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The firm selected for testing a control that consisted of an annual review of certain loans including an evaluation of loan grades. The loan grade was an important input in determining whether a loan would be individually evaluated for impairment or considered as part of the general reserve component of the ALL. The firm did not evaluate the specific review procedures that the control owner performed to evaluate the appropriateness of the loan grade. (AS 2201.42 and .44)

The issuer assigned a loan grade to each loan. The loan grade was an important input in determining whether the loan would be individually evaluated for impairment or considered as part of the general reserve. The firm's sample to test the reasonableness of loan grades was too small because in determining its sample size the firm did not appropriately consider the characteristics of the population. (AS 2315.23 and .23A)

The firm performed various substantive procedures to evaluate the reasonableness of the methods and assumptions the issuer used to calculate the qualitative component of the general reserve of the ALL for originated loans. The firm did not evaluate the reasonableness of certain assumptions the issuer used to estimate the underlying qualitative factors beyond comparing these factors to prior periods inquiring about any changes and recalculating the reserve. (AS 2501.10)

The issuer allocated loans between purchased loans and originated loans for each of six types of loans and then applied different loss rates to each population. The firm did not test the accuracy of the allocation of loans between purchased loans and originated loans. (AS 2501.10)

The firm selected for testing controls over the review of non-accrual loans and loans identified as troubled debt restructurings. The firm did not identify and test any controls over the accuracy and completeness of the reports that the control owners reviewed in the performance of these controls. (AS 2201.39)

The firm did not identify and test any controls over the issuer's identification of other loans with impairment indicators that had not already been placed in non-accrual status or identified as troubled debt restructurings. (AS 2201.39)

The firm's sample to test the reasonableness of loan grades was too small because in determining its sample size the firm did not appropriately consider the characteristics of the population. (AS 2315.23 and .23A)

The issuer used a model to estimate the general reserve component of the ALL which consisted of quantitative qualitative and unallocated components. The unallocated component represented a significant portion of the general reserve. The following deficiencies were identified: · The firm selected for testing a control that consisted of the evaluation of the reasonableness of the ALL including the general reserve. The firm did not evaluate the specific review procedures the control owner performed to assess the reasonableness of certain assumptions used to estimate the general reserve. (AS 2201.42 and .44)

The issuer used a model to estimate the general reserve component of the ALL which consisted of quantitative qualitative and unallocated components. The unallocated component represented a significant portion of the general reserve. The following deficiencies were identified: · With respect to the firm's substantive testing of the general reserve the firm did not test the reasonableness of the significant unallocated component beyond comparing the current year's general reserve to the prior year's. (AS 2501.07)

The firm selected for testing a control over the review of qualitative factors which are inputs used in determining the general reserve component of the ALL. The firm did not test the aspect of this control that addressed the accuracy of certain data used in the performance of this control. (AS 2201.42 and .44)

The issuer used loan charge-offs as inputs to determine the general reserve component of the ALL. The firm selected for testing a control that included the review of loan charge-offs and the evaluation of charge-offs excluded from the calculation. The firm did not evaluate the specific review procedures the control owner performed to evaluate the charge-offs excluded from the calculation. (AS 2201.42 and .44)

The firm selected for testing a control over the review of qualitative factors which are inputs used in determining the general reserve component of the ALL. The firm did not evaluate the review procedures that the control owners performed including the procedures to identify items for follow up and the procedures to determine whether those items were appropriately resolved. (AS 2201.42 and .44)

The firm selected for testing a control that consisted of the issuer's review of the assigned loan risk ratings. The loan risk rating was an important input in estimating the ALL and determining whether a loan would be individually or collectively evaluated for impairment. The firm did not evaluate the review procedures that the control owner performed including the procedures to identify items for follow up and the procedures to determine whether those items were appropriately resolved. (AS 2201.42 and .44)

The firm selected for testing a control that consisted of the issuer's review of certain assumptions used to estimate the quantitative component of the ACL for loans collectively evaluated for impairment. The firm did not evaluate the specific review procedures that the control owner performed to assess the reasonableness of these assumptions that were outside of the range of assumptions the issuer established under its ACL methodology. (AS 2201.42 and .44)

For loans that were collectively evaluated for impairment the issuer determined the qualitative reserve component of the ACL using various risk-weighted qualitative factors. The following deficiencies were identified: · The firm selected for testing a control that included the issuer's review of these qualitative factors using an internally developed framework comprised of various assumptions. The firm did not identify and test any controls that addressed the (1) reasonableness of the assumptions from the framework that were used in the operation of this control (2) reasonableness of the risk weights assigned to the qualitative factors and (3) the accuracy of certain loan information used in the operation of the issuer's controls over the ACL that the firm selected for testing. (AS 2201.39)

For loans that were collectively evaluated for impairment the issuer determined the qualitative reserve component of the ACL using various risk-weighted qualitative factors. The following deficiencies were identified: · The firm's approach for substantively testing the qualitative reserve component of the ACL was to test the issuer's process. The firm did not perform any procedures to evaluate whether the issuer had a reasonable basis for the qualitative factors used in developing the reserve. (AS 2501.16)

The issuer assigned certain loans a loan risk rating which was an important input in estimating the quantitative component of the ACL. The following deficiencies were identified: · The firm selected for testing a control that consisted of the issuer's review of the loan risk ratings assigned to certain loans. The firm did not evaluate the specific review procedures that the control owner performed to assess the reasonableness of the loan risk ratings. (AS 2201.42 and .44)

The issuer assigned certain loans a loan risk rating which was an important input in estimating the quantitative component of the ACL. The following deficiencies were identified: · The firm selected for testing a control that consisted of the issuer's review of the loan risk ratings assigned to certain loans. The firm did not assess whether the issuer's review was designed to occur with sufficient scope and frequency to address the risks of material misstatement. (AS 2201.42)

The issuer assigned certain loans a loan risk rating which was an important input in estimating the quantitative component of the ACL. The following deficiencies were identified: · The firm selected for testing a control that consisted of the issuer's comparison of loan risk ratings determined by an external loan reviewer to loan risk ratings determined by the issuer. The firm did not identify and test any controls that addressed the reasonableness of the loan risk ratings determined by the external loan reviewer. (AS 2201.39)

The issuer assigned certain loans a loan risk rating which was an important input in estimating the quantitative component of the ACL. The following deficiencies were identified: · The firm's substantive procedures to test the reasonableness of the assigned loan risk rating for these loans included selecting a sample of loans for testing. The sample size that the firm used was too small to provide sufficient appropriate audit evidence because these procedures were designed based on a level of control reliance that was not supported due to the deficiencies in the firm's control testing discussed above. (AS 2301.16 .18 and .37)

The firm selected for testing several controls that consisted of reviews of aspects of the issuer's loan portfolio to evaluate the reasonableness of loan grades and the identification of problem loans that management used in its evaluation of the ALL. The firm did not evaluate the specific criteria the control owners used to identify individual loans for follow up and whether loans meeting such criteria were identified for investigation and resolved. (AS 2201.42 and .44)

The firm selected for testing two review controls over the qualitative factors used in the calculation of the ALL. The firm did not evaluate the specific review procedure that the control owners performed to evaluate the reasonableness of the qualitative factors. (AS 2201.42 and .44)

The firm did not identify and test a control over certain assumptions used in the calculation of the ALL. (AS 2201.39)

The firm selected for testing a control that included a review of all loans to determine whether they should be put on non-accrual status. 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)

The firm's approach for substantively testing the ALL was to review and test management's process. The firm did not sufficiently evaluate the reasonableness of the ALL because the firm's procedures to test the qualitative factors and risk adjustment percentages the issuer used to determine the ALL were limited to (1) reading the issuer's analysis (2) comparing the factors and percentages to the prior year and (3) evaluating whether certain changes or lack thereof to the factors and percentages from the prior year were directionally consistent with internal or external data. (AS 2501.09 .10 and .11)

The issuer determined the qualitative component of the ALL by applying basis points to each qualitative factor. The firm's approach for substantively testing the qualitative component was to test the issuer's process and develop an independent expectation. The following deficiencies were identified: · The firm did not evaluate whether the issuer had a reasonable basis for the significant assumptions related to the basis points used. (AS 2501.16)

The issuer determined the qualitative component of the ALL by applying basis points to each qualitative factor. The firm's approach for substantively testing the qualitative component was to test the issuer's process and develop an independent expectation. The following deficiencies were identified: · The firm did not evaluate the relevance of external information it used to develop its independent expectation. (AS 1105.04 and .06)

The issuer determined the qualitative component of the ALL by applying basis points to each qualitative factor. The firm's approach for substantively testing the qualitative component was to test the issuer's process and develop an independent expectation. The following deficiencies were identified: · The firm did not perform procedures to demonstrate it had a reasonable basis for the assumptions it used to develop its independent expectation. (AS 2501.22)

The issuer determined the qualitative component of the ALL by applying basis points to each qualitative factor. The firm's approach for substantively testing the qualitative component was to test the issuer's process and develop an independent expectation. The following deficiencies were identified: · The firm did not perform any procedures to demonstrate that the range it used for its independent expectation encompassed only reasonable outcomes and was supported by sufficient appropriate audit evidence. (AS 2501.25)

The issuer also reported an unallocated component of the ALL. The firm did not evaluate the reasonableness of the significant assumptions the issuer used to develop this component. (AS 2501.16)

The issuer reported certain loans for which the borrowers were provided temporary payment relief under the law. The issuer identified that one borrower did not make any subsequent payments on a loan for which it had previously been provided payment relief. As a result the issuer determined that the value of this loan was dependent on the underlying collateral. The issuer estimated the fair value of the loan's collateral and recorded a specific provision within the ALLL. The following deficiencies were identified: - The firm did not identify and test any controls that addressed the valuation of loans for which the borrowers had received temporary payment relief under the law. (AS 2201.39) Unrelated to our review the issuer received additional information concerning the value of the collateral for the above loan and concluded that a material misstatement existed that had not been previously identified. The issuer subsequently corrected this misstatement in a restatement of its financial statements and the firm revised and reissued its report on the financial statements. The issuer also reevaluated its controls over the valuation of similar loans and concluded that a material weakness existed that had not been previously identified. The issuer subsequently reflected this material weakness in a revision to its report on ICFR and the firm revised its opinion on the effectiveness of the issuer's ICFR to express an adverse opinion and reissued its report to include this material weakness.

The issuer reported certain loans for which the borrowers were provided temporary payment relief under the law. The issuer identified that one borrower did not make any subsequent payments on a loan for which it had previously been provided payment relief. As a result the issuer determined that the value of this loan was dependent on the underlying collateral. The issuer estimated the fair value of the loan's collateral and recorded a specific provision within the ALLL. The following deficiencies were identified: - The firm did not perform procedures beyond obtaining the issuer's analysis to test the reasonableness of this specific provision. (AS 2501.07) Unrelated to our review the issuer received additional information concerning the value of the collateral for the above loan and concluded that a material misstatement existed that had not been previously identified. The issuer subsequently corrected this misstatement in a restatement of its financial statements and the firm revised and reissued its report on the financial statements. The issuer also reevaluated its controls over the valuation of similar loans and concluded that a material weakness existed that had not been previously identified. The issuer subsequently reflected this material weakness in a revision to its report on ICFR and the firm revised its opinion on the effectiveness of the issuer's ICFR to express an adverse opinion and reissued its report to include this material weakness. [This citation refers to AS 2501 Auditing Accounting Estimates which was in effect for this audit. This standard was replaced by AS 2501 Auditing Accounting Estimates Including Fair Value Measurements which became effective for audits of financial statements ending on or after December 15 2020.]

The issuer's ALLL included a reserve for loans collectively evaluated for impairment. This reserve included a component that was determined by using certain qualitative factors. The following deficiencies were identified: - The firm selected for testing controls that consisted of the issuer's reviews of the ALLL. The firm did not identify and test any controls over the accuracy and completeness of certain data and/or reports used in the operation of these controls. (AS 2201.39)

The issuer's ALLL included a reserve for loans collectively evaluated for impairment. This reserve included a component that was determined by using certain qualitative factors. The following deficiencies were identified: - The firm selected for testing controls that consisted of the issuer's review of the qualitative component of the ALLL. The firm did not evaluate the specific review procedures that the control owners performed to evaluate the reasonableness of the basis point adjustments for the qualitative factors. (AS 2201.42 and .44)

The issuer's ALLL included a reserve for loans collectively evaluated for impairment. This reserve included a component that was determined by using certain qualitative factors. The following deficiencies were identified: - The firm's approach for substantively testing the reserve was to review and test management's process. The firm did not perform procedures to evaluate the reasonableness of certain basis points that were applied to determine the qualitative component beyond comparing these basis points to the basis points that were applied in prior years and concluding on their overall reasonableness. (AS 2501.09 .10 and .11) [This citation refers to AS 2501 Auditing Accounting Estimates which was in effect for this audit. This standard was replaced by AS 2501 Auditing Accounting Estimates Including Fair Value Measurements which became effective for audits of financial statements ending on or after December 15 2020.]

The issuer's general reserve component of the ALL included a qualitative reserve. For each of the qualitative factors evaluated in determining the reserve the issuer assigned a risk level and then assigned basis point adjustments based on the risk level. The firm selected for testing several controls over the review of the ALL. The firm did not evaluate the specific review procedures the control owners performed to evaluate the reasonableness of the risk levels and related basis point adjustments. (AS 2201.42 and .44)

For loans that were collectively evaluated for impairment the issuer determined the qualitative reserve component of the ALL using various qualitative factors. The following deficiency was identified: · The firm selected for testing controls that included the issuer's reviews of the qualitative factors for reasonableness. The firm did not evaluate the specific review procedures that the control owners performed to assess the reasonableness of these qualitative factors. (AS 2201.42 and .44)

For loans that were collectively evaluated for impairment the issuer determined the qualitative reserve component of the ALL using various qualitative factors. The following deficiency was identified: · The firm's approach for substantively testing the ALL was to test the issuer's process. The firm did not sufficiently evaluate whether the issuer had a reasonable basis for these qualitative factors because the firm's procedures were limited to (1) reading the issuer's ALL memorandum and (2) comparing the qualitative factors the issuer used to those used in prior periods. (AS 2501.16)

For loans that were collectively evaluated for impairment the issuer determined the quantitative reserve component of the ALL using various assumptions. The firm's approach for substantively testing the ALL was to test the issuer's process. The firm did not evaluate whether the issuer had a reasonable basis for certain significant assumptions beyond reading an issuer-prepared memorandum. (AS 2501.16)

The firm's approach for substantively testing the allowance for loan losses (ALL) was to test the issuer's process. The following deficiencies were identified: · For loans that were collectively evaluated for impairment the issuer determined the qualitative reserve component of the ALL using various qualitative factors. The firm did not evaluate whether the issuer had a reasonable basis for the significant assumptions the issuer used to develop these qualitative factors. (AS 2501.16)

The firm's approach for substantively testing the allowance for loan losses (ALL) was to test the issuer's process. The following deficiencies were identified: · The issuer also reported an unallocated reserve component of the ALL. The firm did not evaluate the reasonableness of the significant assumptions the issuer used to develop this component. (AS 2501.16)

The issuer's ACL included reserves for loans collectively evaluated for impairment and for loans individually evaluated for impairment. For loans that were collectively evaluated for impairment the issuer estimated quantitative qualitative and economic reserve components. The following deficiencies were identified: · The issuer assigned a loan risk rating to its commercial loans. The loan risk rating was an important input in estimating the ACL and determining whether a loan would be individually or collectively evaluated for impairment. The firm did not identify and test any controls over the assignment of the loan risk rating to a certain population of these loans. (AS 2201.39)

The issuer's ACL included reserves for loans collectively evaluated for impairment and for loans individually evaluated for impairment. For loans that were collectively evaluated for impairment the issuer estimated quantitative qualitative and economic reserve components. The following deficiencies were identified: · The firm's approach for substantively testing the ACL was to test the issuer's process and the firm used an auditor-employed specialist to evaluate the methods and certain significant assumptions used by the issuer. The firm did not identify that the auditor-employed specialist did not evaluate the reasonableness of the significant assumptions that the issuer used to develop the quantitative and economic reserve components. (AS 1201.C6 and .C7; AS 2501.16)

The issuer's ACL included reserves for loans collectively evaluated for impairment and for loans individually evaluated for impairment. For loans that were collectively evaluated for impairment the issuer estimated quantitative qualitative and economic reserve components. The following deficiencies were identified: · The firm's approach for substantively testing the ACL was to test the issuer's process and the firm used an auditor-employed specialist to evaluate the methods and certain significant assumptions used by the issuer. The firm did not evaluate the reasonableness of the significant assumptions related to the qualitative factors that the issuer used to develop the qualitative reserve component. (AS 2501.16)

The issuer's ACL included reserves for loans collectively evaluated for impairment and for loans individually evaluated for impairment. For loans that were collectively evaluated for impairment the issuer estimated quantitative qualitative and economic reserve components. The following deficiencies were identified: · The firm did not sufficiently evaluate whether the methods the issuer used to develop the ACL were in conformity with the requirements of GAAP because it did not evaluate whether the issuer's economic reserve component was duplicative of a portion of the qualitative reserve component that also related to economic conditions. (AS 2501.10)

The issuer's ACL included reserves for loans collectively evaluated for impairment and for loans individually evaluated for impairment. For loans that were collectively evaluated for impairment the issuer estimated quantitative qualitative and economic reserve components. The following deficiencies were identified: · The firm did not evaluate the relevance of certain external data the issuer used in developing the economic reserve and the qualitative reserve. (AS 1105.04 and .06)

The issuer used a service organization to host maintain and manage the information technology (IT) system that the issuer used to initiate process and record transactions related to the ALL. The firm did not identify and test any complementary user entity controls to place reliance on or identify and test any other controls over the accuracy and completeness of data from the service organization that was used in the operation of controls. (AS 2201.39 and .B22)

The issuer used a service organization to host maintain and manage the information technology (IT) system that the issuer used to initiate process and record transactions related to the ALL. The firm selected for testing controls that consisted of the issuer's review of access to this information system. The firm did not evaluate the specific review procedures that the control owners performed to determine whether to initially grant access to users and whether the granted role access continued to be appropriate. (AS 2201.42 and .44)

The firm did not identify and test any controls over the accuracy and completeness of information the control owner obtained from other information systems and used in the operation of certain controls. (AS 2201.39)

The firm selected for testing a control that consisted of the issuer's review of certain loans for potential impairment. The firm did not evaluate the specific review procedures that the control owners performed to review these loans for potential impairment. (AS 2201.42 and .44)