Company: SKLZ
Filing Date: 2025-11-06
Form Type: 10-K
Source: 0001801661-25-000050
Chunk: 140

Company: Skillz Inc.
Filing Date: 2025-11-06
Form: 10-K
Item: Item 8
Chunk 140
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 expectation is based on an evaluation of all information reasonably available to the game developers regarding the Company’s customary business practices, published policies and specific statements. We identified the classification of end-user incentives as a critical audit matter.

The principal considerations for our determination that the classification of end-user incentives is a critical audit matter are that evaluating the appropriateness of this assessment requires subjective auditor judgment in the application of U.S. GAAP to the 

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specific facts of each incentive program, as well as an increased extent of audit effort in evaluating the completeness and accuracy of information relevant to the assessment.

Our audit procedures related to the classification of end-user incentives included the following, among others.

•We evaluated the appropriateness of the entity’s accounting policy in accordance with U.S. GAAP.

•Read and evaluated certain contracts and terms of service with game developers and end-users.

•Performed corroborative inquiries and confirmed key terms and conditions with selected game developers.

•Inspected publicly available information published on the Company’s website and social media platforms and evaluated the consistency of these information sources with the Company’s assessment.

•Inquired of Company personnel in operational, IT, and strategy roles to evaluate the completeness of incentive programs subjected to the Company’s assessment.

•Engaged in live end-user game play and evaluated whether all incentives earned through game play were accurately included in the Company’s assessment.

Monetization services: use of system-generated audit evidence

As described further in Note 2 to the consolidated financial statements, the Company provides monetization services for game developers’ game content. As disclosed in management’s report on internal control over financial reporting, the Company identified material weaknesses as of December 31, 2024. The material weaknesses included ineffective information technology general controls (ITGCs) in the areas of user access and program change management controls. As a result of the ITGC material weakness, the Company’s related information technology (IT) dependent manual and application controls were also deemed ineffective. The prevention, detection, and correction of material misstatements of the consolidated financial statements is dependent, in part, on management designing and implementing effective ITGCs and related IT dependent manual and application controls related to financial reporting processes. We identified the use of system-generated audit evidence related to the Company’s monetization services as a critical audit matter.

The principal considerations for our determination that this matter is a critical audit matter are that the existence of material weaknesses in ITGCs necessitated (i) especially challenging and complex auditor judgment in designing audit procedures and determining that sufficient appropriate audit evidence