- Inspection year
- 2024
- Report date
- 22-May-2025
- PCAOB release
- 104-2025-091
- Audits reviewed
- 3
- Audits w/ Part I.A deficiencies
- 3
- Part I.A deficiency rate
- 100%
- Part I.A deficiencies
- 20
- Part I.B deficiencies
- 9
- Report
- View PDF ↗
Deficiencies (20)
Grouped by issuer and in the same order as the PCAOB report, so each item ties back directly to the source.
Issuer A10 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The issuer used two information-technology (IT) systems to initiate process and/or record transactions related to certain revenue recognized at various locations. In its testing of controls over this revenue the firm tested two IT-dependent manual controls that used data and reports generated or maintained by these IT systems. The accuracy and completeness of these data and reports depended on effective IT general controls (ITGCs). The firm however did not test the operating effectiveness of the ITGCs over these IT systems. (AS 2201.44) Both financial statement and ICFR audits | AS 2201.44 | |
| 2 | Revenue | The issuer used two information-technology (IT) systems to initiate process and/or record transactions related to certain revenue recognized at various locations. In its testing of controls over this revenue the firm tested two IT-dependent manual controls that used data and reports generated or maintained by these IT systems. The accuracy and completeness of these data and reports depended on effective IT general controls (ITGCs). As a result of the deficiency in the firm's testing of ITGCs the firm's testing of these IT-dependent manual controls was not sufficient. (AS 2201.46) Both financial statement and ICFR audits | AS 2201.46 | |
| 3 | Revenue | The firm identified certain of the issuer's locations as “in-scope” locations for purposes of testing controls over the revenue. The firm selected for testing certain controls over the processing and recording of the revenue that consisted of the issuer's review and/or approval of (1) the detail sales price list (2) sales price and other information in contracts (3) certain sales reports and (4) changes in estimated contract costs. The following deficiencies were identified: · The firm did not perform sufficient procedures to test the operating effectiveness of these controls because the firm did not test the operating effectiveness of the controls at certain “in-scope” locations which reported a significant amount of the revenue. (AS 2201.44) Both financial statement and ICFR audits | AS 2201.44 | |
| 4 | Revenue | The firm identified certain of the issuer's locations as “in-scope” locations for purposes of testing controls over the revenue. The firm selected for testing certain controls over the processing and recording of the revenue that consisted of the issuer's review and/or approval of (1) the detail sales price list (2) sales price and other information in contracts (3) certain sales reports and (4) changes in estimated contract costs. 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 lists from which it selected its samples for testing. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 | |
| 5 | Revenue | The firm identified certain of the issuer's locations as “in-scope” locations for purposes of testing controls over the revenue. The firm selected for testing certain controls over the processing and recording of the revenue that consisted of the issuer's review and/or approval of (1) the detail sales price list (2) sales price and other information in contracts (3) certain sales reports and (4) changes in estimated contract costs. The following deficiencies were identified: · For two of these controls both of which involved the issuer's review of estimated revenue and contract costs the firm did not evaluate the specific review procedures that the control owners performed to assess the appropriateness of these estimates. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 6 | Revenue | For certain other revenue the following deficiencies were identified: · The firm selected for testing a control over the processing and recording of this other revenue that consisted of the issuer's review and approval of the revenue distribution. The firm did not identify and test any controls over the accuracy and completeness of a report used in the operation of this control. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 7 | Revenue | For certain other revenue the following deficiencies were identified: · The firm used issuer-prepared reports to substantively test this other revenue but did not perform any procedures to test or test any controls over the accuracy and completeness of these reports. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 | |
| 8 | Long-Lived Assets | During the year the issuer identified events indicating that the carrying value of its long-lived assets may not be recoverable and performed an impairment analysis for each project. The firm's approach for testing the impairment of long-lived assets was to test the issuer's process and the firm identified certain of the issuer's locations as “in-scope” locations for purposes of testing long-lived assets for possible impairment. The following deficiencies were identified: · The firm did not identify and test any controls over the issuer's evaluation of long-lived assets for possible impairment. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 9 | Long-Lived Assets | During the year the issuer identified events indicating that the carrying value of its long-lived assets may not be recoverable and performed an impairment analysis for each project. The firm's approach for testing the impairment of long-lived assets was to test the issuer's process and the firm identified certain of the issuer's locations as “in-scope” locations for purposes of testing long-lived assets for possible impairment. The following deficiencies were identified: · The firm did not perform sufficient procedures to test the impairment of long-lived assets because the firm did not test such assets for possible impairment at certain “in-scope” locations which held a significant portion of the issuer's long-lived assets. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 | |
| 10 | Long-Lived Assets | During the year the issuer identified events indicating that the carrying value of its long-lived assets may not be recoverable and performed an impairment analysis for each project. The firm's approach for testing the impairment of long-lived assets was to test the issuer's process and the firm identified certain of the issuer's locations as “in-scope” locations for purposes of testing long-lived assets for possible impairment. The following deficiencies were identified: · The firm used an issuer-prepared report to substantively test long-lived assets for possible impairment but did not perform any procedures to test or test any controls over the accuracy and completeness of this report. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 |
Issuer B7 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The issuer recognized revenue from contracts that included multiple performance obligations and allocated the total transaction price to the separate performance obligations based on relative standalone selling prices (SSPs). The firm selected a sample of transactions to test revenue. The following deficiencies were identified: · The firm used issuer-prepared reports to substantively test revenue but did not perform any procedures to test or test any controls over the accuracy and completeness of these reports. (AS 1105.10) Financial statement audit only | AS 1105.10 | |
| 2 | Revenue | The issuer recognized revenue from contracts that included multiple performance obligations and allocated the total transaction price to the separate performance obligations based on relative standalone selling prices (SSPs). The firm selected a sample of transactions to test revenue. The following deficiencies were identified: · The firm did not perform sufficient procedures to evaluate the appropriateness of the issuer's (1) determination of transaction price and (2) allocation of the transaction price to each performance obligation because the firm did not evaluate the effect of a sales discount on the transaction price and did not test the SSPs used to allocate revenue to the separate performance obligations. (AS 2301.08 and .13) Financial statement audit only | AS 2301.8; AS 2301.13 | |
| 3 | Revenue | The issuer recognized revenue from contracts that included multiple performance obligations and allocated the total transaction price to the separate performance obligations based on relative standalone selling prices (SSPs). The firm selected a sample of transactions to test revenue. The following deficiencies were identified: · The issuer recognized certain revenue based on electronic activity. The firm used activity information produced by the issuer to evaluate whether the issuer satisfied its performance obligations related to this revenue but did not perform any procedures to test or test any controls over the accuracy and completeness of this information. (AS 1105.10) Financial statement audit only | AS 1105.10 | |
| 4 | Revenue | The issuer recognized revenue from contracts that included multiple performance obligations and allocated the total transaction price to the separate performance obligations based on relative standalone selling prices (SSPs). The firm selected a sample of transactions to test revenue. The following deficiencies were identified: · The issuer recognized certain other revenue over the performance period. The firm did not perform sufficient procedures to test whether the issuer satisfied its performance obligations because the firm did not evaluate the reasonableness of the performance period. (AS 2301.08 and .13) Financial statement audit only | AS 2301.8; AS 2301.13 | |
| 5 | Accounts Receivable | Payments collected by the issuer were applied to the oldest outstanding accounts receivable balance first. The firm used a system-generated accounts receivable aging report to substantively test the allowance for doubtful accounts but did not perform procedures to test or test any controls over the accuracy of the report beyond agreeing a sample of balances from the accounts receivable aging report to the respective billings. (AS 1105.10) Financial statement audit only | AS 1105.10 | |
| 6 | Variable Interest Entities | The issuer derives revenue through consolidated VIEs and their subsidiaries and relies on contractual arrangements with the VIEs and their shareholders to control the business operations of the consolidated VIEs. The firm did not perform sufficient procedures to test the issuer's ability to consolidate the VIEs because it did not perform any procedures to evaluate the nature of certain uncertainties disclosed by the issuer regarding (1) the validity of the contractual arrangements with the VIEs and their subsidiaries (2) the structure of the VIEs and (3) its ability to enforce the contractual arrangements and perform additional procedures to address the risks associated with those uncertainties. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 7 | Related Party Transactions | The firm did not identify and evaluate a departure from GAAP related to the issuer's omission of a disclosure required by FASB ASC Topic 850 Related Party Disclosures. (AS 2410.17; AS 2810.30 and 31) Financial statement audit only | AS 2410.17; AS 2810.30; AS 2810.31 |
Issuer C3 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The issuer recognized revenue from contracts that included multiple performance obligations and allocated the total transaction price to the separate performance obligations based on relative SSPs. The firm's approach for testing the allocation of revenue to the separate performance obligations was to test the issuer's process. The following deficiencies were identified: · The firm did not sufficiently evaluate whether the residual method that the issuer used to allocate the transaction price to the separate performance obligations was in conformity with FASB ASC Topic 606 Revenue from Contracts with Customers because the firm did not evaluate whether the SSPs of certain performance obligations were highly variable. (AS 2501.10) Financial statement audit only | AS 2501.10 | |
| 2 | Revenue | The issuer recognized revenue from contracts that included multiple performance obligations and allocated the total transaction price to the separate performance obligations based on relative SSPs. The firm's approach for testing the allocation of revenue to the separate performance obligations was to test the issuer's process. The following deficiencies were identified: · The firm did not sufficiently evaluate whether the issuer had a reasonable basis for the SSP of a performance obligation for certain transactions. (AS 2501.16) Financial statement audit only | AS 2501.16 | |
| 3 | Variable Interest Entities | The issuer derives revenue through a consolidated Variable Interest Entity (VIE) and its subsidiaries and relies on contractual arrangements with the VIE and its shareholders to control the business operations of the consolidated VIE. The firm did not perform sufficient procedures to test the issuer's ability to consolidate the VIE because it did not perform any procedures to evaluate the nature of certain uncertainties disclosed by the issuer regarding (1) the validity of the contractual arrangements with the VIE and its subsidiaries (2) the structure of the VIE and (3) its ability to enforce the contractual arrangements and perform additional procedures to address the risks associated with those uncertainties. (AS 2301.08) Financial statement audit only | AS 2301.8 |