Explorer

The firm did not perform any substantive procedures to test the existence of certain inventory acquired. (AS 2301.08)

The firm's internal inspection program had inspected this audit and reviewed these areas and did not identify the deficiencies below. The firm selected for testing a control over revenue. Except for one of the selected items that was part of the firm's walkthrough the firm did not test the specific review procedures that the control owner performed over certain aspects of this control beyond inspecting for evidence of the control owners' approval. (AS 2201.44)

The firm's internal inspection program had inspected this audit and reviewed these areas and did not identify the deficiencies below. The firm selected for testing certain controls over inventory. Except for certain of the selected items that were part of the firm's walkthroughs the firm did not test the specific review procedures that the control owners performed over certain aspects of these controls beyond inspecting for evidence of the control owners' approval. (AS 2201.44)

During the year the issuer acquired a business. The firm did not perform procedures to evaluate the reasonableness of a significant assumption used to estimate the amount of acquired intangible assets beyond inquiry with management. (AS 2501.16)

The firm sent a positive confirmation request to the issuer's investment custodian which was returned by the issuer's recordkeeper. The firm did not evaluate the relevance and reliability of the confirmation response and whether alternative procedures were necessary because the confirmation was not obtained from the intended recipient. (AS 1105.04 and .06; AS 2310.31)

The firm did not identify and test any controls over the accuracy and completeness of reports that the issuer used in the performance of various controls that the firm tested over deposit liabilities. (AS 2201.39)

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

The issuer used external specialists to (1) determine the fair values of intangible assets acquired in a business combination completed during the year and (2) perform an impairment analysis of certain reporting units including the determination of the fair values of those reporting units. In each instance the estimated fair values were determined using issuer-prepared forecasted cash flows. The firm did not determine the likely sources of potential misstatement related to these forecasted cash flows and did not identify and test any controls that addressed the risks associated with the issuer's development of the forecasted cash flows. (AS 2201.30 and .39)

The firm's approach for testing the fair value of acquired intangible assets was to review and test management's process. The firm did not test the forecasted cash flows and the accuracy and completeness of other data that were provided to the external specialist. (AS 1210.12)

The firm's approach for testing the fair value of acquired intangible assets was to review and test management's process. The firm did not evaluate the reasonableness of the assumptions developed by the issuer or the external specialist. (AS 2502.26 and .28)

The firm selected for testing a control over the review of assigned loan grades. The loan grades were an important input in estimating the ALL. The firm did not evaluate the specific review procedures that the control owners performed to assess the reasonableness of the assigned loan grades. (AS 2201.42 and .44)

The sample size the firm used in its substantive procedures to test the reasonableness of the 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 deficiency in the firm's control testing discussed above. (AS 2315.19 .23 and .23A)

The firm selected for testing a control that consisted of the review of the qualitative component of the general reserve. 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 assigned loan grades to certain of its loans. The loan grades were an important input in determining whether a loan would be individually evaluated for impairment or considered as part of the general reserve. The following deficiencies were identified: · The firm selected for testing a control that consisted of the external loan review ('ELR') of assigned loan grades for certain loans. The firm did not evaluate the specific review procedures that the external loan reviewers performed to assess the reasonableness of the assigned loan grades. (AS 2201.42 and .44)

The issuer assigned loan grades to certain of its loans. The loan grades were an important input in determining whether a loan would be individually evaluated for impairment or considered as part of the general reserve. The following deficiencies were identified: · The firm selected for testing a control that consisted of the review of assigned loan grades for loans not subject to the ELR control discussed above. 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 assigned loan grades to certain of its loans. The loan grades were an important input in determining whether a loan would be individually evaluated for impairment or considered as part of the general reserve. The following deficiencies were identified: · The firm selected for testing a control that consisted of the review of assigned loan grades for loans not subject to the ELR control discussed above. The firm did not test the aspect of this control that addressed the accuracy and completeness of the reports used in the operation of this control. (AS 2201.42 and 44)

The issuer assigned loan grades to certain of its loans. The loan grades were an important input in determining whether a loan would be individually evaluated for impairment or considered as part of the general reserve. The following deficiencies were identified: · The sample size the firm used in its substantive procedures to test the reasonableness of the 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 2315.19 .23 and .23A)

The issuer recorded the fair values of securities based on the prices it received from an external pricing service. The firm selected for testing a control that consisted of for a judgmental sample of securities the comparison of these prices to prices obtained from another external pricing service. The firm did not evaluate whether the control was designed to address the risks of material misstatement presented by the securities not subject to the control given the selection method applied by the issuer. (AS 2201.42)

The firm selected for testing a control over the review of the fair value of the acquired intangible assets discussed above and concluded that it was deficient. The firm did not perform sufficient procedures to evaluate the severity of the control deficiency because it did not evaluate the magnitude of the potential misstatement resulting from the deficiency beyond relying on the results of its substantive procedures. (AS 2201.62)

The sample size the firm used in its substantive procedures to test 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 deficiency in the firm's control testing discussed above. (AS 2315.19 .23 and .23A)

During the year the issuer acquired a business and used an external specialist to determine the fair values of the acquired intangible assets and property plant and equipment ('PP&E'). The firm's approach for testing the fair value of these acquired assets was to review and test management's process. The firm did not perform any procedures beyond inquiring of management to test the forecasted cash flows that were provided to the external specialist. (AS 1210.12)

During the year the issuer acquired a business and used an external specialist to determine the fair values of the acquired intangible assets and property plant and equipment ('PP&E'). The firm's approach for testing the fair value of these acquired assets was to review and test management's process. The firm did not perform any procedures beyond inquiring of management to evaluate the reasonableness of the assumptions developed by the external specialist. (AS 2502.26 and .28)

The external specialist determined the fair value of the PP&E using an issuer-prepared asset listing. The firm did not sufficiently test the accuracy and completeness of the listing because it limited its procedures to comparing the asset listing to the PP&E roll-forward schedule and general ledger of the acquired business. (AS 1210.12)

The firm's substantive procedures to test certain inventory costs consisted of analytical procedures. The firm did not perform procedures to obtain evidence that the expectations it used would be predictive of the inventory costs as of year end. (AS 2305.13 and .14)

The firm's substantive procedures to test certain inventory costs consisted of analytical procedures. The firm did not test or in the alternative test controls over the accuracy and completeness of the data it used to develop its expectations. (AS 2305.16)

The firm did not sufficiently evaluate the reasonableness of the assumptions the issuer used to determine the fair value of certain investments because it limited its procedures to comparing the assumptions used at year end to those used in the third quarter and quantifying the effect of the differences. (AS 2502.26 and .28)

To address an identified fraud risk the firm selected investments for testing that exceeded a monetary threshold. The firm did not perform any procedures to address the fraud risk in the remaining population of investments. (AS 1105.27; AS 2301.13)

The firm's approach for testing the fair value of acquired intangible assets was to review and test management's process. The firm did not perform any procedures beyond inquiring of management to test the forecasted cash flows after the first forecasted year that were provided to the external specialist to value the acquired intangible assets. (AS 1210.12)

The firm selected for testing a control over the review of the issuer's annual goodwill impairment analysis. 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 firm selected for testing a control over the review of the issuer's annual goodwill impairment analysis. The firm did not identify and test any controls over the accuracy and completeness of certain information (other than forecasted cash flows which is discussed above) used in the operation of this control. (AS 2201.39)

The firm's approach for testing the issuer's annual goodwill impairment analysis was to review and test management's process. The firm did not perform any procedures beyond inquiring of management to test the forecasted cash flows after the first forecasted year that were provided to the external specialist to determine the fair value of the reporting units. (AS 1210.12)

The firm's approach for testing the issuer's annual goodwill impairment analysis was to review and test management's process. The firm did not test the carrying value of one of the issuer's reporting units. (AS 1210.12)

For revenue recognized from certain customers the firm did not perform procedures to determine whether the transactions selected for testing met the revenue recognition criteria. (AS 2301.08)

During the year the issuer acquired a business and used an external specialist to determine the fair values of the acquired intangible assets. The firm did not determine the likely sources of potential misstatement related to the accounting for the business combination and did not identify and test any controls that addressed the risks associated with the business combination. (AS 2201.30 and .39)

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 reserve component of the ALL including an assessment of the qualitative factors for reasonableness. The firm did not evaluate the specific review procedures that the control owner 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 one of the qualitative reserve components of the ALL using certain qualitative factors. The following deficiencies were identified: • The firm selected for testing a control that included the issuer's review of this qualitative reserve component of the ALL including an assessment of the qualitative factors for reasonableness. The firm did not evaluate the specific review procedures that the control owner performed to assess the reasonableness of these qualitative factors. (AS 2201.42 and .44)

For loans that were collectively evaluated for impairment the issuer determined one of the qualitative reserve components 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 related analysis of the factors 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 reviews of the qualitative factors. The firm did not evaluate the specific review procedures that the control owners performed to assess the reasonableness of certain adjustments that the issuer made to the calculation of these 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 did not perform procedures to evaluate certain adjustments that the issuer made to the calculation of these qualitative factors the issuer used to determine the reserve. (AS 2501.09 .10 and .11)

The issuer recognized revenue from customer contracts over time based on costs incurred to date relative to total estimated costs to complete the contracts. For certain of these contracts that were selected for testing the firm did not evaluate the reasonableness of the estimated costs to complete beyond (1) comparing for each contract the estimated costs to complete at year end to the estimated costs to complete at the subsequent month end and (2) inquiring of management. (AS 2501.07)

The issuer used an information-technology (IT) system to initiate process and record loan-related transactions. The firm selected for testing certain controls over the issuer's review of user access to this IT system but did not evaluate the specific procedures that the control owners performed to determine whether to grant access to users or whether the granted access continued to be appropriate. (AS 2201.42 and .44)

The firm relied on certain ITGCs including those over the issuer's online banking application and manual controls in its approach to testing certain deposit liabilities. The following deficiencies were identified: · The firm selected for testing a control over the origination of new deposit liability accounts. The firm did not include any new accounts originated in the online banking system in its testing. (AS 2301.19 and .21)

The firm relied on certain ITGCs including those over the issuer's online banking application and manual controls in its approach to testing certain deposit liabilities. The following deficiencies were identified: · The firm did not identify and test controls over the process for customers who elected to receive electronic statements. (AS 2301.16)

The firm sent confirmation requests to the issuer's customers for two samples of deposit liabilities. The following deficiencies were identified: · As a result of the deficiencies identified the firm did not sufficiently test the completeness of the deposit liabilities population that was used to select the samples to be confirmed. (AS 1105.10)

The firm sent confirmation requests to the issuer's customers for two samples of deposit liabilities. The following deficiencies were identified: · The sample sizes the firm used in its substantive procedures to test these deposit liabilities 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)

For loans that were collectively evaluated for impairment the issuer determined the qualitative reserve component of the ALL using certain qualitative factors. The firm's approach for substantively testing the qualitative component of the ALL was to test the issuer's process. The firm did not evaluate whether the issuer had a reasonable basis for the basis points used for the qualitative factors and for its selection of basis points from a range of potential basis points. (AS 2501.16)

The firm selected for testing a control that consisted of the issuer's review of assumptions used to determine the qualitative adjustments used to estimate the ALL for loans collectively evaluated for impairment. The firm did not evaluate the specific review procedures that the control owners performed to assess the reasonableness of certain of these assumptions. (AS 2201.42 and .44)

The firm selected for testing a control that consisted of the issuer's review of assumptions used to determine the qualitative adjustments used to estimate the ALL for loans collectively evaluated for impairment. Due to the deficiencies in the firm's testing of the IT general controls (ITGCs) the firm did not sufficiently test controls over the accuracy and completeness of certain reports used in the operation of these controls. (AS 2201.46)

For loans collectively evaluated for impairment the firm's approach for substantively testing the ALL was to test the issuer's process. The following deficiencies were identified: · For one component of the issuer's qualitative reserve the firm did not evaluate whether the issuer had a reasonable basis for certain significant assumptions used and whether those assumptions were consistent with relevant industry regulatory and other external factors including economic conditions; existing market information; and/or other significant assumptions used by the issuer. (AS 2501.16)