was identified with respect to the derivative liabilities recorded for the conversion features embedded in the convertible debt: · The firm did not perform any procedures to evaluate the accounting treatment of the embedded conversion features as derivative liabilities. (AS 2301.08 and .11) Financial statement audit only | AS 2301.8; AS 2301.11 | Significant risk |
| 11 | Derivative Liabilities | The following deficiency was identified with respect to the derivative liabilities recorded for the conversion features embedded in the convertible debt: · The firm did not perform substantive procedures to test the fair value of the derivative liabilities beyond obtaining and reading a company-provided memo. (AS 2501.07) Financial statement audit only | AS 2501.7 | Significant risk |
| 12 | Derivative Liabilities | The following deficiency was identified with respect to the derivative liabilities recorded for the conversion features embedded in the convertible debt: · The firm did not perform any procedures to test the disclosures related to the derivative liabilities. (AS 2301.08 and .11) Financial statement audit only | AS 2301.8; AS 2301.11 | Significant risk |
| 13 | Journal Entries | The firm did not identify and select journal entries and other adjustments for testing to address the potential for material misstatement due to fraud. (AS 2401.58) Financial statement audit only | AS 2401.58 |
Issuer B8 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Liability | The firm sent a positive confirmation request for a liability at year end. The respondent did not respond to the aspect of the confirmation request related to the amount of liability outstanding and informed the firm that the loans were sold to another entity. The firm did not perform any alternative procedures including confirmation with the purchaser of the loans. (AS 2310.31) Financial statement audit only | AS 2310.31 | Significant risk |
| 2 | Related Party Transactions | he firm did not perform procedures to test the identified transactions with related parties including whether the transactions were properly accounted for and disclosed in the issuer's financial statements beyond inquiry and obtaining information provided by the issuer about the transactions. (AS 2410.12 and .17) Financial statement audit only | AS 2410.12; AS 2410.17 | |
| 3 | Related Party Transactions | The firm did not evaluate whether the issuer had properly identified all of its related parties and relationships and transactions with related parties including testing the accuracy and completeness of the related parties and relationships and transactions with related parties identified by the issuer. (AS 2410.14 and .17) Financial statement audit only | AS 2410.14; AS 2410.17 | |
| 4 | Related Party Transactions | The firm did not identify and evaluate a departure from GAAP related to the issuer's omission of disclosures required by FASB ASC Topic 850 Related Party Disclosures. (AS 2410.17; 2810.30 and .31) Financial statement audit only | AS 2410.17; AS 2810.30; AS 2810.31 | |
| 5 | Significant Transactions | The issuer entered into certain significant transactions during the year. The firm did not evaluate the business purpose (or lack thereof) of these transactions that appeared unusual due to the timing size or nature including whether they may have been entered into to engage in fraudulent financial reporting or conceal misappropriation of assets given certain facts regarding these transactions. (AS 2401.67) Financial statement audit only | AS 2401.67 | |
| 6 | Significant Transactions | In addition the firm did not perform procedures to test the transactions including the appropriateness of the accounting treatment the valuation and the related disclosures. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 7 | Journal Entries | The firm did not identify and select journal entries and other adjustments for testing to address the potential for material misstatement due to fraud. (AS 2401.58) Financial statement audit only | AS 2401.58 | |
| 8 | Subsequent Events | The firm did not perform procedures to test a subsequent event transaction beyond inquiry and obtaining a board resolution regarding the planned transaction. (AS 2301.08) Financial statement audit only | AS 2301.8 |
Issuer C7 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Liabilities | The firm did not perform any procedures to test certain liabilities. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 2 | Liabilities | To test another liability the firm sent a positive confirmation request to an external party and received the response via email. The firm did not consider performing procedures to address the risks associated with electronic responses such as verifying the source and contents of the confirmation responses. (AS 2310.29) Financial statement audit only | AS 2310.29 | |
| 3 | Liabilities | To test another liability the firm sent a positive confirmation request to an external party and received the response via email. The firm obtained bank statements showing certain deposits related to this liability. The firm did not perform procedures to verify the source of those deposits. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 4 | Related Party Transactions | The firm did not perform procedures to test certain related party transactions and balances including whether they were properly disclosed in the financial statements beyond inquiry with management. (AS 2410.12 and .17) Financial statement audit only | AS 2410.12; AS 2410.17 | |
| 5 | Share-Based Compensation | The issuer issued stock in exchange for services provided. The firm did not perform any procedures to test whether share-based expenses were recognized in the appropriate period and in accordance with the terms of the relevant agreements including whether the issuance of shares of common stock was approved by the issuer's Board of Directors. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 6 | Share-Based Compensation | The firm did not identify and evaluate a departure from GAAP related to the issuer's omission of certain disclosures related to certain share-based payment transactions required by FASB ASC Topic 718 Compensation—Stock Compensation. (AS 2810.30 and .31) Financial statement audit only | AS 2810.30; AS 2810.31 | |
| 7 | Journal Entries | The firm did not identify and select journal entries and other adjustments for testing to address the potential for material misstatement due to fraud. (AS 2401.58) Financial statement audit only | AS 2401.58 |