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The issuer used information from a service organization in developing its estimate of the ACL. The firm selected for testing certain controls that used data and reports from the service organization. The firm did not (1) perform any procedures to obtain evidence regarding the service organization's controls for the year under audit or (2) identify and test any other controls over the accuracy and completeness of the data and reports used in the performance of these controls. (AS 2201.39 and .B19)

The firm used certain of these data and reports in its substantive testing of the ACL but did not test or identify and test any controls over (as discussed above) the accuracy and/or completeness of these data and reports. (AS 2301.08 and .11)

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: · The firm did not identify and test any controls over the accuracy of the loan data contained in the two data warehouses. (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: · The firm selected for testing a control that included (1) the issuer's review of the LRRs assigned to loans meeting certain criteria and (2) procedures to monitor whether the LRRs for these loans were updated within the time frame established for the control. The firm did not evaluate the review procedures that the control owners performed including the criteria that the control owners used to identify items for follow up and whether those items were appropriately resolved. (AS 2201.42 and .44)

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 addition the firm did not test the aspect of this control that addressed the appropriateness of the time frame established for the control for requiring updates to the LRRs. (AS 2201.42 and .44)

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 controls over the qualitative component of the general reserve the firm selected for testing controls that consisted of reviews of trends in various qualitative considerations the issuer used to determine the risk-rating factors. The firm did not identify and test any controls that addressed the appropriateness of the risk-rating factors and weightings that were assigned to each of the qualitative considerations. (AS 2201.39)

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 the issuer assessed collectively for impairment the issuer estimated the ALL using a model that consisted of quantitative and qualitative components. The issuer developed the qualitative component of the ALL by applying certain qualitative factors to each of its classes of loans. The firm selected for testing a control that consisted of a committee's review of the ALL including the qualitative factors. The firm did not evaluate the review procedures that the control owners performed to evaluate the qualitative factors including the criteria that the control owners used to identify items for follow up and whether those items were appropriately resolved. (AS 2201.42 and .44)

With respect to the ALL for loans that the issuer assessed collectively for impairment: The firm selected for testing controls that included a committee's review of certain assumptions used to estimate this 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)

With respect to the ALL for loans that the issuer assessed collectively for impairment: The firm selected for testing a control that consisted of the issuer's review of the assigned loan grades which included a review by senior management of the assigned loan grades for certain loans. The loan grades were an important factor in estimating this ALL. The firm did not perform procedures to test the aspect of the control related to senior management's review of the assigned loan grades beyond inspecting loan files for sign-off as evidence of review. (AS 2201.42 and .44)

With respect to the ALL for loans that the issuer assessed individually for impairment: The firm selected for testing a control that consisted of the issuer's review of loans that exceeded a loan grade threshold and the review of the impairment calculations for individually impaired loans. The firm did not evaluate the specific review procedures that the control owners performed to assess the reasonableness of certain inputs and assumptions underlying the impairment calculations for individually impaired loans. (AS 2201.42 and .44)

With respect to the ALL for loans that the issuer assessed individually for impairment: The firm selected for testing a control that consisted of the issuer's review of appraisals used to determine the fair value of the underlying collateral for collateral-dependent loans that it had determined to be individually impaired. The firm used only the work of the issuer's internal audit as evidence of the operating effectiveness of the control. This approach did not provide sufficient appropriate audit evidence that the control was operating as designed because of the amount of subjectivity involved in reviewing the appraised collateral values. (AS 2201.19; AS 2605.20 and .21)

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 selected for testing controls that consisted of the issuer's reviews 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 the significant assumptions the issuer used to develop this qualitative factor. (AS 2201.42 and .44)

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 assigned certain loans a loan risk rating which was an important input in estimating the quantitative component of the ACL. 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 firm's sample size was too small to provide sufficient appropriate audit evidence because in determining the sample size the firm did not take into account tolerable misstatement the allowable risk of incorrect acceptance and the characteristics of the population. (AS 2315.16 .23 and .23A)

The issuer assigned certain loans a loan risk rating which was an important input in estimating the quantitative component of the allowance for credit losses (ACL). 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 firm's sample was too small to provide sufficient appropriate audit evidence because in determining its sample the firm did not consider the characteristics of the population. (AS 2315.16 .23 and .23A)

The issuer assigned certain loans a loan risk rating which was an important input in estimating the quantitative component of the allowance for credit losses (ACL). 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 firm's sample was too small to provide sufficient appropriate audit evidence because in determining its sample the firm did not consider the relationship of the sample to the relevant audit objective and the allowable risk of incorrect acceptance. (AS 2315.16 .23 and .23A)

The issuer developed the quantitative reserve component of the ACL using a model that was maintained by a service organization. The following deficiencies were identified: · The firm obtained a service auditor's report but did not evaluate whether this auditor's report provided sufficient appropriate audit evidence because the firm did not assess certain controls that the service auditor tested and how those controls related to the issuer's controls over the quantitative component of the ACL. (AS 2201.B21)

The issuer developed the quantitative reserve component of the ACL using a model that was maintained by a service organization. The following deficiencies were identified: · The firm did not identify and test any controls over the issuer's ongoing assessment and monitoring of the predictability and effectiveness of this ACL model. (AS 2201.39)

The firm selected for testing a control that consisted of the control owner's reperformance of certain ACL calculations. The number of instances that the firm selected for testing this control did not provide sufficient appropriate audit evidence given the frequency with which this control operated. (AS 2201.46)

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 of quantitative and qualitative components. The firm selected for testing a control that consisted of the issuer's review of the underlying data and primary calculations supporting an ALL analysis designed to assess the appropriateness of the quantitative and qualitative adjustments. The firm did not evaluate the specific review procedures that the control owner performed to (1) assess the appropriateness of the adjustments and (2) verify the accuracy and completeness of the data used in determining certain of the adjustments. (AS 2201.42 and .44)

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)

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 any procedures to test or in the alternative test any controls over the accuracy and completeness of certain historical loss information generated from the issuer's system and used to develop a portion of the qualitative reserve. (AS 1105.10)

The issuer assigned a risk rating to each loan. The loan risk ratings were an important input in estimating the ALL. The firm's approach for substantively testing the ALL was to review and test management's process. The firm did not sufficiently evaluate the appropriateness of the loan risk ratings because its procedures were limited to testing the risk ratings for a selection of loans originated in the current year and comparing loan risk ratings used in the ALL calculation for certain loans to issuer-prepared reports. (AS 2501.09 .10 and .11)

The issuer determined the qualitative component of the ALL by applying basis points for qualitative factors to each loan type. The firm's approach for substantively testing the qualitative component was to test the issuer's process. The following deficiency was identified: · The firm did not evaluate the reasonableness of the significant assumptions the issuer used to develop this component. (AS 2501.16)

The issuer determined the qualitative component of the ALL by applying basis points for qualitative factors to each loan type. The firm's approach for substantively testing the qualitative component was to test the issuer's process. The following deficiency was identified: · The firm did not perform any procedures to test the accuracy and/or completeness of reports from the issuer's systems that the firm used in its substantive procedures. (AS 1105.10)

The issuer's ALL included a qualitative reserve based on various qualitative factors. The following deficiency was identified: · The firm selected for testing two review controls over the issuer's determination of the qualitative reserve. The firm did not evaluate the specific review procedures that the control owners performed to evaluate the reasonableness of the assumptions used to develop the qualitative factors used in determining the qualitative reserve. (AS 2201.42 and .44)

The issuer's ALL included a qualitative reserve based on various qualitative factors. The following deficiency was identified: · The firm did not perform procedures to evaluate whether the issuer had a reasonable basis for the significant assumptions used to determine the qualitative reserve beyond obtaining and reading an issuer-prepared narrative. (AS 2501.16)

The issuer used certain qualitative factors to determine the qualitative component of the ALL. The firm's approach for substantively testing the qualitative component of the ALL was to test the issuer's process and develop an independent expectation. The following deficiency was identified: · The firm did not evaluate whether the issuer had a reasonable basis for certain significant assumptions related to basis points assigned to qualitative factors used to determine the qualitative component of the ALL. (AS 2501.16)

The issuer used certain qualitative factors to determine the qualitative component of the ALL. The firm's approach for substantively testing the qualitative component of the ALL was to test the issuer's process and develop an independent expectation. The following deficiency was identified: · The firm did not perform any procedures to demonstrate it had a reasonable basis for the assumptions it used in determining its independent expectation. (AS 2501.22)

The issuer used loan risk ratings to estimate its ACL. The firm did not identify and test any controls that addressed the reasonableness of loan risk ratings. (AS 2201.39)

The issuer monitored loan delinquency and used that information to identify potential problem loans for impairment evaluation. The firm did not identify and test any controls over the identification and classification of past due loans within the issuer's loan system. (AS 2201.39)

The issuer reported an ACL that included both a quantitative and qualitative component. The issuer used certain qualitative factors including assigned loan risk grades to determine the qualitative component of the ACL. The following deficiency was identified: · The firm selected for testing a review control over the qualitative reserve. The firm did not evaluate the specific review procedures the control owners performed to evaluate the reasonableness of the basis points applied to the qualitative factors. (AS 2201.42 and .44)

The issuer reported an ACL that included both a quantitative and qualitative component. The issuer used certain qualitative factors including assigned loan risk grades to determine the qualitative component of the ACL. The following deficiency was identified: · The firm selected for testing a control that consisted of the issuer's review of loans including a review of the reasonableness of assigned loan risk grades. This control included a determination of which loans would be subject to a review of the assigned loan risk grades. The firm did not assess the effect of the issuer excluding certain loans from review of the assigned loan risk grades on the control's ability to effectively prevent or detect a material misstatement. (AS 2201.42)

The issuer reported an ACL that included both a quantitative and qualitative component. The issuer used certain qualitative factors including assigned loan risk grades to determine the qualitative component of the ACL. The following deficiency was identified: · The firm did not perform procedures to evaluate whether the issuer had a reasonable basis for the significant assumptions related to basis points applied to the qualitative factors beyond obtaining and reading an issuer-prepared narrative. (AS 2501.16)

The issuer reported an ACL that included both a quantitative and qualitative component. The issuer used certain qualitative factors including assigned loan risk grades to determine the qualitative component of the ACL. The following deficiency was identified: · The firm did not perform any procedures to evaluate the reasonableness of a significant assumption used to develop the quantitative component. (AS 2501.16)

The issuer used loan risk ratings to estimate its ACL. The firm did not identify and test any controls over the reasonableness of loan risk ratings. (AS 2201.39)

The firm selected for testing two controls over the issuer's determination of the ACL. The issuer used certain system-generated reports that it obtained from an application that was hosted by a service organization in the performance of these controls. The firm obtained the service auditor's report for this service organization and identified certain complementary user controls related to user access that the service auditor's report described as necessary. The firm identified control deficiencies in its testing of these complementary user controls and selected for testing a compensating control that consisted of the issuer's review of user access. The firm did not identify and test any controls over the accuracy and completeness of the user population used in the operation of this compensating control. (AS 2201.68)

The firm selected for testing a control that included the issuer's reviews of certain assumptions used to estimate the quantitative component of the ACL. In evaluating the design of this control the firm did not evaluate whether a threshold that the control owner used to identify items for investigation was sufficiently precise to detect material misstatements. (AS 2201.42)

The firm selected for testing a control that included the issuer's reviews of certain assumptions used to estimate the quantitative component of the ACL. In evaluating the design of this control the firm did not evaluate the specific review procedures that the control owner performed to evaluate the relevance of external information used in the operation of this control. (AS 2201.42 and .44)

The firm did not perform sufficient substantive procedures to evaluate the reasonableness of certain significant assumptions the issuer used to estimate the ACL because the firm did not evaluate (1) whether the assumptions were consistent with other external factors including economic conditions and (2) the relevance of certain market information the issuer used. (AS 1105.04 and .06; AS 2501.16)

The issuer assigned each loan a loan risk rating which was an important input in estimating the quantitative component of the ACL. The firm selected for testing a control that included the issuer's reviews of loan risk ratings and tested the control at an interim date. The firm did not perform procedures to update the results of its testing from the interim date to year end. (AS 2201.55)

For loans that were collectively evaluated for impairment the issuer determined the qualitative reserve component of the ACL using certain qualitative factors. The firm's approach for substantively testing the qualitative component of the ACL was to test the issuer's process. The following deficiencies were identified: · The firm tested one of the issuer's controls over the determination of the ACL during an interim period. The firm did not evaluate the specific review procedures that the control owners performed to evaluate the reasonableness of certain significant assumptions related to 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 ACL using certain qualitative factors. The firm's approach for substantively testing the qualitative component of the ACL was to test the issuer's process. The following deficiencies were identified: · The firm tested one of the issuer's controls over the determination of the ACL during an interim period. The firm did not perform procedures to update the results of its testing from the interim date to year end. (AS 2201.55)

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

The firm selected for testing a control that consisted of the issuer'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 assumptions used to develop the ACL. (AS 2201.42 and .44)

The issuer estimated the ACL using various significant assumptions. The firm did not evaluate whether the issuer had a reasonable basis for certain significant assumptions it used. (AS 2501.16)