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The issuer used an internally developed model to estimate the quantitative component of the ACL for loans collectively evaluated for impairment. The following deficiencies were identified: · The firm selected for testing a control that consisted of the issuer's annual validation of this model as of an interim date. The firm did not evaluate whether this control's operation six months prior to year end was sufficient to address the risks of material misstatement at year end. (AS 2201.42)

The issuer used an internally developed model to estimate the quantitative component of the ACL for loans collectively evaluated for impairment. The following deficiencies were identified: · The firm's approach for substantively testing the quantitative component of the ACL for loans collectively evaluated for impairment was to test the issuer's process and the firm used an auditor-employed specialist to evaluate the methods and significant assumptions used by the issuer. The firm did not sufficiently evaluate whether the methods used by the issuer were appropriate because the firm did not identify that the auditor-employed specialist did not perform any procedures to test the issuer's model at year end. (AS 1201.C6 and .C7; AS 2501.10)

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)

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)

The issuer reported loans receivable at two business units. The firm excluded from the scope of its audits the ACL related to one of these business units but did not evaluate whether the risks of material misstatement that the firm associated with the ACL subject to audit procedures also applied to the excluded ACL. (AS 2101.11 and .12; AS 2201.B10)

With respect to the ACL subject to audit procedures: · The firm identified and tested controls that consisted of the issuer's review of the quantitative component of the ACL but did not identify and test any controls over certain inputs the control owners used in the operation of those controls. (AS 2201.39)

With respect to the ACL subject to audit procedures: · The firm did not identify and test any controls over the qualitative component of the ACL. (AS 2201.39)

With respect to the ACL subject to audit procedures: · The firm's approach for substantively testing the ACL was to test the issuer's process. The firm did not perform any procedures to evaluate the reasonableness of certain significant assumptions the issuer used to develop the quantitative component and any significant assumptions the issuer used to develop the qualitative component. (AS 2501.16)

During the year the issuer sold certain loans receivable to external parties. The firm did not identify and evaluate that the issuer's accounting for and presentation and disclosure of the gain on the sale of these loans was not in conformity with FASB ASC Topic 310 Receivables and FASB ASC Subtopic 860-20 Transfers and Servicing – Sales of Financial Assets. (AS 2810.30 and .31) In connection with our review the issuer reevaluated its accounting and presentation of this sale of loans receivable and determined that an error existed that had not been previously identified. The issuer did not file an amended Form 10-K or Form 8-K indicating that its previously issued financial statements should not be relied on. Instead the issuer adjusted this accounting and presentation in a subsequent filing.

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 firm used certain loan data from the legacy systems in its testing of the ACL but did not perform any procedures to test or test any controls over the accuracy and completeness of these data. (AS 1105.10)

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 assigned certain loans 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 consisted of the issuer's review for a sample of loans of the loan risk ratings assigned to certain types of loans. The firm did not evaluate the criteria the control owners used to select loans for review. (AS 2201.42)

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 firm selected for testing controls that consisted of the issuer's validation of the models it used to estimate the quantitative component of the ACL for loans and leases collectively evaluated for impairment. The issuer's validation included a comparison of the modeled results to the actual results that identified two types of errors and by design assessed one of these types of errors. In evaluating the design of these controls the firm did not evaluate the effect of the issuer not assessing one type of error on the controls' ability to effectively prevent or detect a material misstatement. (AS 2201.42)

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's approach for substantively testing the qualitative component of 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 sufficiently evaluate the reasonableness of these significant assumptions because it did not identify that the auditor-employed specialist's procedures were limited to inquiring of management and reading an issuer-prepared memorandum. Further the firm used a sample of appraisal reports prepared by the company's specialists in its testing of these significant assumptions without performing any procedures with respect to its use of the work of the company's specialists as audit evidence. (AS 1105.A1 - .A10 AS 1201.C6 and .C7; 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 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 firm's approach for substantively testing the ALL included developing an independent expectation of the ALL which included a specific reserve for impaired loans and a general reserve for loans collectively evaluated for impairment. The firm did not perform any procedures to evaluate the reasonableness of certain assumptions used to develop its independent expectation including assumptions provided by the issuer. (AS 2501.09 .10 and .12) [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.]

With respect to the specific reserve the firm used appraisals prepared in previous years by external specialists engaged by the issuer to evaluate the fair value of properties used as collateral for certain loans the firm evaluated for impairment. Given the length of time that had passed since the appraisals were prepared the firm applied a discount rate to the fair value of each property as part of its evaluation. The firm did not perform procedures to evaluate the relevance and reliability of these appraisals. Specifically the firm did not perform procedures to evaluate the reasonableness of the methods assumptions and underlying data used in preparing the appraisals. Further the firm did not perform any procedures to evaluate the reasonableness of the discount rate used to evaluate these loans for impairment. (AS 2502.26 .28 and .31)

The issuer used various qualitative factors to determine the qualitative component of the ALL. The firm's approach for testing the qualitative reserve was to test the issuer's process. The following deficiencies were identified: · The firm did not perform sufficient procedures to evaluate the reasonableness of the significant assumptions related to the qualitative factors the issuer used to determine the qualitative reserve because it limited its procedures to reading the issuer's ALL methodology and evaluating the consistency of the assumptions with those used in prior periods. (AS 2501.16)

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 reasonableness of another significant assumption that the issuer developed and it used in its independent expectation of the specific reserve. (AS 2501.16)

The issuer used various qualitative factors to determine the qualitative component of the ALL. The firm's approach for testing the qualitative reserve was to test the issuer's process. The following deficiencies were identified: · The firm did not perform procedures to evaluate the relevance and reliability of external information that the issuer used to develop the significant assumptions related to qualitative factors. (AS 1105.04 and .06)

The issuer used various qualitative factors to determine the qualitative component of the ALL. The firm's approach for testing the qualitative reserve was to test the issuer's process. The following deficiencies were identified: · The firm did not perform sufficient procedures to test or identify and test any controls over the accuracy and completeness of issuer-produced information that the issuer used to develop the significant assumptions related to the qualitative factors because it limited its procedures to inquiries and performing certain recalculations and comparisons of certain of the information to other issuer-prepared information. (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 test the accuracy and completeness of issuer-produced information and evaluate the relevance and reliability of external information used by the company's specialists to determine the fair value of the properties used as collateral. (AS 1105.A8a)

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 reasonableness of significant assumptions used by the company's specialists to determine the fair value of the properties used as collateral. (AS 1105.A8b; AS 2501.16)

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 sufficient procedures to demonstrate it had a reasonable basis for certain assumptions it developed because it did not demonstrate how its assumptions took into account its understanding of the company's process that included certain information about the properties used as collateral so that its expectations considered the factors relevant to the estimate. (AS 2501.21 and .22)

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'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 demonstrate it had a reasonable basis for another assumption it developed and used in its independent expectation of the specific reserve. (AS 2501.22)

The issuer used an information-technology (IT) system to initiate process and record loan-related transactions. The firm did not perform any procedures to test the accuracy and completeness of the data that it used to test controls related to user access and change management over this IT system. (AS 1105.10)

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 over the review of the significant judgments and estimates used in the ALL. Due to the deficiencies in the firm's testing of IT general controls the firm did not sufficiently test controls over the accuracy and completeness of data and reports used in the operation of this control. (AS 2201.46)

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)

For loans collectively evaluated for impairment 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 significant assumptions related to the basis points used for the qualitative factors. (AS 2501.16)

The firm's internal inspection program inspected this audit and reviewed this area but did not identify the deficiencies below. The firm did not evaluate the reasonableness of certain significant assumptions used by the issuer to develop the qualitative component of the allowance for loan losses. (AS 2501.16)

The firm's internal inspection program inspected this audit and reviewed this area but did not identify the deficiencies below. The issuer calculated the qualitative component of the allowance for loan losses (ALL) by applying basis points to each qualitative factor. The firm did not perform sufficient procedures to test the qualitative component of the ALL because 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 ALL using qualitative factors and applied basis points in determining each of the qualitative factors. The firm's approach for substantively testing the ALL was to test the issuer's process. The firm did not sufficiently evaluate the reasonableness of significant assumptions related to the basis points because the firm did not evaluate whether the issuer had a reasonable basis for the basis points that were applied to the qualitative factors. (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 basis points that were applied to determine the qualitative component of the ALL because it limited its procedures to (1) reading the issuer's analysis (2) testing the economic and loan portfolio trends and (3) concluding that changes to the basis points applied to determine the qualitative component or lack thereof were reasonable. (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.]

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. In evaluating the design of this control the firm did not assess the effect of the same individuals both developing and reviewing the qualitative factors. (AS 2201.42)

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 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: · With respect to the firm's substantive procedures to test the qualitative component of the reserve the firm did not evaluate the reasonableness of certain adjustments that the issuer made to the qualitative factors beyond reading the issuer's ALL memorandum and comparing the current year's general reserve to the prior year's. (AS 2501.07)

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's approach for substantively testing the reasonableness of certain assumptions the issuer used to estimate the ACL was to review and test the issuer's process. The firm's procedures were limited to comparing these assumptions to those used in the prior year and inquiring of management about significant variances. Further the firm's approach for testing certain other assumptions the issuer used to estimate the ACL was to develop an independent expectation of the assumptions. The firm did not have a reasonable basis for its expectation because it did not evaluate the relevance of the industry information it used in developing its expectation. (AS 1105.04 and .06; 2501.16)

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)

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 the issuer's process. The firm did not sufficiently evaluate the reasonableness of the qualitative factors the issuer used to determine the qualitative reserve component of the ALL 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 estimated the qualitative reserve component of the allowance for loan losses (ALL) using qualitative factors. 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 a significant assumption the issuer used to develop certain of these qualitative factors. (AS 2501.16)

For loans that were collectively evaluated for impairment the issuer estimated the qualitative reserve component of the allowance for loan losses (ALL) using qualitative factors. The firm's approach for substantively testing the ALL was to test the issuer's process. The issuer used information from a service organization to estimate this component of the ALL. The firm did not perform procedures to test the completeness of certain of this information. (AS 2301.08)