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  "documentTitle": "Lasertec Corporation (6920)",
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      "text": "Lam Research 10K Aug 2023 – Ernst& Young audit opinion excerpt",
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      "text": "KLA 10K Aug 2023 – PriceWaterhouse Coopers audit opinion excerpt",
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      "text": "Auditors for both KLA and Lam recently noted inventory valuation as the one and only Critical Audit Matter in their last audit opinions, a designation reserved for the highest-risk and most material areas in the financial reports.",
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      "text": "Manipulating inventory to falsify gross margins and earnings is an easy temptation for a semiconductor company trying to meet lofty market expectations. Inventory games in the semiconductor unit at Toshiba were a key part of the fraud and scandal that blew up the company in 2014. The potential for abuse is highlighted in the audit opinions at several of the largest semicap players. Auditors for both KLA and Lam recently noted inventory valuation as the one and only Critical Audit Matter in their last audit opinions, a designation reserved for the highest-risk and most material areas in the financial reports.",
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      "text": "Inventory – Valuation [...] Auditing management’s estimates for excess and obsolete inventory involved subjective auditor judgment because management’s assessment of whether a write down is required... is judgmental.",
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      "text": "The estimate of net realizable value of inventory is impacted by assumptions regarding general semiconductor market conditions... and require management to use significant judgment that may include uncertain elements.",
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      "text": "\"The estimate of net realizable value of inventory is impacted by assumptions regarding general semiconductor market conditions, manufacturing schedules, technology changes, new product introductions and possible alternative uses, and require management to use significant judgment that may include uncertain elements....The principal considerations for our determination that performing procedures relating to the valuation of product inventory is a critical audit matter are (i) the significant judgment by management when developing the estimated obsolescence used for determining the net realizable value of product inventory and (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management's assumption related to the future demand for product inventory.\" — PriceWaterhouse Coopers (KLA 10K Aug 2023); \"Inventory – Valuation [...] Auditing management’s estimates for excess and obsolete inventory involved subjective auditor judgment because management’s assessment of whether a write down is required and the measurement of any excess of cost over net realizable value is judgmental and considers a number of qualitative factors that are affected by market and economic conditions outside the Company’s control.\" — Ernst& Young (Lam Research 10K Aug 2023)",
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      "text": "Source: Investigator field visits",
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