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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 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)

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 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 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'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.]

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 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 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 the basis points used for the qualitative base adjustment and for its selection of basis points from a range of potential basis points. (AS 2501.16)

The firm's approach for substantively testing the ALL was to test the issuer's process. The firm did not evaluate the reasonableness of the assumptions developed by the company's specialist that were used in the qualitative overlay adjustment. (AS 1105.A8b)

For loans that were collectively evaluated for impairment the issuer determined the qualitative reserve component of the ALL using qualitative factors. The firm's approach for substantively testing this reserve was to review and test management's process. The firm did not perform procedures to evaluate the reasonableness of the basis points for each qualitative factor that were applied to determine the qualitative component beyond comparing these basis points to the basis points that were applied in prior years and assessing whether certain changes or lack thereof to the basis points from the prior year were directionally consistent with internal or external data. (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 for fiscal years ending on or after December 15 2020]

The firm's approach for substantively testing the ALL was to test the issuer's process. The following deficiencies were identified: · The firm did not perform sufficient procedures to evaluate the reasonableness of certain significant assumptions because the firm did not evaluate whether the issuer had a reasonable basis for these assumptions. Further the firm used certain external data to develop an expectation for the range of these significant assumptions but did not perform procedures to evaluate the relevance of this data. (AS 1105.04 and .06; AS 2501.16)

The firm's approach for substantively testing the ALL was to test the issuer's process. The following deficiencies were identified: · The firm did not perform any procedures to evaluate the reasonableness of certain other significant assumptions. (AS 2501.16)

The firm's approach for substantively testing the ALL was to test the issuer's process. The firm did not perform sufficient procedures to evaluate the reasonableness of certain significant assumptions because the firm did not evaluate whether the issuer had a reasonable basis for these assumptions. Further the firm used certain external data to develop an expectation for the range of these significant assumptions but did not perform procedures to evaluate the relevance of this data. (AS 1105.04 and .06; AS 2501.16)

The issuer calculated the qualitative component of the allowance for loan losses 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. The firm did not evaluate the reasonableness of significant assumptions used by the issuer to develop this component. (AS 2501.16)

For loans that were collectively evaluated for impairment the issuer determined the qualitative reserve component of the ALL using certain qualitative factors. The following deficiencies were identified: • 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 qualitative reserve component of the ALL because the firm's procedures to test the qualitative factors the issuer used to determine the reserve were limited to (1) reading the issuer's ALL memorandum and (2) comparing the qualitative factors the issuer used at year end to those used in prior periods. (AS 2501.09 .10 and .11)

For loans that were collectively evaluated for impairment the issuer determined one of the qualitative reserve components of the ALL using certain qualitative factors. The following deficiencies were identified: • 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 qualitative reserve component of the ALL because the firm's procedures to test the qualitative factors the issuer used to determine the reserve were limited to (1) reading the issuer's ALL memorandum and related analysis of the factors and (2) comparing the qualitative factors the issuer used at year end to those used in prior periods. (AS 2501.09 .10 and .11)

For loans that were collectively evaluated for impairment the issuer determined the qualitative reserve component of the ALL using certain qualitative factors. The following deficiencies were identified: • 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 qualitative reserve component of the ALL because the firm did not perform procedures to evaluate certain adjustments that the issuer made to the calculation of these qualitative factors the issuer used to determine the reserve. (AS 2501.09 .10 and .11)

For loans that were collectively evaluated for impairment the issuer determined the qualitative reserve component of the ALL using certain qualitative factors. The firm's approach for substantively testing the qualitative component of the ALL was to test the issuer's process. The firm did not evaluate whether the issuer had a reasonable basis for the basis points used for the qualitative factors and for its selection of basis points from a range of potential basis points. (AS 2501.16)

For loans collectively evaluated for impairment the firm's approach for substantively testing the ALL was to test the issuer's process. The following deficiencies were identified: · For one component of the issuer's qualitative reserve the firm did not evaluate whether the issuer had a reasonable basis for certain significant assumptions used and whether those assumptions were consistent with relevant industry regulatory and other external factors including economic conditions; existing market information; and/or other significant assumptions used by the issuer. (AS 2501.16)

For loans collectively evaluated for impairment the firm's approach for substantively testing the ALL was to test the issuer's process. The following deficiencies were identified: · For another component the firm did not evaluate whether the issuer had a reasonable basis for significant assumptions related to the basis points used for the qualitative base adjustment and for its selection of basis points from a range of potential basis points. (AS 2501.16)

The issuer determined the qualitative reserve component of the ACL using various qualitative factors. The following deficiencies were identified: · The firm's approach for substantively testing the ACL was to test the issuer's process. The firm did not sufficiently evaluate the reasonableness of certain significant assumptions the issuer used to develop the qualitative reserve component of the ACL because its procedures were limited to a year-over-year comparison of these significant assumptions. (AS 2501.16)

The issuer engaged a specialist to assist it in determining the quantitative reserve component of the ACL using a model that was developed by the company's specialist. The following deficiencies were identified: · The firm did not evaluate the reasonableness of the forecasting significant assumption that was developed by the company's specialist and used in the model. (AS 1105.A8b)

The issuer's general reserve component of the ALL included a qualitative reserve component ('qualitative component') that was determined by certain qualitative factors. The firm's approach for substantively testing the ALL was to review and test management's process. The firm did not perform procedures to evaluate the reasonableness of the basis points that were applied to determine the qualitative component beyond (1) reading the issuer's analysis and vouching the data to supporting documentation (2) comparing these basis points to the basis points that were applied in the prior year and (3) assessing whether certain changes or lack thereof to the basis points from the prior year were directionally consistent with internal or external data. (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 for fiscal years ending on or after December 15 2020.]

The firm's approach for substantively testing the ALL was to review and test management's process. The firm did not perform procedures to evaluate the reasonableness of the basis points that were applied to qualitative factors beyond (1) reading the issuer's analysis (2) comparing the basis points that were applied to the qualitative factors to the basis points that were applied in the prior year and (3) assessing whether certain changes or lack thereof to the basis points from prior year were directionally consistent with internal or external data. (AS 2501.09 .10 and .11)

The firm's approach for substantively testing the ALL was to review and test management's process. The firm did not perform procedures to evaluate the reasonableness of the basis points that were applied to certain qualitative factors beyond (1) reading the issuer's analysis (2) comparing the basis points that were applied to the qualitative factors to the basis points that were applied in the prior year and (3) assessing whether certain changes or lack thereof to the basis points from the prior year were directionally consistent with internal or external data. (AS 2501.09 .10 and .11)

The firm's approach for substantively testing the ALL was to review and test management's process. The firm did not perform procedures to evaluate the reasonableness of the basis points that were applied to qualitative factors beyond (1) reading the issuer's analysis (2) comparing the basis points that were applied to the qualitative factors to the basis points that were applied in the prior year and performing a trend analysis and (3) assessing whether certain changes or lack thereof to the basis points from the prior year and the results from the resulting from the comparison and trend analysis were directionally consistent with internal or external data. (AS 2501.09 .10 and .11)

The firm's approach for substantively testing the quantitative component of the ALL was (1) to review and test management's process and (2) develop an independent expectation. The issuer used loss data from selected peer companies to develop loss rates that it used to estimate the quantitative component of the portion of the ALL related to loans collectively evaluated for impairment. The following deficiencies were identified: · To develop an independent expectation the firm used a combination of the issuer's historical loss rates and the loss rates of the group of peer companies used by the issuer to develop estimated loss ranges and compared these estimated loss ranges to the issuer's loss rates. The firm did not evaluate (1) the reasonableness of the assumptions used to develop these estimated loss ranges and (2) the differences between these estimated loss ranges and issuer's loss rates. (AS 2501.09 .10 and .12)

The firm's approach for substantively testing the qualitative component of the ALL was to review and test management's process. The firm did not sufficiently evaluate the reasonableness of the qualitative reserve component of the ALL because the firm's procedures to test the qualitative factors the issuer used to determine the reserve component were limited to (1) reading the issuer's ALL memorandum (2) testing certain observable inputs related to existing economic conditions that the issuer used to develop its loss estimates and (3) comparing the qualitative factors the issuer used at year end to those used in prior periods. (AS 2501.09 .10 and .11)

The firm's approach for substantively testing the quantitative component of the ALL was (1) to review and test management's process and (2) develop an independent expectation. The issuer used loss data from selected peer companies to develop loss rates that it used to estimate the quantitative component of the portion of the ALL related to loans collectively evaluated for impairment. The following deficiencies were identified: · The firm did not obtain an understanding of how the issuer developed its loss rates. (AS 2501.10)

The firm's approach for substantively testing the quantitative component of the ALL was (1) to review and test management's process and (2) develop an independent expectation. The issuer used loss data from selected peer companies to develop loss rates that it used to estimate the quantitative component of the portion of the ALL related to loans collectively evaluated for impairment. The following deficiencies were identified: · To test management's process the firm compared the loss rates developed by the issuer to the loss rates of certain peer companies identified by the issuer. The firm did not sufficiently evaluate the relevance of the loss rates of the peer companies because the firm did not evaluate the comparability of the composition and risk characteristics of the issuer's loan portfolio to the loan portfolios of the peer companies. (AS 2501.09 .10 and .11)

The firm's approach for substantively testing the qualitative component of the ALL was to review and test the issuer's process. The firm did not perform procedures to evaluate whether the issuer had a reasonable basis for the significant assumptions related to basis point qualitative factors used to determine the qualitative component of the ALL beyond obtaining and reading an issuer-prepared narrative. (AS 2501.16)

The firm's approach for substantively testing the ACL was to test the issuer's process and the firm used the work of company specialists to evaluate the appropriateness of certain of the models the issuer used to develop the ACL for loans collectively evaluated for impairment. The following deficiency was identified: • The firm did not perform procedures to evaluate the reasonableness of the significant assumptions used to develop the ACL beyond reading an issuer-prepared memorandum. (AS 2501.16)

The issuer's general reserve component of the ALL included a qualitative reserve that included two components based on qualitative adjustments. The firm's approach for substantively testing the ALL was to test the issuer's process. The firm did not perform sufficient procedures to test the other qualitative adjustment because the firm did not evaluate the reasonableness of a significant assumption used in the calculation. (AS 2501.16)

The issuer estimated the general reserve component of the ALL using the following significant assumptions: (1) loan segmentation (2) probability of default (“PD”) (3) loss given default (“LGD”) and (4) loan risk ratings (“LRR”). The issuer used a model to derive the PD and LGD assumptions using current and historical loan data (“loan data”) contained in two data warehouses. The following deficiencies were identified: · The firm did not identify and test any controls that addressed the reasonableness of the loan segmentation PD and LGD assumptions. (AS 2201.39)

The issuer estimated the general reserve component of the ALL using the following significant assumptions: (1) loan segmentation (2) probability of default (“PD”) (3) loss given default (“LGD”) and (4) loan risk ratings (“LRR”). The issuer used a model to derive the PD and LGD assumptions using current and historical loan data (“loan data”) contained in two data warehouses. The following deficiencies were identified: · In its substantive testing of the ALL the firm did not test the reasonableness of the loan segmentation PD and LGD assumptions. (AS 2501.11)

The issuer developed the qualitative component of the general reserve of the ALL by assigning risk-rating factors which it weighted using certain judgmental assumptions to qualitative considerations such as delinquency trends economic and business conditions and other external factors used in its calculation. The following deficiencies were identified: · With respect to its substantive procedures over the qualitative component of the general reserve the firm did not evaluate the appropriateness of the risk-rating factors and weightings that were assigned to each of the qualitative considerations. (AS 2501.11)

For loans that were collectively evaluated for impairment the issuer determined the qualitative reserve component of the ACL using qualitative factors. With respect to one of these qualitative factors the following deficiency was identified: · The firm's approach for substantively testing the ACL was to test the issuer's process. The firm did not evaluate whether the issuer had a reasonable basis for the significant assumptions the issuer used to develop this qualitative factor. (AS 2501.16)

The issuer determined the qualitative reserve component of the ACL using various qualitative factors. The firm's approach for substantively testing the ACL was to test the issuer's process. The firm did not evaluate whether the issuer had a reasonable basis for the significant assumptions that the issuer used to develop certain of these qualitative factors. (AS 2501.16)

The issuer's ALL included a general reserve which consisted primarily of a qualitative component. The firm's approach for substantively testing the ALL was to review and test management's process. The following deficiencies were identified: - The firm did not perform sufficient procedures to evaluate the reasonableness of certain assumptions used by the issuer to develop the qualitative component of the general reserve ('qualitative reserve') because the firm did not evaluate whether the issuer had a reasonable basis for the assumptions. (AS 2501.16)