- Inspection year
- 2021
- Report date
- 16-Nov-2022
- PCAOB release
- 104-2023-002
- Audits reviewed
- 17
- Audits w/ Part I.A deficiencies
- 3
- Part I.A deficiency rate
- 18%
- Part I.A deficiencies
- 14
- Part I.B deficiencies
- 2
- Report
- View PDF ↗
Deficiencies (14)
Grouped by issuer and in the same order as the PCAOB report, so each item ties back directly to the source.
Issuer A5 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Allowance for Credit/Loan Losses | 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) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 2 | Allowance for Credit/Loan Losses | 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) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 3 | Allowance for Credit/Loan Losses | 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) Both financial statement and ICFR audits | AS 2201.46 | |
| 4 | Allowance for Credit/Loan Losses | 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) Both financial statement and ICFR audits | AS 2501.16 | |
| 5 | Allowance for Credit/Loan Losses | 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 another component the firm did not evaluate whether the issuer had a reasonable basis for significant assumptions related to the basis points used for the qualitative base adjustment and for its selection of basis points from a range of potential basis points. (AS 2501.16) Both financial statement and ICFR audits | AS 2501.16 |
Issuer B8 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Deposit Liabilities | 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 ITGCs over the issuer's online banking application. (AS 2301.16) Financial statement audit only | AS 2301.16 | |
| 2 | Deposit Liabilities | 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 monitoring of the transfer of data from the teller system to the general ledger. The firm did not evaluate whether the control was designed to address the risk related to the completeness of the data transferred. (AS 2301.19) Financial statement audit only | AS 2301.19 | |
| 3 | Deposit Liabilities | 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 controls over user access to the general ledger. The firm did not evaluate the specific review procedures that the control owners performed to determine whether to initially grant access and whether previously granted access continued to be appropriate. (AS 2301.19 and .21) Financial statement audit only | AS 2301.19; AS 2301.21 | |
| 4 | Deposit Liabilities | 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 controls over change management. The firm did not test or in the alternative test controls over the completeness of the population of changes that the firm used in its testing of these controls. (AS 1105.10) Financial statement audit only | AS 1105.10 | |
| 5 | Deposit Liabilities | 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) Financial statement audit only | AS 2301.19; AS 2301.21 | |
| 6 | Deposit Liabilities | 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) Financial statement audit only | AS 2301.16 | |
| 7 | Deposit Liabilities | 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) Financial statement audit only | AS 1105.10 | |
| 8 | Deposit Liabilities | 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) Financial statement audit only | AS 2301.16; AS 2301.18; AS 2301.37; AS 2315.19; AS 2315.23; AS 2315.23A |
Issuer C1 deficiency
| # | 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 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) Financial statement audit only | AS 2501.16 |