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The firm selected for testing a control that consisted of the issuer's review of risk grades assigned to commercial graded loans. The loan grades were an important factor in estimating the ALL. The sample size used by the firm to test the control was too small to provide sufficient appropriate audit evidence to support its conclusion that the control was operating effectively. (AS 2201.46)

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 sample size the firm used in its substantive procedures to test the reasonableness of assigned loan grades was too small to provide sufficient appropriate audit evidence because these procedures were designed based on a level of control reliance that was not supported due to the deficiencies in the firm's control testing discussed above. (AS 2301.16 .18 and .37; AS 2315.19 .23 and .23A)

The firm selected for testing a control that consisted of the external review of loan grades. The sample size used by the firm to test the control was too small to provide sufficient appropriate audit evidence to support its conclusion that the control was operating effectively. As a result the sample size the firm used in its substantive procedures to test the reasonableness of assigned loan grades was too small to provide sufficient appropriate audit evidence because these procedures were designed based on a level of control reliance that was not supported due to the deficiencies in the firm's control testing discussed above. (AS 2301.16 .18 and .37; AS 2315.19 and .23 and .23A)

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 identify and test any controls over the accuracy and completeness of the data used in the operation of this control. (AS 2201.39)

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'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 did not identify and test any controls over the valuation of assets collateralizing certain loans. (AS 2201.39)

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 did not evaluate whether the method used by the issuer in certain models to determine a complementary reserve component of the ACL was in conformity with the requirements of IFRS. (AS 2501.10)

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 did not evaluate the reasonableness of the significant assumptions used by the issuer in these models. (AS 2501.16)

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 did not perform procedures to evaluate the reasonableness of certain significant assumptions used by the issuer to determine the quantitative component of the ACL beyond for one such assumption consisting of loan risk ratings testing the mathematical accuracy of certain inputs for a sample of the issuer's risk rating models. (AS 2501.16)

The firm did not perform procedures to test certain information presented in the ALL disclosure beyond comparing prior year information to the prior year financial statements and calculating the mathematical accuracy of certain information presented. (AS 2301.08)

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)

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 issuer determined loan grades using loan scorecards that were prepared for each borrower. The firm selected for testing a control that consisted of the monthly review of a sample of loan scorecards to evaluate the accuracy and completeness of the loan information and numerous other key inputs. The firm did not test the review procedures the control owner performed to evaluate numerous inputs to the scorecard that were important in determining the loan grade. (AS 2201.42 and .44)

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 used the loan scorecards in its substantive testing of the appropriateness of the assigned loan grades for commercial loans. The firm did not test or (as discussed above) sufficiently test controls over the accuracy and completeness of the loan information and other key inputs included in these scorecards. (AS 2501.11)

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 sample size the firm used in certain of its substantive procedures to test the appropriateness of the assigned loan grades for commercial loans was too small to provide sufficient appropriate audit evidence because these procedures were designed based on a level of control reliance that was not supported due to the deficiencies in the firm's control testing discussed above. (AS 2301.16 .18 and .37; AS 2315.19 .23 and .23A)

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)

The issuer's processes related to loans receivable the ALL investments derivatives and investment and brokerage services income were highly automated with transactions being initiated processed and recorded by numerous information-technology (“IT”) systems. The firm tested certain automated and IT-dependent manual controls that used data and reports generated or maintained by these IT systems. The accuracy and completeness of these data and reports depended on effective IT general controls (“ITGCs”). The firm's sampling approach for testing ITGCs was inappropriate because it was based on an unsupported assumption that the population of ITGCs was homogeneous. As a result the firm's testing of these automated and IT-dependent manual controls over these areas was not sufficient. (AS 2201.46 and .47)

The firm selected for testing a control that consisted of a review of past-due loans performed by the issuer to determine whether these loans would be individually or collectively evaluated for impairment. The firm did not identify and test any controls over the accuracy and completeness of a report that was used in the operation of this control. (AS 2201.39)

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.

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 did not evaluate the reasonableness of the loss factors beyond comparing the factors to those used in the prior year inquiring of management about changes to those factors and the effects on the ALL and recalculating the qualitative reserve component by loan type. (AS 2501.11)

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 issuer used models to determine the general reserve component of the ALL for commercial loans collectively evaluated for impairment. These models used various data including a loan risk rating for each loan that were derived from the issuer's data warehouse system. The loan risk rating was an important input in estimating the ALL and determining whether a loan would be individually or collectively evaluated for impairment. The following deficiencies were identified: · The firm used only the work of the issuer's internal audit as evidence about the effectiveness of certain controls related to the issuer's reviews of the loan risk ratings. This approach did not provide sufficient appropriate audit evidence that these controls were designed and operating effectively because of the amount of subjectivity and judgment involved in evaluating the appropriateness of the loan risk ratings and determining any changes to these ratings. (AS 2201.19; AS 2605.20 and .21)

The issuer used models to determine the general reserve component of the ALL for commercial loans collectively evaluated for impairment. These models used various data including a loan risk rating for each loan that were derived from the issuer's data warehouse system. The loan risk rating was an important input in estimating the ALL and determining whether a loan would be individually or collectively evaluated for impairment. The following deficiencies were identified: · The issuer identified a deficiency related to one of the loan risk-rating controls discussed above. The firm identified and tested certain controls that it believed would mitigate this deficiency. The firm did not identify that these compensating controls did not address the risks of material misstatement related to inappropriate loan risk ratings. (AS 2201.68)

The issuer used models to determine the general reserve component of the ALL for commercial loans collectively evaluated for impairment. These models used various data including a loan risk rating for each loan that were derived from the issuer's data warehouse system. The loan risk rating was an important input in estimating the ALL and determining whether a loan would be individually or collectively evaluated for impairment. The following deficiencies were identified: · The firm did not identify and test any controls over the accuracy of the transfer of the loan risk ratings from the issuer's source systems to the data warehouse system or test other controls that would have provided evidence over the accuracy of the loan risk ratings in the data warehouse system. (AS 2201.39)

The issuer assigned a risk rating to each commercial loan. The loan risk rating was an important input in estimating the ACL for commercial loans collectively assessed for impairment. The following deficiencies were identified: · The firm identified a deficiency related to a control that consisted of the issuer's periodic review of loan risk ratings assigned to certain commercial loans. The firm tested various controls that it believed would compensate for this deficiency but did not identify that these controls did not address whether the risk ratings were reviewed and updated timely. (AS 2201.68)

The issuer assigned a risk rating to each commercial loan. The loan risk rating was an important input in estimating the ACL for commercial loans collectively assessed for impairment. The following deficiencies were identified: · The firm's sample to test the reasonableness of the risk ratings for certain commercial loans was too small because in determining its sample the firm did not consider certain characteristics of the loan population. (AS 2315.16 .23 and .23A)

The issuer assigned a risk rating to each commercial loan. The loan risk rating was an important input (1) in estimating the ACL for commercial loans collectively assessed for impairment and (2) in determining the fair value of a certain type of commercial loans that the issuer reclassifies to available-for-sale (AFS) securities for financial reporting purposes. The firm's sample to test the reasonableness of the risk ratings for commercial loans including loans reclassified to AFS securities was too small because in determining its sample the firm did not consider certain characteristics of the loan population including whether the population of loans reclassified to AFS securities should have been tested separately. (AS 2315.16 .23 and .23A)

The firm did not identify and test any controls over the issuer's ACL for certain loans. (AS 2201.39)

The firm did not perform any substantive procedures to test the ACL for these loans. (AS 2501.07)

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 firm concluded that a control over the loan officers' annual credit review (“ACR”) of the reasonableness of assigned loan grades was deficient because certain of the ACRs were not completed as of the end of the year for commercial loan relationships. The firm concluded that it represented a significant deficiency after determining the percentage of noncompliance of ACRs and identifying and testing two compensating controls that consisted of a credit monitoring (“CM”) control and an independent loan review over certain commercial loan relationships. The firm did not sufficiently evaluate the severity of the control deficiency due to the following: · The firm used the work of internal audit (“IA”) to test the CM control. The firm did not evaluate IA's identification of several instances in which borrower financial information obtained for use in the CM control was not analyzed by the control owners. (AS 2201.68)

The firm concluded that a control over the loan officers' annual credit review (“ACR”) of the reasonableness of assigned loan grades was deficient because certain of the ACRs were not completed as of the end of the year for commercial loan relationships. The firm concluded that it represented a significant deficiency after determining the percentage of noncompliance of ACRs and identifying and testing two compensating controls that consisted of a credit monitoring (“CM”) control and an independent loan review over certain commercial loan relationships. The firm did not sufficiently evaluate the severity of the control deficiency due to the following: · The firm selected loan relationships which had ACRs and independently tested the CM control. The firm did not perform procedures to determine whether the CM control operated for the selected loans after the ACRs were performed which would be the only way this compensating control could have mitigated the ACR deficiency identified. (AS 2201.68)

The firm concluded that a control over the loan officers' annual credit review (“ACR”) of the reasonableness of assigned loan grades was deficient because certain of the ACRs were not completed as of the end of the year for commercial loan relationships. The firm concluded that it represented a significant deficiency after determining the percentage of noncompliance of ACRs and identifying and testing two compensating controls that consisted of a credit monitoring (“CM”) control and an independent loan review over certain commercial loan relationships. The firm did not sufficiently evaluate the severity of the control deficiency due to the following: · The firm did not test whether the CM control operated effectively over the population of loans for which a required ACR was not performed. (AS 2201.68)

The firm concluded that a control over the loan officers' annual credit review (“ACR”) of the reasonableness of assigned loan grades was deficient because certain of the ACRs were not completed as of the end of the year for commercial loan relationships. The firm concluded that it represented a significant deficiency after determining the percentage of noncompliance of ACRs and identifying and testing two compensating controls that consisted of a credit monitoring (“CM”) control and an independent loan review over certain commercial loan relationships. The firm did not sufficiently evaluate the severity of the control deficiency due to the following: · The sample size the firm used to test the second compensating control was designed assuming a certain level of evidence the firm planned to obtain from testing the ACR control over assigned loan grades. Due to the identified control deficiency in the ACR control the ACR control tested did not provide the planned level of evidence. As a result the sample size the firm used to test the second compensating control was too small to provide the necessary evidence about its operating effectiveness. (AS 2201.68)

The sample sizes the firm used in certain of its substantive procedures to test the ALL were too small to provide sufficient appropriate audit evidence because these procedures were designed based on a level of control reliance that was not supported due to deficiencies in the firm's control testing discussed above. (AS 2301.16 .18 and .37; AS 2315.19 .23 and .23A)

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)

The firm's approach to substantively test the qualitative component of the ALL was to review and test management's process. The firm did not sufficiently evaluate the appropriateness of the issuer's ALL methodology and the reasonableness of the significant inputs and assumptions used because it limited its procedures to comparing the basis-point adjustments for economic and other factors that the issuer used at year end to those used in the prior period. (AS 2501.11)

The firm selected for testing a control that the issuer intended to be an objective review of assigned loan grades. The firm concluded that this control was deficient because the control owners were not independent of the department responsible for assigning the loan grades. The firm identified other controls over the review of assigned loan grades that it believed would compensate for this control deficiency. The firm did not identify that the control owners for these controls also were not independent of the department responsible for assigning the loan grades. (AS 2201.68)

The sample sizes the firm used in certain of its substantive procedures to test the reasonableness of assigned loan grades were too small to provide sufficient appropriate audit evidence because these procedures were designed based on a level of control reliance that was not supported due to deficiencies in the firm's control testing discussed above. (AS 2301.16 .18 and .37; AS 2315.19 .23 and .23A)

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'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 qualitative reserve component of the ALL because the firm's procedures to test the qualitative factors the issuer used to determine the reserve were limited to (1) reading the issuer's ALL memorandum and (2) comparing the qualitative factors the issuer used at year end to those used in prior periods. (AS 2501.09 .10 and .11)

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)

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 management's process. The firm did not sufficiently evaluate the reasonableness of the qualitative reserve component of the ALL because the firm's procedures to test certain qualitative factors the issuer used to determine the reserve were limited to (1) reading the issuer's ALL memorandum and its analysis of the factors and (2) comparing the qualitative factors the issuer used at year end to those used in the prior year. (AS 2501.09 .10 and .11)

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 did not identify and test any controls over the issuer's validation of certain of these models. (AS 2201.39)

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 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 identify and test any controls over the accuracy and completeness of the data that the control owners used in the operation of these controls. (AS 2201.39)