How audits fail in Derivatives
The recurring ways firms fell short. Click any one to read the real inspection findings.
- Little or no substantive testing13
The firm performed little or no substantive testing over the account, disclosure, or assertion.
- Management review controls not fully evaluated12
The firm tested a management review control but didn't evaluate the specific procedures the reviewer performed, or the control's precision.
- IT general controls not tested8
The firm relied on automated or IT-dependent controls but didn't adequately test the underlying IT general controls (e.g. change management).
- Accounting or disclosure treatment not evaluated7
The firm didn't evaluate whether the accounting or disclosures conformed with GAAP, or didn't identify departures from GAAP or omitted disclosures.
2 significant risk - Estimate assumptions not evaluated6
The firm didn't sufficiently evaluate the reasonableness of the significant assumptions behind an estimate.
2 significant risk - Estimate method, model, or data not evaluated6
The firm didn't evaluate the method, model, or underlying data the issuer used to develop an estimate or fair value.
1 significant risk - Controls not identified or tested5
The firm didn't identify and/or test controls it needed to rely on for the account or assertion.
- Accuracy/completeness of client data not tested4
The firm used issuer-prepared schedules, reports, or system data without testing that they were accurate and complete.
- Other testing deficiency4
A deficiency that doesn't fall into one of the more specific patterns above.
- Sample too small or unsupported3
The sample the firm tested was too small, or the basis for the sample size didn't support the conclusion.
- Reliance on a specialist or pricing service1
The firm relied on a specialist, pricing service, or third party without sufficiently evaluating that work.