Company: SKLZ
Filing Date: 2025-11-06
Form Type: 10-K
Source: 0001801661-25-000050
Chunk: 141

Company: Skillz Inc.
Filing Date: 2025-11-06
Form: 10-K
Item: Item 8
Chunk 141
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 is obtained for the accounts and disclosures associated with the Company’s monetization services and (ii) increased audit effort through the use of individuals with specialized skill and knowledge in information technology.

Our audit procedures related to the use of system-generated audit evidence related to the Company’s monetization services included the following, among others.

•We engaged in live end-user game play during the period and traced the related transactions into the system data.

•We tested reconciliations of end-user net cash deposits and withdrawals during the period from payment processors. 

•We tested reconciliations of transactions from the system data to the amounts recorded in the general ledger.  

•With the assistance of information technology professionals, we:

◦Inspected relevant IT systems to identify and evaluate financially relevant changes during the audit period;

◦Evaluated the appropriateness of user access for the database of the relevant underlying systems;

◦Identified and inspected the code controlling each transaction type, tested the operating effectiveness and inspected the last modification date of each code configuration to determine that no relevant changes were made to that piece of code during the period; and

◦For code changes identified, inspected the code to determine the change was appropriate.   

Assessment of indirect tax liabilities

As described further in Note 10 to the consolidated financial statements, the Company is subject to indirect taxes, including sales and use tax in the United States.  There is a high degree of complexity involved in the interpretation and application of indirect tax law to the Company’s activities for certain domestic jurisdictions. Significant judgments are made by management in estimating these liabilities, which include assessing the taxability of services transacted using the Company’s technology solution. We identified the assessment of indirect tax liabilities for certain domestic jurisdictions as a critical audit matter. 

The principal consideration for our determination that this matter is a critical audit matter is that management makes significant judgments when determining the indirect tax liabilities for certain domestic jurisdictions, including taxability of services transacted using the Company’s technology solution. This in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence relating to the indirect tax liabilities. In addition, the audit effort involved the use of professionals with specialized skill and knowledge.

Our audit procedures related to the assessment of indirect tax liabilities included the following, among others:

•With the assistance of our indirect tax specialists, we evaluated management’s assessment of the indirect tax law enacted by certain taxing authorities as well as their determination regarding taxability of the Company’s services transacted using the Company’s technology