Explorer

The issuer's general reserve component of the ALL included a qualitative reserve component. In determining the qualitative reserve component the issuer used loan risk grades and basis point adjustments for qualitative factors. The following deficiencies were identified: - The firm selected for testing a control that consisted of the issuer's review of the ALL including an evaluation of the qualitative reserve component. The firm did not evaluate the specific review procedures that the control owners performed to evaluate the reasonableness of the basis points for certain qualitative factors used to determine the qualitative reserve component. (AS 2201.42 and .44)

The issuer's general reserve component of the ALL included a qualitative reserve component. In determining the qualitative reserve component the issuer used loan risk grades and basis point adjustments for qualitative factors. The following deficiencies were identified: - The firm did not identify and test any controls over the accuracy of a system-generated report used in the operation of a control. (AS 2201.39)

The issuer's general reserve component of the ALL included a qualitative reserve component. In determining the qualitative reserve component the issuer used loan risk grades and basis point adjustments for qualitative factors. The following deficiencies were identified: - The firm's approach for substantively testing the ALL was to review and test management's process. With respect to certain qualitative components of the ALL the firm did not evaluate whether the issuer had a reasonable basis for the basis points used and for its selection of basis points from a range of potential basis points. (AS 2501.16)

The issuer's general reserve component of the ALL included a qualitative reserve component. In determining the qualitative reserve component the issuer used loan risk grades and basis point adjustments for qualitative factors. The following deficiencies were identified: - The sample size the firm used in its substantive procedures to test the reasonableness of loan risk 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 issuer used certain qualitative factors to determine the qualitative reserve component of the ACLL. The firm selected for testing a control over the issuer's review of the qualitative reserve component. The firm did not evaluate the specific review procedures that the control owner performed to (1) evaluate the reasonableness of the assumptions used to develop the qualitative reserve component and (2) test the accuracy and completeness of the data used in the operation of the control. (AS 2201.42 and .44)

The issuer used certain qualitative factors to determine the qualitative reserve component of the ACLL. The firm selected for testing a control over the issuer's review of the qualitative reserve component. The firm's approach for substantively testing the qualitative component of the ACLL was to test the issuer's process. The firm did not perform any procedures to evaluate the reasonableness of significant assumptions used by the issuer to develop the qualitative component of the ACLL. (AS 2501.16)

The firm selected for testing certain controls that consisted of the issuer's review of the ACLL. The firm did not evaluate the specific review procedures that the control owners performed to (1) evaluate the reasonableness of the assumptions used to develop the ACLL and (2) test the accuracy and completeness of the data used in the operation of these controls. (AS 2201.42 and .44)

The firm's approach for substantively testing the ACLL was to test the issuer's process. The firm did not perform any procedures to evaluate the reasonableness of significant assumptions used by the issuer to develop the ACLL. (AS 2501.16)

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)