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The firm selected for testing controls that consisted of the issuer's review of (1) risk ratings assigned to certain commercial loans (2) loans that were identified as having higher risk characteristics and (3) the reasonableness of the ALL general reserve. 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)

For certain consumer loans the firm selected for testing a control that consisted of the issuer's quarterly review of its ALL assumptions and adjustments to the ALL including a review of any exceptions to the issuer's ALL methodology and whether quarterly changes to the ALL were reasonable. The firm did not evaluate certain criteria the control owners used to identify items for follow up related to the review of quarterly changes to the ALL. Further the firm did not evaluate the review procedures the control owners performed to determine whether certain items identified by the control owners for follow up were appropriately resolved. (AS 2201.42 and .44)

The firm selected for testing a control that consisted of the review of the issuer's risk assessment for graded loans. This review included the determination of which loans would be subject to an independent loan-grade review. The loan grades were an important factor in estimating the ALL. The firm did not evaluate the specific review procedures that the control owner performed to determine which loans would be subject to an independent loan-grade review. (AS 2201.42 and .44)

The firm selected for testing a control that consisted of the issuer's review of the assumptions and qualitative adjustments used to estimate the ALL for loans collectively evaluated for impairment. The firm did not evaluate the specific review procedures that the control owners performed to assess the reasonableness of these assumptions and qualitative adjustments. (AS 2201.42 and .44)

The firm selected for testing a control that consisted of a committee's review of certain assumptions used to estimate the quantitative component of the ACL. 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)

For loans that were collectively evaluated for impairment the issuer estimated the ALL using models and methodologies based on assumptions judgment and other data and applying certain post-model adjustments. The issuer determined post-model adjustments by comparing the model to a benchmark and/or considering data for each loan portfolio. The following deficiencies were identified: - The firm selected for testing a control that consisted of the issuer's review of the post-model adjustments for each loan portfolio. The firm did not evaluate the specific review procedures that the control owners performed to assess the appropriateness and reasonableness of certain post-model adjustments. (AS 2201.42 and .44)

The firm identified and tested a control that consisted of the issuer's review of the allowance for credit losses (ACL) including a comparison of certain metrics between the issuer and its peers. The firm did not evaluate the specific review procedures that the control owner performed to determine which peers to select for comparison. (AS 2201.42 and .44)

For certain loans the issuer estimated the allowance for credit losses ('ACL') by comparing the respective loan's outstanding balance to the output of a DCF model which included various assumptions. One of the significant assumptions used in the DCF model was dependent on another significant assumption which was the value of the underlying collateral for the respective loans as determined by various external specialists engaged by the issuer. The firm's approach to test the ACL for these loans was to test the issuer's process. The following deficiency was identified: · The firm selected for testing a control that consisted of management's review of the appropriateness of the ACL for certain loans. The firm did not evaluate the specific review procedures that the control owner performed to assess the (1) appropriateness of the method(s) used by the company's specialists to determine the value of the collateral (2) reasonableness of the assumptions used by the company's specialists to determine the value of the collateral and (3) reasonableness of the collateral adjustment percentage used in the DCF model. (AS 2201.42 and .44)

During the year the issuer completed a business combination where the issuer's operations from before the transaction remained on the issuer's existing information systems (“legacy systems”) and continued to be recorded in these systems separately from the other company's operations. The issuer determined the qualitative reserve component of the ACL using qualitative factors and developed one of these factors using various data including appraisal data prepared by the company's specialists and certain external data. The following deficiencies were identified: · The firm selected for testing controls that consisted of the issuer's review of the ACL including an assessment of this qualitative factor for reasonableness. The firm did not evaluate the specific review procedures that the control owner performed to assess the reasonableness of this qualitative factor. (AS 2201.42 and .44)

The firm's internal inspection program had inspected this audit and reviewed this area but did not identify the deficiencies below. The firm selected for testing controls that consisted of the issuer's review of the ACL including a committee's reviews of certain assumptions used to estimate the qualitative component. The firm did not evaluate the specific review procedures that the control owners performed to assess the reasonableness of these assumptions. (AS 2201.42 and .44)

The issuer used an information-technology (IT) system to initiate process and record loan-related transactions. The firm selected for testing a control over a review of user access rights for this IT system. 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 over the review of the significant judgments and estimates used in 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 included the issuer's review of the assumptions used to determine the qualitative factors used to estimate the ALL for loans collectively evaluated for impairment. The firm did not evaluate the specific review procedures that the control owner performed to evaluate the reasonableness of the basis points applied to each of the qualitative factors. (AS 2201.42 and .44)

The issuer developed the qualitative component of the general reserve of the ALL by applying certain qualitative factors to each of its classes of loans. The following deficiencies were identified: · The firm selected for testing a control that consisted of the issuer's review of the ALL including the development and review of the qualitative factors. 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 controls that included the issuer's reviews of the assumptions used to estimate the ACL. The firm did not evaluate the specific review procedures that the control owners performed to assess the reasonableness of these assumptions. (AS 2201.42 and .44)

The firm selected for testing controls that included the issuer's reviews of the assigned loan risk ratings. The loan risk rating was an important input in estimating the ALL. The firm did not evaluate the specific review procedures that the control owners performed to assess the reasonableness of the assigned risk ratings. (AS 2201.42 and .44)

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 selected for testing a control that consisted of the issuer's reviews of the ALL including an assessment 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 the qualitative factors. (AS 2201.42 and .44)

The firm selected for testing a control that consisted of the issuer's review of problem loans. 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 issuer's ACL was comprised of various components including quantitative and complementary reserve components and the issuer used various models and assumptions to determine the individual components of the ACL. The firm's approach for substantively testing the ACL was to test the issuer's process. The following deficiency was identified: · The firm selected for testing a control that consisted of management's review and approval of certain studies performed to assess the reasonableness of the assumptions used by the issuer to determine a quantitative reserve component of the ACL. 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 issuer's ACL was comprised of various components including quantitative and complementary reserve components and the issuer used various models and assumptions to determine the individual components of the ACL. The firm's approach for substantively testing the ACL was to test the issuer's process. The following deficiency was identified: · The firm selected for testing two controls that consisted of management's review and approval of the models used by the issuer and the issuer's calculation of a complementary reserve component of the ACL. The firm did not evaluate the specific review procedures that the control owner performed to evaluate the reasonableness of a post-model adjustment included in this component of the ACL. (AS 2201.42 and .44)

The issuer's ACL was comprised of various components including quantitative and complementary reserve components and the issuer used various models and assumptions to determine the individual components of the ACL. The firm's approach for substantively testing the ACL was to test the issuer's process. The following deficiency was identified: · The firm selected for testing a control that consisted of management's monitoring of customers' financial condition through the use of a color-coded monitoring system to identify economic groups that experienced a decline in credit quality. The firm did not evaluate the specific review procedures that the control owner performed to identify economic groups which experienced a decline in credit quality. (AS 2201.42 and .44)

The issuer's ACL was comprised of various components including quantitative and complementary reserve components and the issuer used various models and assumptions to determine the individual components of the ACL. The firm's approach for substantively testing the ACL was to test the issuer's process. The following deficiency was identified: · The firm selected for testing a control that consisted of management's review and approval of the economic risk ratings used by the issuer to determine the quantitative component of the ACL. The firm did not evaluate the specific review procedures that the control owner performed to assess the reasonableness of these economic risk ratings. (AS 2201.42 and .44)

The issuer used various models including models to value certain derivatives and to determine certain components of the ALL. The firm selected for testing controls that consisted of the (1) periodic validation of certain of these models including new or updated models and (2) annual review of all models. For the validation control the firm did not evaluate the specific review procedures the control owners performed to validate certain aspects of certain models. Further the firm did not evaluate certain review procedures that the control owners performed as part of the annual model review. (AS 2201.42 and .44)

To determine the qualitative reserve component of the ALL for loans that were collectively evaluated for impairment the issuer assigned a loss factor to each loan based on certain qualitative considerations. The following deficiencies were identified: · The firm selected for testing controls that included the issuer's reviews of the qualitative reserve component of the ALL and the corresponding loss factors. The firm did not evaluate the specific review procedures that the control owners performed to assess whether the loss factors assigned to each loan were appropriate. (AS 2201.42 and .44) In connection with our review the issuer reevaluated its controls over the ALL and concluded that a material weakness existed that had not been previously identified. The issuer subsequently revised its report on ICFR to reflect this material weakness and the material weakness discussed below and the firm modified its opinion on the effectiveness of the issuer's ICFR to express an adverse opinion and reissued its report.

The issuer used a credit risk-rating model to determine (1) a risk-rating score for each loan and (2) the general reserve component of the ALL using the risk-rating scores as important inputs. The firm selected for testing controls that consisted of the issuer's reviews of the outputs from this model. The firm did not evaluate the specific review procedures that the control owners performed to evaluate the appropriateness of the risk-rating scores and the reasonableness of the general reserve. (AS 2201.42 and .44)

The firm selected for testing a control that included the review of the data the issuer used to estimate the ACL but did not evaluate the specific review procedures that the control owner performed to assess the accuracy and completeness of these data. (AS 2201.42 and .44)

The issuer's ALL included a general reserve comprised of a quantitative component related to historical losses and a qualitative component related to various environmental factors. The firm selected for testing controls over the ALL that consisted of management's and a committee's review and approval of the ALL. The firm did not evaluate the specific review procedures that the control owners performed to evaluate the reasonableness of the assumptions used to determine the qualitative component of the ALL. (AS 2201.42 and .44)

The firm selected for testing two review controls over the qualitative component of the ALL. The firm did not evaluate the review procedures that the control owners performed including the procedures used to identify items for follow up and the procedures to determine whether those items were appropriately resolved. (AS 2201.42 and .44)

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 selected for testing controls that consisted of the issuer's reviews of the ALL including an assessment 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 the 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 certain qualitative factors. The following deficiencies were identified: · The firm selected for testing a control that consisted of the issuer's review 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 certain qualitative factors. (AS 2201.42 and .44)

The issuer used various internally and externally developed models to estimate the quantitative component of the ACL for loans collectively evaluated for impairment. These models used various data and assumptions. The following deficiencies were identified: · The firm selected for testing controls that consisted of the issuer's reviews of the operation of these models and the underlying inputs and assumptions. 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 issuer used two IT systems to process and record transactions related to the ALL. In its testing of controls over this account the firm tested certain IT-dependent manual controls that used data and reports generated or maintained by these IT systems. The following ITGC deficiencies were identified: · The firm selected for testing controls over the issuer's review of user access to these IT systems but did not evaluate the specific review procedures that the control owners performed to determine whether to approve user access that had been requested or whether user access that had been previously approved continued to be appropriate. (AS 2201.42 and .44)

The issuer's ALL included a reserve for loans individually evaluated for impairment ('specific reserve') and a reserve for loans collectively evaluated for impairment ('collective reserve'). The issuer's collective reserve included a component that was determined by using certain qualitative factors ('qualitative component'). The following deficiencies were identified: · The firm selected for testing controls that consisted of the issuer's reviews of the ALL including the collective reserve. The firm did not evaluate the specific review procedures that the control owners performed to assess the reasonableness of the ALL including the appropriateness of the basis points applied to determine the qualitative component. (AS 2201.42 and .44)

The issuer's ALL included a reserve for loans individually evaluated for impairment ('specific reserve') and a reserve for loans collectively evaluated for impairment ('collective reserve'). The issuer's collective reserve included a component that was determined by using certain qualitative factors ('qualitative component'). The following deficiencies were identified: · The firm selected for testing controls that consisted of the issuer's reviews of its loan portfolio to identify potentially impaired loans for the specific reserve. The firm did not evaluate the specific review procedures that the control owners performed to assess the completeness of loans the issuer assessed individually for impairment. (AS 2201.42 and .44)

The issuer's ALL included a reserve for loans individually evaluated for impairment ('specific reserve') and a reserve for loans collectively evaluated for impairment ('collective reserve'). The issuer's collective reserve included a component that was determined by using certain qualitative factors ('qualitative component'). The following deficiencies were identified: · The firm selected for testing a control that consisted of the issuer's review of the valuation of impaired loans. The firm did not evaluate the specific review procedures that the control owner performed to assess the appropriateness of the methods and assumptions used to determine the valuation of the specific reserve for these impaired loans. (AS 2201.42 and .44)

The firm selected for testing controls that consisted of management's review of qualitative factors and the reasonableness of loan grade basis points used in the determination of the ALL. The firm did not evaluate the specific review procedures that the control owners performed to evaluate the qualitative factors and loan grade basis points. (AS 2301.19 and .21)

The firm selected for testing one review control over the qualitative component of the ALL. The firm did not perform sufficient procedures to test the operating effectiveness of this control because 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 2201.44)

The issuer determined the qualitative reserve component of the ALL for loans that were collectively evaluated for impairment. The following deficiencies were identified: · The firm selected for testing a control that included the issuer's review of (1) certain loans for potential impairment and (2) the qualitative component of the ALL. The firm did not evaluate the specific review procedures that the control owners performed to (1) determine whether all loans identified for potential impairment were reviewed and (2) assess the reasonableness of the qualitative component of the ALL. (AS 2201. 42 and .44)

The issuer determined the qualitative component of the ALL by applying basis points to qualitative factors. The following deficiency was identified: · The firm selected for testing a review control over the qualitative component of the ALL. The firm did not evaluate the specific review procedures that the control owners performed to evaluate the reasonableness of the basis points applied to each qualitative factor. (AS 2201.42 and .44)

The firm selected for testing a control that consisted of management's reviews of the ACL. The firm did not evaluate the specific review procedures that the control owners performed to evaluate the reasonableness of the qualitative component of the ACL. (AS 2201.42 and .44)

Loan risk ratings were an important input in estimating the issuer's ALL. The following deficiency was identified: · The firm selected for testing a review control to address the risk related to inaccurate loan risk ratings. The firm did not evaluate the specific review procedures that the control owners performed to evaluate whether the loan risk ratings reviews were occurring timely. (AS 2201.42 and .44)

The issuer's ALL included reserves for impaired loans. The following deficiency was identified: · The firm selected for testing a control that included the review of impaired loans. The firm did not evaluate the specific review procedures that the control owners performed to evaluate whether impaired loans were appropriately reserved including the review of support for the collateral value of the loans. (AS 2201.42 and .44)

The issuer's general reserve component of the ALL included a qualitative reserve component. In determining the qualitative reserve component the issuer used loan risk grades and basis point adjustments for qualitative factors. The following deficiencies were identified: - The firm selected for testing a control that included 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 the loans for potential impairment. (AS 2201.42 and .44)

The issuer's general reserve component of the ALL included a qualitative reserve component. In determining the qualitative reserve component the issuer used loan risk grades and basis point adjustments for qualitative factors. The following deficiencies were identified: - The firm selected for testing a control that consisted of the issuer's review of the ALL including an evaluation of the qualitative reserve component. The firm did not evaluate the specific review procedures that the control owners performed to evaluate the reasonableness of the basis points for certain qualitative factors used to determine the qualitative reserve component. (AS 2201.42 and .44)

The issuer used certain qualitative factors to determine the qualitative reserve component of the ACLL. The firm selected for testing a control over the issuer's review of the qualitative reserve component. The firm did not evaluate the specific review procedures that the control owner performed to (1) evaluate the reasonableness of the assumptions used to develop the qualitative reserve component and (2) test the accuracy and completeness of the data used in the operation of the control. (AS 2201.42 and .44)

The firm selected for testing certain controls that consisted of the issuer's review of the ACLL. The firm did not evaluate the specific review procedures that the control owners performed to (1) evaluate the reasonableness of the assumptions used to develop the ACLL and (2) test the accuracy and completeness of the data used in the operation of these controls. (AS 2201.42 and .44)