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As part of the issuer's overall credit risk assessment for corporate loans collectively evaluated for impairment the issuer determined a loan risk rating for each loan based on loan information for each borrower including a borrower risk rating. The following deficiencies were identified: · The firm's approach for testing the ALL for these loans was to review and test management's process. The firm did not perform any procedures to test the calculations in these models. (AS 2501.11)

The firm selected for testing a control that consisted of the review of the issuer's risk assessment for certain graded loans. This control included the issuer's assessment to determine which of these loans would be subject to an independent loan-grade review. The loan grades were an important factor in estimating the ACL. The firm did not identify that this control excluded certain loans from the issuer's assessment. (AS 2201.42)

As part of the issuer's overall credit risk assessment for commercial loans collectively evaluated for impairment the issuer determined loan grades for each loan. These loan grades were an important factor in estimating the ALL for commercial loans. The following deficiencies were identified: · The firm selected for testing a control that consisted of an independent review of the loan grades and other key inputs used to estimate the ALL. All loans and commitments were subject to this review within a three-year period. The firm also selected for testing another control that consisted of the approval of all loan-grade changes made subsequent to the origination of the loan. The firm did not consider that these controls were not designed to require in the period under audit that all loans that the issuer had identified as having a high risk of inappropriate loan grades be subject to an independent loan-grade review. (AS 2201.42)