- Inspection year
- 2021
- Report date
- 26-Jul-2022
- PCAOB release
- 104-2022-163
- Audits reviewed
- 4
- Audits w/ Part I.A deficiencies
- 3
- Part I.A deficiency rate
- 75%
- Part I.A deficiencies
- 5
- Part I.B deficiencies
- —
- Report
- View PDF ↗
Deficiencies (5)
Grouped by issuer and in the same order as the PCAOB report, so each item ties back directly to the source.
Issuer A3 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Allowance for Credit/Loan Losses | The issuer determined the ALL using qualitative factors and applied basis points in determining each of the qualitative factors. The firm's approach for substantively testing the ALL was to test the issuer's process. The firm did not sufficiently evaluate the reasonableness of significant assumptions related to the basis points because the firm did not evaluate whether the issuer had a reasonable basis for the basis points that were applied to the qualitative factors. (AS 2501.16) Financial statement audit only | AS 2501.16 | |
| 2 | Deposits | The firm took a controls reliance approach to test the existence of deposits. The firm did not identify and test any controls over the existence of deposits. (AS 2301.16) Financial statement audit only | AS 2301.16 | |
| 3 | Deposits | The firm used negative confirmations to substantively test the existence of deposits. This procedure and sample size did not provide sufficient appropriate audit evidence because they were 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 2310.20; AS 2315.16 .23 and .23A) Financial statement audit only | AS 2301.16; AS 2301.18; AS 2301.37; AS 2310.20; AS 2315.16; AS 2315.23; AS 2315.23A |
Issuer B1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Allowance for Credit/Loan Losses | 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 basis points that were applied to determine the qualitative component of the ALL because it limited its procedures to (1) reading the issuer's analysis (2) testing the economic and loan portfolio trends and (3) concluding that changes to the basis points applied to determine the qualitative component or lack thereof were reasonable. (AS 2501.09 .10 and .11) [This citation refers to AS 2501 Auditing Accounting Estimates which was in effect for this audit. This standard was replaced by AS 2501 Auditing Accounting Estimates Including Fair Value Measurements which became effective for audits of financial statements ending on or after December 15 2020.] Financial statement audit only | AS 2501.9; AS 2501.10; AS 2501.11 |
Issuer C1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Investments | 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) Financial statement audit only | AS 1105.27; AS 2301.8 |