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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 selected for testing a control that consisted of the issuer's reconciliation of certain loan data but did not identify and test any controls over the completeness of certain reports that the control owner used in the operation of this control. (AS 2201.39)

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 used issuer-prepared loan delinquency data in its substantive testing of the ACL but did not perform procedures to test or test any controls over the accuracy of this data. (AS 1105.10)

The issuer developed the ACL for loans collectively evaluated for impairment using various models that were maintained by a service organization. The firm obtained a service auditor's report for this service organization. The following deficiency was identified: • The firm selected for testing a control that included the issuer's review of certain ACL assumptions that the service organization used in its models. The firm did not identify and test any controls over the review of an analysis that was prepared by a company specialist and used in the operation of this control. (AS 2201.39)

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 used a report produced by the service organization in its substantive testing of the ACL but did not perform procedures to test or test any controls over the accuracy of this report. (AS 2301.08 and .11)

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 whether certain of the models the issuer used were in conformity with the requirements of GAAP and appropriate for the nature of the ACL beyond reading the company's specialist's report. Further the firm did not perform any procedures with respect to its use of the work of the company's specialist as audit evidence. (AS 1105.A1 - A.10; AS 2501.10)

The issuer engaged a specialist to appraise the value of land that collateralized certain of the issuer's loans. The issuer applied adjustments for project percentage of completion and selling cost estimates to the appraised land value to determine the specific reserve to apply to these loans. The firm did not perform substantive procedures to test the aggregate appraisal value of the land securing the loans beyond obtaining and reading the valuation report prepared by the company's specialist. Further the firm did not perform any procedures to evaluate the work of the company's specialist. (AS 1105.A6 -.A10; AS 2501.16)

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 did not perform procedures to evaluate the reasonableness of the value of the collateral as determined by the company's specialists beyond reading the valuation reports prepared by the company's specialists and assessing the knowledge skills and ability of the specialists. (AS 1105.A4 - .A10; AS 2501.16)

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 did not perform procedures to evaluate the reasonableness of the collateral adjustment percentage which the firm considered to be a significant assumption used in the DCF model beyond comparing the collateral adjustment percentage to the issuer's policy of acceptable collateral ranges. (AS 2501.16)

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 identify and test any controls over the accuracy and/or completeness of the appraisal and external data used to develop this factor. (AS 2201.39)

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 used the appraisal and external data in its substantive testing of the qualitative component of the ACL but did not perform any procedures to test or test any controls over the accuracy and/or completeness of these data. (AS 1105.10)

The issuer's ALL also included a specific reserve for impaired loans. The issuer engaged external specialists to determine the fair value of certain property that served as collateral for certain impaired loans. The firm's approach for substantively testing the specific reserve was to develop an independent expectation of the specific reserve that included use of the work of the company's specialists as audit evidence. The following deficiencies were identified: · The firm did not sufficiently evaluate the relevance and reliability of the work performed by the company's specialists and whether the specialists' findings supported or contradicted the fair value of the collateral because it did not evaluate that the appraisals were not prepared as of the end of the year and perform additional procedures to address the potential effect of the timing difference on the fair value of the collateral. (AS 1105.A9 and .A10)

The issuer's ALL also included a specific reserve for impaired loans. The issuer engaged external specialists to determine the fair value of certain property that served as collateral for certain impaired loans. The firm's approach for substantively testing the specific reserve was to develop an independent expectation of the specific reserve that included use of the work of the company's specialists as audit evidence. The following deficiencies were identified: · The firm did not perform procedures to evaluate the reliability of external information that the firm used to develop its independent expectation of the specific reserve. (AS 1105.04 and .06)

The issuer engaged valuation specialists to determine the fair value of the collateral for impaired loans. The following deficiency was identified: · The firm did not evaluate the relevance and reliability of certain data from external sources used by the company's specialists. (AS 1105.A8a)

The issuer engaged a specialist to determine a current estimate of expected credit losses. The company's specialist determined expected credit losses by evaluating certain receivables on a collective (pool) basis. The firm did not perform sufficient procedures to evaluate whether this method was consistent with the requirements of FASB ASC Topic 326 because the firm did not consider certain specific risk characteristics of a receivable included in the pool including its size vintage and external credit rating. (AS 1105.A8c)