Explorer

The issuer held certain investments that were categorized as level 3 within the fair value hierarchy as set forth in FASB ASC Topic 820 Fair Value Measurement. The firm's approach for substantively testing the valuation of these investments was to develop independent estimates. The firm did not evaluate the relevance of the pricing information and the appropriateness of another input the firm used in developing its fair value estimates of these investments. (AS 2502.40)

The issuer recorded the fair value for available-for-sale (“AFS”) and held-to-maturity (“HTM”) debt securities based on the prices it received from an external pricing service. The firm selected for testing a control that consisted of the issuer's comparison for a selection of securities from various security categories of the prices it received from the external pricing service to prices it obtained from other sources and evaluation of any pricing differences that exceeded monetary thresholds. The firm did not evaluate whether the control was designed to address the risks of material misstatement presented by the different risk characteristics inherent in the population of securities in each category not subject to the control given the selection method applied. (AS 2201.42)

The issuer recorded the fair value for AFS securities based on the prices it received from an external pricing service. The firm selected for testing a control that consisted of (1) comparing the recorded fair values to prices obtained from another pricing service for a sample of securities selected from certain categories of securities and (2) the analysis of pricing differences that exceeded an established threshold. The firm did not evaluate whether the control was designed to address the risks of material misstatement presented by the population of securities not subject to the control given the selection method applied by the issuer and the different valuation methods used by the issuer's external pricing services to value the securities. (AS 2201.42)

The firm's approach for substantively testing the issuer's impairment analysis for certain investments was to develop an independent expectation. The following deficiency was identified. • The firm did not perform procedures to demonstrate that it had a reasonable basis for the method and assumptions it used including taking into account (1) the requirements of certain elements of the applicable financial reporting framework and (2) its understanding of the issuer's process including the issuer's use of a flat rate for impairment so that its independent expectation considered the factors relevant to the estimate. (AS 2501.21 and .22)

The firm's approach for substantively testing the issuer's impairment analysis for certain investments was to develop an independent expectation. The following deficiency was identified. • The firm did not evaluate the significant difference between its independent expectation and the issuer's recorded impairment beyond concluding that the issuer's recorded impairment was more conservative. (AS 2501.26; AS 2810.13)

To test the valuation of certain investments the firm selected specific investments for testing. The firm did not perform any substantive procedures to test the remaining portion of these certain investments. (AS 1105.27; AS 2301.08)

In addition the firm did not identify and test any controls over the valuation of investments. (AS 2201.39)

The issuer held certain investments in privately held companies that were categorized as level 3 within the fair value hierarchy as set forth in FASB ASC Topic 820 Fair Value Measurement. The following deficiencies were identified: · The firm's approach for substantively testing the valuation of certain of these investments was to review and test management's process. The firm did not perform any procedures to test the share price the issuer used to record the fair value of each investment beyond (1) obtaining for one investment an unexecuted consent of the investee company's board of directors regarding a possible equity transaction and (2) obtaining for the other investments an email that the issuer had received from a broker indicating the weighted-average share price for trades that the broker executed in the last quarter of the year under audit. (AS 2502.26 and .28)

The issuer held certain investments in privately held companies that were categorized as level 3 within the fair value hierarchy as set forth in FASB ASC Topic 820 Fair Value Measurement. The following deficiencies were identified: · The firm's approach for substantively testing the valuation of another investment was to develop an independent estimate. The firm did not evaluate the appropriateness of the peer companies determined by the issuer that the firm used in developing its fair value estimate of this investment. (AS 2502.40)

To test the valuation of investments the firm selected for testing specific investments. The firm did not perform any substantive procedures to test the remaining population of investments. (AS 1105.27; AS 2301.08)

The issuer recorded the fair value of its available-for-sale ('AFS') securities based on prices it obtained from an external pricing service. The firm selected for testing various controls over the valuation of these securities that included the issuer's comparison of these prices to prices obtained from another external pricing service. The securities and prices obtained from both pricing services were manually entered by the issuer into a spreadsheet for this comparison. The firm did not test the aspects of these controls that addressed whether the prices the issuer used in this comparison were derived from different sources. (AS 2201.42 and .44)

The issuer recorded the fair value of its available-for-sale ('AFS') securities based on prices it obtained from an external pricing service. The firm selected for testing various controls over the valuation of these securities that included the issuer's comparison of these prices to prices obtained from another external pricing service. The securities and prices obtained from both pricing services were manually entered by the issuer into a spreadsheet for this comparison. The firm did not identify and test any controls over the accuracy of the prices that were manually entered into the comparison spreadsheet. (AS 2201.39)

The issuer held a majority ownership in a limited partnership and reported the valuation of this investment based on investee financial results including audited financial statements that were prepared using different accounting principles. The following deficiencies were identified: · The firm did not evaluate whether the issuer's accounting for this investment was appropriate. (AS 2301.08 and .11)

The issuer held a majority ownership in a limited partnership and reported the valuation of this investment based on investee financial results including audited financial statements that were prepared using different accounting principles. The following deficiencies were identified: · The firm did not obtain sufficient appropriate audit evidence for the investee's financial statements prepared using different accounting principles because it did not perform procedures to obtain evidence related to significant differences in accounting principles. (AS 1105.B1 and .B2)

The issuer held a majority ownership in a limited partnership and reported the valuation of this investment based on investee financial results including audited financial statements that were prepared using different accounting principles. The following deficiencies were identified: · The firm did not identify and evaluate departures from GAAP related to this investment. (AS 2810.30 and .31)

The firm did not perform sufficient procedures to evaluate the issuer's qualitative assessment of potential impairment indicators to test the valuation of an investment because the firm did not address certain inconsistencies in the issuer's assessment. (AS 2301.08)