Explorer

The issuer reported investment securities. The firm sent a confirmation to the trustee and the response was returned by email. The following deficiencies were identified: · The firm did not evaluate whether the issuer's presentation of investment securities was in conformity with GAAP including consideration of contrary evidence included in the firm's work papers. (AS 2301.08; AS 2810.03)

The issuer reported investment securities. The firm sent a confirmation to the trustee and the response was returned by email. The following deficiencies were identified: · The firm did not identify and evaluate a GAAP departure related to the issuer's omission of certain required disclosures related to these securities. (AS 2810.30 and .31)

The issuer reported investment securities. The firm sent a confirmation to the trustee and the response was returned by email. The following deficiencies were identified: · The firm did not consider performing procedures to address the risks associated with the electronic response received from the trustee such as verifying the source and contents of the confirmation response. (AS 2310.29)

The firm did not evaluate a departure from GAAP related to the issuer's reporting in the statement of cash flows of the purchase and sale of investment securities that did not result in the payment or receipt of cash rather than the exclusion of such noncash transactions from the statement of cash flows in conformity with FASB ASC Topic 230 Statement of Cash Flows. (AS 2810.30 and .31)

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 values of available-for-sale ('AFS') securities based on the prices it obtained from external pricing services. The firm selected for testing a control that consisted of meetings that the issuer held with the external pricing services to assess the appropriateness of the methods and assumptions used by the external pricing services to price those securities. The firm did not evaluate the specific procedures that the control owner performed to obtain an understanding of the methods and assumptions underlying the prices obtained from the pricing services. (AS 2201.42 and .44)

The firm selected for testing a control that consisted of the review of the categorization of AFS securities within the fair value hierarchy as set forth in FASB ASC Topic 820 Fair Value Measurement. The firm did not evaluate the specific procedures that the control owner performed to assess the appropriateness of the categorization within the fair value hierarchy. (AS 2201.42 and .44)

The firm's approach for testing the valuation of certain AFS securities was to develop an independent estimate of the fair values for a sample of these AFS securities using prices the firm obtained from various other external pricing services. For purposes of evaluating the reasonableness of the differences between its independent estimates and the issuer's estimates the firm did not obtain an understanding of the assumptions used by the issuer's external pricing services for the individual securities selected for testing. (AS 2502.40)

The issuer held investment securities that it classified based on original maturity as either cash equivalents or short-term investments in its financial statements. The firm did not identify and test any controls that addressed the appropriateness of the classification of these investments. (AS 2201.39)

The firm did not perform any substantive procedures that addressed the appropriateness of the classification of these investments. (AS 2301.08)

The issuer recorded the fair value of its available-for-sale securities based on prices it obtained from external pricing services. The firm selected for testing a quarterly control over the valuation of these securities that included the issuer's comparison of its recorded prices to prices obtained from another external pricing service and the investigation of securities with price variances that exceeded both a monetary and a percentage change threshold. The following deficiencies were identified: · The firm did not evaluate whether the monetary threshold the issuer used to identify securities for investigation was sufficiently precise to detect material misstatements. (AS 2201.42)

The issuer recorded the fair value of its available-for-sale securities based on prices it obtained from external pricing services. The firm selected for testing a quarterly control over the valuation of these securities that included the issuer's comparison of its recorded prices to prices obtained from another external pricing service and the investigation of securities with price variances that exceeded both a monetary and a percentage change threshold. The following deficiencies were identified: · In testing the operating effectiveness of this control for the fourth quarter the firm did not identify that the comparison spreadsheet that the issuer used in this quarter contained a formulaic error such that the issuer did not properly calculate the price variances for any of its securities. (AS 2201.44)

The issuer recorded the fair value of its available-for-sale securities based on prices it obtained from external pricing services. The firm selected for testing a quarterly control over the valuation of these securities that included the issuer's comparison of its recorded prices to prices obtained from another external pricing service and the investigation of securities with price variances that exceeded both a monetary and a percentage change threshold. The following deficiencies were identified: · For securities for which a comparative price was unavailable the control owner performed procedures that consisted of comparing the recorded price of these securities to their respective historical prices and investigating securities with price variances that exceeded a monetary threshold. In testing the design of this control the firm did not evaluate whether historical prices were an appropriate basis to allow the issuer to assess the reasonableness of the recorded fair values for these securities. (AS 2201.42)

The firm selected for testing two controls over the issuer's determination 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 identify that these controls were not designed to address whether the pricing inputs used to determine the fair value of certain securities were observable. (AS 2201.42)

The sample size the firm used in certain of its substantive procedures to test the valuation of these securities 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 recorded the fair value of its available-for-sale securities based on prices it obtained from an external 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. The firm did not identify and test any controls over the accuracy and completeness of the list of the issuer's securities used by the control owner in performing the comparison. (AS 2201.39)

The sample sizes the firm used in certain of its substantive procedures to test the valuation of these securities 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 the deficiency in the firm's control testing discussed above. (AS 2301.16 .18 and .37; AS 2315.19 .23 and .23A)

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: · The firm did not identify and test any controls over a report that the control owner used to assess the accuracy and completeness of the issuer's securities that were manually entered into the comparison spreadsheet. (AS 2201.39)

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: · The firm did not test an aspect of this control that addressed whether the prices from the primary pricing service were accurately entered into the comparison spreadsheet. (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 used an investment adviser to initiate purchases and sales of its investment securities in accordance with the issuer's investment policy. These securities were held by a third-party custodian. The firm did not perform sufficient procedures to test these securities because the firm's procedures were limited to confirming the recorded balances of these securities with the investment adviser without performing any procedures to evaluate the appropriateness of the information provided by the investment adviser. (AS 2503.21 and .22)

The issuer held certain investment securities that it classified based on the maturity date of the security as either cash equivalents or short-term investments in its financial statements. The firm did not perform any substantive procedures that addressed the appropriateness of the classification of these securities. (AS 2301.08)

The firm selected for testing a control that consisted of a committee's review of securities to determine whether they met certain quantitative or qualitative factors that would indicate that these securities should be evaluated for possible impairment. The firm did not test an aspect of the control that addressed whether securities that met certain of those qualitative factors were identified for evaluation. (AS 2201.42 and .44)

The firm did not identify and test any controls over the observability of the pricing inputs at the individual instrument level that the issuer used to determine the categorization of certain of its investment securities within the fair value hierarchy as set forth in FASB ASC Topic 820 Fair Value Measurement. (AS 2201.39)

The firm did not perform any substantive procedures to evaluate the appropriateness of the issuer's categorization of these investment securities within the fair value hierarchy beyond tracing the balances that were disclosed for each category to an issuer-prepared analysis. (AS 2301.08)

The firm did not identify and test any controls over the issuer's valuation and presentation and disclosure of certain investment securities. (AS 2201.39)

The firm did not perform any substantive procedures to test the valuation of these investment securities. (AS 2501.07)

The firm did not perform any substantive procedures to evaluate the appropriateness of the issuer's categorization of these investment securities within the fair value hierarchy set forth in FASB ASC Topic 820 Fair Value Measurement beyond tracing the balances that were disclosed for each category to issuer-prepared schedules. (AS 2301.08)

The issuer recorded the fair values of certain of its available-for-sale (AFS) securities based on broker quotes. The following deficiencies were identified: · The firm did not identify and test any controls over the reasonableness of the methods and assumptions the issuer used to value these securities. (AS 2201.39)

The issuer recorded the fair values of certain of its available-for-sale (AFS) securities based on broker quotes. The following deficiencies were identified: · The firm did not identify and test any controls over the observability of the pricing inputs at the individual instrument level that the issuer used to determine the categorization of these securities within the fair value hierarchy as set forth in FASB ASC Topic 820. (AS 2201.39)

The issuer recorded the fair values of certain of its available-for-sale (AFS) securities based on broker quotes. The following deficiencies were identified: · The firm did not perform any substantive procedures to evaluate the appropriateness of the issuer's categorization of these securities within the fair value hierarchy beyond tracing the balances that were disclosed for each category to issuer-prepared schedules. (AS 2301.08)

The issuer recorded the fair values of certain of its available-for-sale (AFS) securities based on broker quotes. The following deficiencies were identified: · The sample size the firm used in its substantive procedures to test the valuation of these investment securities 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 disclosed various information about its investment securities that were in unrealized loss positions at year end. The following deficiencies were identified: · The firm did not identify and test any controls over the accuracy and completeness of the issuer-prepared schedules used to develop this disclosure. (AS 2201.39)

The firm did not identify and test any controls over the issuer's amortization of premiums and accretion of discounts on its investment securities. (AS 2201.39)

The issuer disclosed various information about its investment securities that were in unrealized loss positions at year end. The following deficiencies were identified: · The firm used these issuer-prepared schedules in its testing of this disclosure but did not perform any procedures to test or test controls over the accuracy and completeness of these schedules. (AS 1105.10)

The issuer disclosed various information about its investment securities that were in unrealized loss positions at year end. The following deficiencies were identified: · The firm did not identify and evaluate a misstatement in this disclosure. (AS 2810.30 and .31)

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 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 did not identify and test any controls over the observability of the pricing inputs related to broker-priced AFS securities at the individual instrument level that the issuer used to determine the categorization of these AFS securities within the fair value hierarchy as set forth in FASB ASC Topic 820. (AS 2201.39)

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 did not perform any substantive procedures to evaluate the appropriateness of the issuer's categorization of these AFS securities within the fair value hierarchy beyond tracing the balances that were disclosed for each category to issuer-prepared schedules. (AS 2301.08)

For AFS securities for which prices could not be obtained the issuer used the original purchase price to approximate fair value. The firm did not identify and test any controls that addressed whether the issuer's use of purchase price was an appropriate approximation of fair value for these AFS securities. (AS 2201.39)

The firm did not perform any substantive procedures to test the issuer's amortization of premiums and accretion of discounts on these investment securities. (AS 2301.08)

The issuer disclosed various information about its investment securities that were in unrealized loss positions at year end. The following deficiencies were identified: · The firm selected for testing a control that consisted of the issuer's review of this disclosure but did not identify and test any controls over the accuracy and completeness of the data that the control owners used in the operation of this control. (AS 2201.39)

The issuer disclosed various information about its investment securities that were in unrealized loss positions at year end. The following deficiencies were identified: · The firm used these data in its substantive testing of this disclosure but did not perform any procedures to test or test any controls over the accuracy of these data. (AS 1105.10)

The firm did not identify and test any controls over the issuer's (1) classification of certain investment securities and (2) evaluation of whether certain other investment securities were impaired. (AS 2201.39)

The firm did not perform any substantive procedures to test the (1) issuer's classification of certain investment securities and (2) whether certain other investment securities were impaired. (AS 2301.08)

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 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 did not perform any substantive procedures to test the valuation of these securities. (AS 2501.07)

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 did not identify and test any controls that addressed whether the issuer's classification of these securities as HTM was appropriate. (AS 2201.39)

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 did not perform any substantive procedures to evaluate whether the issuer's classification of these securities as HTM was appropriate. (AS 2301.08)

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 used a manually prepared spreadsheet to compare the fair values recorded for its available-for-sale and held-to-maturity securities to prices obtained from various sources. The firm selected for testing controls over the review of this spreadsheet but when evaluating the design of these controls did not identify that the control owner did not perform any procedures that addressed whether the pricing information that was included in the spreadsheet was accurate and complete. (AS 2201.42)