- Inspection year
- 2024
- Report date
- 27-Sep-2024
- PCAOB release
- 104-2024-158
- Audits reviewed
- 2
- Audits w/ Part I.A deficiencies
- 2
- Part I.A deficiency rate
- 100%
- Part I.A deficiencies
- 14
- Part I.B deficiencies
- 1
- 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 A10 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Allowance for Credit/Loan Losses | The issuer determined the qualitative component of the ALL by applying basis points to qualitative factors. The following deficiency was identified: · The firm selected for testing a review control over the qualitative component of the ALL. The firm did not evaluate the specific review procedures that the control owners performed to evaluate the reasonableness of the basis points applied to each qualitative factor. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | Significant risk |
| 2 | Allowance for Credit/Loan Losses | The issuer determined the qualitative component of the ALL by applying basis points to qualitative factors. The following deficiency was identified: · 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 significant assumptions related to basis points applied to the qualitative factors. (AS 2501.16) Both financial statement and ICFR audits | AS 2501.16 | Significant risk |
| 3 | Allowance for Credit/Loan Losses | Loan risk ratings were an important input in estimating the issuer's ALL. The following deficiency was identified: · The firm selected for testing a review control to address the risk related to inaccurate loan risk ratings. The firm did not evaluate the specific review procedures that the control owners performed to evaluate whether the loan risk ratings reviews were occurring timely. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | Significant risk |
| 4 | Allowance for Credit/Loan Losses | Loan risk ratings were an important input in estimating the issuer's ALL. The following deficiency was identified: · The sample size the firm used in its substantive procedure to test the reasonableness of loan risk ratings was too small to provide sufficient appropriate audit evidence because the procedure was 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) Both financial statement and ICFR audits | AS 2301.16; AS 2301.18; AS 2301.37; AS 2315.19; AS 2315.23; AS 2315.23A | Significant risk |
| 5 | Allowance for Credit/Loan Losses | The issuer's ALL included reserves for impaired loans. The following deficiency was identified: · The firm selected for testing a control that included the review of impaired loans. The firm did not evaluate the specific review procedures that the control owners performed to evaluate whether impaired loans were appropriately reserved including the review of support for the collateral value of the loans. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | Significant risk |
| 6 | Allowance for Credit/Loan Losses | The issuer's ALL included reserves for impaired loans. The following deficiency was identified: · The sample size the firm used in its substantive procedure to test the valuation of impaired loans was too small to provide sufficient appropriate audit evidence because the procedure was 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) Both financial statement and ICFR audits | AS 2301.16; AS 2301.18; AS 2301.37; AS 2315.19; AS 2315.23; AS 2315.23A | Significant risk |
| 7 | Allowance for Credit/Loan Losses | The issuer engaged valuation specialists to determine the fair value of the collateral for impaired loans. The following deficiency was identified: · The firm did not perform any procedures to evaluate the reasonableness of the significant assumptions developed and used by the company's specialists. (AS 1105.A8b) Both financial statement and ICFR audits | AS 1105.A8b | Significant risk |
| 8 | Allowance for Credit/Loan Losses | The issuer engaged valuation specialists to determine the fair value of the collateral for impaired loans. The following deficiency was identified: · The firm did not test the accuracy and completeness of certain issuer-produced data used by the company's specialists. (AS 1105.A8a) Both financial statement and ICFR audits | AS 1105.A8a | Significant risk |
| 9 | Allowance for Credit/Loan Losses | The issuer engaged valuation specialists to determine the fair value of the collateral for impaired loans. The following deficiency was identified: · The firm did not evaluate the relevance and reliability of certain data from external sources used by the company's specialists. (AS 1105.A8a) Both financial statement and ICFR audits | AS 1105.A8a | Significant risk |
| 10 | Allowance for Credit/Loan Losses | The issuer engaged valuation specialists to determine the fair value of the collateral for impaired loans. The following deficiency was identified: · The firm did not perform any procedures to evaluate whether the issuer had a reasonable basis for the significant assumptions it developed related to the adjustments the issuer made to the valuation of collateral. (AS 2501.16) Both financial statement and ICFR audits | AS 2501.16 | Significant risk |
Issuer B4 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Allowance for Credit/Loan Losses | The firm selected for testing a control that consisted of management's reviews of the ACL. The firm did not evaluate the specific review procedures that the control owners performed to evaluate the reasonableness of the qualitative component of the ACL. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | Significant risk |
| 2 | Allowance for Credit/Loan Losses | The issuer used certain data to determine the quantitative component of the ACL. The firm did not identify and test any controls over the accuracy and/or completeness of this data. (AS 2201.39) In addition the firm used this data to substantively test the ACL. The firm did not perform any procedures to test or (as discussed above) identify and test any controls over the accuracy of this data. (AS 2301.08) Both financial statement and ICFR audits | AS 2201.39 | Significant risk |
| 3 | Allowance for Credit/Loan Losses | The issuer used certain data to determine the quantitative component of the ACL. In addition the firm used this data to substantively test the ACL. The firm did not perform any procedures to test or (as discussed above) identify and test any controls over the accuracy of this data. (AS 2301.08) Both financial statement and ICFR audits | AS 2301.8 | Significant risk |
| 4 | Investment Securities | The firm did not perform any substantive procedures to test the valuation of certain investment securities including some accounted for at fair value. (AS 2301.08; AS 2501.07) Both financial statement and ICFR audits | AS 2301.8; AS 2501.7 |