Explorer

The issuer recorded available-for-sale securities at fair value. The firm selected for testing a control that included comparing recorded prices from an external service provider to prices determined by the control owner. The firm did not evaluate the specific review procedures that the control owner performed to (1) determine the comparative prices and (2) to identify items for follow-up. (AS 2201.42 and .44)

The issuer used a service organization to perform recordkeeping and pricing for its available-for-sale securities. The firm selected for testing a control that consisted of the issuer's comparison of prices this service organization used to prices that the issuer obtained from an external pricing service. The firm did not evaluate the specific review procedures that the control owners performed to determine whether items identified for follow up were appropriately resolved. (AS 2201.42 and .44)

The issuer managed a portion of its investment securities portfolio and used external parties to manage the remaining portion. The issuer used one service organization to perform recordkeeping and processing of all investment transactions and a second service organization to maintain custody of the overall portfolio. With respect to information received from the recordkeeping service provider the following deficiencies were identified: · The firm selected for testing a control over the relevance and reliability of the pricing information the issuer received from this service organization related to the portion of the portfolio managed by external parties. This control included the issuer's comparison of certain pricing information it received from the service organization to information it received from the external parties. The firm did not evaluate the specific review procedures the control owner performed to assess the relevance and reliability of the pricing information received from the external parties. (AS 2201.42 and .44)

The firm selected for testing a control over the review of potential other-than-temporary-impairment on available-for-sale investment securities. 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 determined the fair value of investment securities using a price vector which was based on prices obtained from multiple pricing vendors. The firm obtained the service auditor's report for the issuer's primary pricing vendor ('service auditor's report') which contained a qualified opinion due to certain control deficiencies identified by the service auditor. The following deficiencies were identified with respect to the firm's testing of controls related to investment securities: · The firm identified and selected for testing a complementary user entity control (CUEC) over the valuation of investment securities that the service auditor's report described as necessary. The CEUC consisted of the issuer's review of the reasonableness of certain investment prices in the price vector. The firm did not evaluate the specific review procedures that the control owner performed to evaluate the price differences identified for further investigation to conclude on the reasonableness of the price vector. (AS 2201.42 .44 and .B22)

The issuer determined the fair value of investment securities using a price vector which was based on prices obtained from multiple pricing vendors. The firm obtained the service auditor's report for the issuer's primary pricing vendor ('service auditor's report') which contained a qualified opinion due to certain control deficiencies identified by the service auditor. The following deficiencies were identified with respect to the firm's testing of controls related to investment securities: · The firm selected for testing another control over the valuation of investment securities that consisted of the issuer's review of the daily variation of certain prices in the price vector. The firm did not evaluate the specific review procedures that the control owners performed to evaluate the price variances identified for further investigation to conclude on the reasonableness of the price vector. (AS 2201.42 and .44)

The issuer determined the fair value of investment securities using a price vector which was based on prices obtained from multiple pricing vendors. The firm obtained the service auditor's report for the issuer's primary pricing vendor ('service auditor's report') which contained a qualified opinion due to certain control deficiencies identified by the service auditor. The following deficiencies were identified with respect to the firm's testing of controls related to investment securities: · The firm selected for testing another control over the valuation of investment securities that consisted of the issuer's review of the service auditor's report to evaluate the vendor's controls and their effects on the services provided to the issuer. The firm did not evaluate the specific review procedures that the control owner performed to determine the effects of the qualified opinion in the service auditor's report and the reliability of the prices provided by the vendor. (AS 2201.42 and .44)

The firm selected for testing a control that consisted of the issuer's review of the estimated value of certain financial assets categorized as level 3 securities. 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 recorded the fair value of its available-for-sale securities based on prices it obtained from an external pricing service (primary pricing service). The firm selected for testing a control over the valuation of these securities that consisted of the issuer's comparison of its recorded prices to prices obtained from another external pricing service and the issuer's investigation of (1) price variances that exceeded certain thresholds or (2) securities for which prices were not provided by the primary pricing service. The issuer manually entered the securities and prices obtained from both pricing services into a spreadsheet for this comparison. The following deficiencies were identified: · For securities that met the issuer's criteria for investigation the firm did not evaluate the specific review procedures that the control owner performed to evaluate whether the prices used to record the fair values for these securities were appropriate. (AS 2201.42 and .44)

The issuer recorded most of its AFS securities at fair value based on prices including broker quotes it obtained from external pricing services. The following deficiencies were identified: · The firm selected for testing a control that consisted of the issuer's evaluation of the appropriateness of the methods and assumptions used by the external pricing services. The firm did not evaluate the specific review procedures that the control owner performed to assess the reasonableness of the methods and assumptions underlying broker quotes obtained from the pricing services. (AS 2201.42 and .44)

The issuer recorded certain investment securities at fair value based on cash-flow models and classified these securities as held-to-maturity (HTM). The following deficiencies were identified: · The firm selected for testing controls over the valuation of these securities including the issuer's review of its cash-flow models. The firm did not evaluate the specific review procedures that the control owners performed to assess the reasonableness of the values determined by these models. (AS 2201.42 and .44)

The issuer recorded the fair values of its available-for-sale securities based on prices it obtained from an external pricing service. The firm selected for testing controls that consisted of the issuer's (1) comparison of these prices to prices obtained from other external pricing services and investigation of price variances that exceeded certain thresholds and (2) review of the categorization of the securities within the fair value hierarchy as set forth in FASB ASC Topic 820 Fair Value Measurement. The firm did not evaluate the specific review procedures that the control owners performed to evaluate (1) whether the fair values of the securities identified for investigation were reasonable and (2) the pricing inputs used to determine the categorization of the securities within the fair value hierarchy. (AS 2201.42 and .44)

The issuer held a portfolio of investments which were carried at fair value. The following deficiencies were identified: · The firm selected for testing a control that consisted of a comparison and analysis of differences between the fair values of certain investments recorded in the issuer's system and external price sources and the investigation of variances over established thresholds. The firm did not evaluate the review procedures that the control owner performed including the procedures to determine whether items identified for follow-up were appropriately resolved. (AS 2201.42 and .44)