- Inspection year
- 2021
- Report date
- 20-Oct-2022
- PCAOB release
- 104-2022-243a
- Audits reviewed
- 2
- Audits w/ Part I.A deficiencies
- 2
- Part I.A deficiency rate
- 100%
- 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 A4 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Allowance for Credit/Loan Losses | For loans that were collectively evaluated for impairment the issuer determined the qualitative reserve component of the ALL using qualitative factors. The firm's approach for substantively testing this reserve was to review and test management's process. The firm did not perform procedures to evaluate the reasonableness of the basis points for each qualitative factor that were applied to determine the qualitative component beyond comparing these basis points to the basis points that were applied in prior years and assessing whether certain changes or lack thereof to the basis points from the prior year were directionally consistent with internal or external data. (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 for fiscal years ending on or after December 15 2020] Both financial statement and ICFR audits | AS 2501.9; AS 2501.10; AS 2501.11 | |
| 2 | Loans and Deposits | The issuer used a service organization to process and record transactions related to loans and deposits. This service organization used a sub-service organization to provide information technology general controls for the issuer and the systems used by the issuer. The controls for the sub-service organization were not addressed in the service auditor's report. The firm did not determine whether it was necessary to obtain an understanding of or test any relevant controls at the sub-service organization. (AS 2201.39 and .B19) Both financial statement and ICFR audits | AS 2201.39; AS 2201.B19 | |
| 3 | Loans and Deposits | To test the existence of loans and completeness of deposits the firm circulated positive confirmations. For confirmations that were not returned the firm performed alternative procedures using certain data and reports from the service organization. As a result of the deficiencies discussed above the firm did not sufficiently test the accuracy of the data and reports used. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 | |
| 4 | Journal Entries | The firm identified fraud criteria for journal entries and obtained a listing of all journal entries that met the criteria. The firm did not perform sufficient substantive procedures to test those journal entries because it limited its procedures to certain journal entries without having an appropriate rationale for limiting its testing to those journal entries. (AS 2401.61) Both financial statement and ICFR audits | AS 2401.61 |
Issuer B1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Significant Estimates | The issuer engaged external service providers to provide investment accounting services and serve as custodian for its investment securities including providing the fair values for its securities. Both external service providers obtained security pricing from other pricing providers. The firm used the pricing information from these pricing providers as audit evidence. The firm did not evaluate whether the pricing information provided sufficient appropriate evidence because it did not evaluate the relevance of the pricing information obtained from these pricing providers. (AS 2501.20 .A2 and .A5) Financial statement audit only | AS 2501.16; AS 2501.20; AS 2501.A2; AS 2501.A5 |