- Inspection year
- 2023
- Report date
- 19-Dec-2024
- PCAOB release
- 104-2025-019
- Audits reviewed
- 10
- Audits w/ Part I.A deficiencies
- 9
- Part I.A deficiency rate
- 90%
- Part I.A deficiencies
- 38
- Part I.B deficiencies
- 2
- Report
- View PDF ↗
Deficiencies (38)
Grouped by issuer and in the same order as the PCAOB report, so each item ties back directly to the source.
Issuer A8 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Allowance for Credit/Loan Losses | The issuer's ALL included a qualitative reserve based on various qualitative factors. The following deficiency was identified: · The firm selected for testing two review controls over the issuer's determination of the qualitative reserve. The firm did not evaluate the specific review procedures that the control owners performed to evaluate the reasonableness of the assumptions used to develop the qualitative factors used in determining the qualitative reserve. (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's ALL included a qualitative reserve based on various qualitative factors. The following deficiency was identified: · The firm did not perform procedures to evaluate whether the issuer had a reasonable basis for the significant assumptions used to determine the qualitative reserve beyond obtaining and reading an issuer-prepared narrative. (AS 2501.16) Both financial statement and ICFR audits | AS 2501.16 | Significant risk |
| 3 | Allowance for Credit/Loan Losses | The issuer monitored loan delinquency and used that information to identify potential problem loans for impairment evaluation. The firm did not identify and test any controls over the identification and classification of past due loans within the issuer's loan system. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | Significant risk |
| 4 | Investment Securities | The firm selected for testing a control over the review of potential other-than-temporary-impairment on available-for-sale investment securities. 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) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 5 | Investment Securities | The firm did not sufficiently evaluate a departure from GAAP related to the issuer's recording of certain available-for-sale investment securities at par value rather than fair value in accordance with FASB ASC Topic 320 Investments — Debt Securities because it did not evaluate whether the uncorrected misstatement was material taking into account relevant quantitative and qualitative considerations in materiality judgments. (AS 2810.17 .30 and .31) Both financial statement and ICFR audits | AS 2810.17; AS 2810.30; AS 2810.31 | |
| 6 | Investment Securities | The firm engaged a specialist to evaluate the fair value hierarchy classifications for the issuer's available-for-sale investment securities. The firm did not perform additional procedures beyond consideration of directional risk or request that the auditor-engaged specialist perform additional procedures to address the specialist's findings that appeared to contradict the issuer's presentation of these investment securities within the fair value hierarchy. (AS 1210.12; AS 2301.08) Both financial statement and ICFR audits | AS 1210.12; AS 2301.8 | |
| 7 | Journal Entries | The firm identified a deficiency related to the ability of individuals to post journal entries without review or approval. The firm tested two controls that it believed would compensate for this deficiency but did not identify that these controls did not address the risk of material misstatement related to unapproved journal entries. (AS 2201.68) Both financial statement and ICFR audits | AS 2201.68 | |
| 8 | Journal Entries | The firm identified fraud criteria for journal entries and obtained a listing of all journal entries that met the criteria. The firm selected for testing certain journal entries that met the criteria. The firm did not perform sufficient substantive procedures to test journal entries because it did not have an appropriate rationale for limiting its procedures to certain journal entries that met the fraud criteria. (AS 2401.61) Both financial statement and ICFR audits | AS 2401.61 |
Issuer B14 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Inventory | The issuer performed cycle counts of inventory at a location. The following deficiency was identified: · The firm did not identify and test any controls that addressed whether all of the inventory items were assigned a frequency to be counted and the appropriateness of the assignment. (AS 2201.39) Unrelated to our review the issuer reevaluated its controls over inventory and concluded that material weaknesses existed that had not been previously identified. The issuer subsequently reflected these material weaknesses in a revision to its report on ICFR and the firm revised its opinion on the effectiveness of the issuer's ICFR to express an adverse opinion and reissued its report. Both financial statement and ICFR audits | AS 2201.39 | Significant risk |
| 2 | Inventory | The issuer performed cycle counts of inventory at a location. The following deficiency was identified: · The firm did not identify and test any controls over the issuer's review of cycle count results including any related inventory adjustments. (AS 2201.39) Unrelated to our review the issuer reevaluated its controls over inventory and concluded that material weaknesses existed that had not been previously identified. The issuer subsequently reflected these material weaknesses in a revision to its report on ICFR and the firm revised its opinion on the effectiveness of the issuer's ICFR to express an adverse opinion and reissued its report. Both financial statement and ICFR audits | AS 2201.39 | Significant risk |
| 3 | Inventory | The issuer performed cycle counts of inventory at a location. The following deficiency was identified: · Due to the deficiencies described the firm did not obtain sufficient appropriate audit evidence that the cycle-count procedures the issuer used for this inventory were sufficiently reliable to produce results substantially the same as those that would have been obtained by a count of all items each year. (AS 2510.11) Both financial statement and ICFR audits | AS 2510.11 | Significant risk |
| 4 | Inventory | The issuer performed cycle counts of inventory at other locations. The firm identified deficiencies in the design and operating effectiveness of these controls at year end. The following deficiency was identified: · The firm identified and tested various review controls that it believed would mitigate the deficiencies. The firm did not perform procedures to 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 2201.68) Unrelated to our review the issuer reevaluated its controls over inventory and concluded that material weaknesses existed that had not been previously identified. The issuer subsequently reflected these material weaknesses in a revision to its report on ICFR and the firm revised its opinion on the effectiveness of the issuer's ICFR to express an adverse opinion and reissued its report. Both financial statement and ICFR audits | AS 2201.68 | Significant risk |
| 5 | Inventory | The issuer performed cycle counts of inventory at other locations. The firm identified deficiencies in the design and operating effectiveness of these controls at year end. The following deficiency was identified: · The firm identified and tested various review controls that it believed would mitigate the deficiencies. The firm did not identify and test any controls over the accuracy and completeness of the information used in these reviews. (AS 2201.68) Unrelated to our review the issuer reevaluated its controls over inventory and concluded that material weaknesses existed that had not been previously identified. The issuer subsequently reflected these material weaknesses in a revision to its report on ICFR and the firm revised its opinion on the effectiveness of the issuer's ICFR to express an adverse opinion and reissued its report. Both financial statement and ICFR audits | AS 2201.68 | Significant risk |
| 6 | Inventory | The issuer performed cycle counts of inventory at other locations. The firm identified deficiencies in the design and operating effectiveness of these controls at year end. The following deficiency was identified: · For one of these locations the firm attended the cycle counts at year end and performed test count procedures. The sample size the firm used for its test count procedures was too small to provide sufficient appropriate audit evidence over the existence of inventory because the firm did not take into account the relevant factors in determining its sample size including tolerable misstatement for the population the allowable risk of incorrect acceptance and the characteristics of the population. (AS 2315.16 .19 .23 and .23A) Both financial statement and ICFR audits | AS 2315.16; AS 2315.19; AS 2315.23; AS 2315.23A | Significant risk |
| 7 | Inventory | The issuer performed cycle counts of inventory at other locations. The firm identified deficiencies in the design and operating effectiveness of these controls at year end. The following deficiency was identified: · For two of these locations the firm did not perform any substantive procedures to test the existence of inventory at year end. (AS 2301.08 and .11) Both financial statement and ICFR audits | AS 2301.8; AS 2301.11 | Significant risk |
| 8 | Inventory | The firm did not identify and test any controls for certain locations where the issuer performed full physical inventory observations. (AS 2201.39) Unrelated to our review the issuer reevaluated its controls over inventory and concluded that material weaknesses existed that had not been previously identified. The issuer subsequently reflected these material weaknesses in a revision to its report on ICFR and the firm revised its opinion on the effectiveness of the issuer's ICFR to express an adverse opinion and reissued its report. Both financial statement and ICFR audits | AS 2201.39 | Significant risk |
| 9 | Inventory | For one of these locations the firm observed the physical inventory counts and selected a sample of inventory items for testing. The sample size the firm used was too small to provide sufficient appropriate audit evidence over the existence of inventory because the firm did not take into account the relevant factors in determining its sample size including tolerable misstatement for the population the allowable risk of incorrect acceptance and the characteristics of the population. (AS 2315.16 .19 .23 and .23A) Both financial statement and ICFR audits | AS 2315.16; AS 2315.19; AS 2315.23; AS 2315.23A | Significant risk |
| 10 | Inventory | For one other location the firm did not perform any substantive procedures to test the existence of inventory at year end. (AS 2301.08 and .11) Both financial statement and ICFR audits | AS 2301.8; AS 2301.11 | Significant risk |
| 11 | Inventory | The firm selected for testing a control over the review of inventory reserves. The firm did not evaluate the specific review procedures that the control owners performed to evaluate the reasonableness of the inventory reserve. (AS 2201.42 and .44) Unrelated to our review the issuer reevaluated its controls over inventory and concluded that material weaknesses existed that had not been previously identified. The issuer subsequently reflected these material weaknesses in a revision to its report on ICFR and the firm revised its opinion on the effectiveness of the issuer's ICFR to express an adverse opinion and reissued its report. Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | Significant risk |
| 12 | Inventory | The firm selected for testing a control over the review of inventory reserves. The firm did not identify and test any controls over the accuracy and completeness of information used in the operation of this control (AS 2201.39) Unrelated to our review the issuer reevaluated its controls over inventory and concluded that material weaknesses existed that had not been previously identified. The issuer subsequently reflected these material weaknesses in a revision to its report on ICFR and the firm revised its opinion on the effectiveness of the issuer's ICFR to express an adverse opinion and reissued its report. Both financial statement and ICFR audits | AS 2201.39 | Significant risk |
| 13 | Inventory | The firm's approach for substantively testing inventory reserves was to test the issuer's process used to develop the reserve. The firm did not perform procedures to test or identify and test any controls over the completeness of certain information it used to substantively test the inventory reserve. (AS 1105.10) Both financial statement and ICFR audits | AS 1105.10 | Significant risk |
| 14 | Inventory | The firm's approach for substantively testing inventory reserves was to test the issuer's process used to develop the reserve. The firm did not perform procedures beyond inquiry to evaluate the reasonableness of significant assumptions used to determine the inventory reserve. (AS 2501.16) Both financial statement and ICFR audits | AS 2501.16 | Significant risk |
Issuer C2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Allowance for Credit/Loan Losses | The issuer used certain qualitative factors to determine the qualitative component of the ALL. The firm's approach for substantively testing the qualitative component of the ALL was to test the issuer's process and develop an independent expectation. The following deficiency was identified: · The firm did not evaluate whether the issuer had a reasonable basis for certain significant assumptions related to basis points assigned to qualitative factors used to determine the qualitative component of the ALL. (AS 2501.16) Financial statement audit only | AS 2501.16 | Significant risk |
| 2 | Allowance for Credit/Loan Losses | The issuer used certain qualitative factors to determine the qualitative component of the ALL. The firm's approach for substantively testing the qualitative component of the ALL was to test the issuer's process and develop an independent expectation. The following deficiency was identified: · The firm did not perform any procedures to demonstrate it had a reasonable basis for the assumptions it used in determining its independent expectation. (AS 2501.22) Financial statement audit only | AS 2501.22 | Significant risk |
Issuer D2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Allowance for Credit/Loan Losses | The issuer used loan risk ratings to estimate its ACL. The firm did not identify and test any controls that addressed the reasonableness of loan risk ratings. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 2 | Control Deficiencies | The firm identified control deficiencies related to significant accounts and in areas of significant risk. The firm did not sufficiently evaluate the severity of these control deficiencies because it did not evaluate the magnitude of the potential misstatements resulting from the deficiencies. (AS 2201.62) Both financial statement and ICFR audits | AS 2201.62 |
Issuer E2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Investment Securities | The firm engaged a specialist to evaluate the fair value hierarchy classifications for the issuer's investment securities. The firm did not perform procedures beyond quantifying the differences in fair value or request that the auditor-engaged specialist perform additional procedures to address the specialist's findings that appeared to contradict the issuer's presentation of these investment securities within the fair value hierarchy. (AS 1210.12; AS 2301.08) Financial statement audit only | AS 1210.12; AS 2301.8 | |
| 2 | 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 evaluating the journal entry descriptions. (AS 2401.61) Financial statement audit only | AS 2401.61 |
Issuer F4 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Long-Lived Assets | The issuer engaged an external specialist to develop estimates related to certain long-lived assets. The firm's approach for substantively testing this estimate was to test the issuer's process. The following deficiency was identified: · The firm did not perform any procedures to test the accuracy and completeness of certain issuer-produced data and evaluate the relevance and reliability of certain data from external sources that the company's specialist used. (AS 1105.A8a) Financial statement audit only | AS 1105.A8a | Significant risk |
| 2 | Long-Lived Assets | The issuer engaged an external specialist to develop estimates related to certain long-lived assets. The firm's approach for substantively testing this estimate was to test the issuer's process. The following deficiency was identified: · The firm did not perform any procedures to evaluate the reasonableness of certain significant assumptions developed by the issuer and the company's specialist. (AS 1105.A8b; AS 2501.16) Financial statement audit only | AS 1105.A8b; AS 2501.16 | Significant risk |
| 3 | Long-Lived Assets | The issuer engaged an external specialist to develop estimates related to certain long-lived assets. The firm's approach for substantively testing this estimate was to test the issuer's process. The following deficiency was identified: · The firm did not perform procedures to evaluate the reasonableness of certain components of other significant assumptions developed by the issuer and used by the company's specialist. (AS 2501.16) Financial statement audit only | AS 2501.16 | Significant risk |
| 4 | Long-Lived Assets | The issuer engaged an external specialist to develop estimates related to certain long-lived assets. The firm's approach for substantively testing this estimate was to test the issuer's process. The following deficiency was identified: · The firm did not perform any procedures beyond inquiry to evaluate whether the methods used by the company's specialist were appropriate under the circumstances. (AS 1105.A8c) Financial statement audit only | AS 1105.A8c | Significant risk |
Issuer G4 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Allowance for Credit/Loan Losses | The issuer reported an ACL that included both a quantitative and qualitative component. The issuer used certain qualitative factors including assigned loan risk grades to determine the qualitative component of the ACL. The following deficiency was identified: · The firm selected for testing a review control over the qualitative reserve. The firm did not evaluate the specific review procedures the control owners performed to evaluate the reasonableness of the basis points applied to the qualitative factors. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 2 | Allowance for Credit/Loan Losses | The issuer reported an ACL that included both a quantitative and qualitative component. The issuer used certain qualitative factors including assigned loan risk grades to determine the qualitative component of the ACL. The following deficiency was identified: · The firm selected for testing a control that consisted of the issuer's review of loans including a review of the reasonableness of assigned loan risk grades. This control included a determination of which loans would be subject to a review of the assigned loan risk grades. The firm did not assess the effect of the issuer excluding certain loans from review of the assigned loan risk grades on the control's ability to effectively prevent or detect a material misstatement. (AS 2201.42) Both financial statement and ICFR audits | AS 2201.42 | |
| 3 | Allowance for Credit/Loan Losses | The issuer reported an ACL that included both a quantitative and qualitative component. The issuer used certain qualitative factors including assigned loan risk grades to determine the qualitative component of the ACL. The following deficiency was identified: · The firm did not perform procedures to evaluate whether the issuer had a reasonable basis for the significant assumptions related to basis points applied to the qualitative factors beyond obtaining and reading an issuer-prepared narrative. (AS 2501.16) Both financial statement and ICFR audits | AS 2501.16 | |
| 4 | Allowance for Credit/Loan Losses | The issuer reported an ACL that included both a quantitative and qualitative component. The issuer used certain qualitative factors including assigned loan risk grades to determine the qualitative component of the ACL. The following deficiency was identified: · The firm did not perform any procedures to evaluate the reasonableness of a significant assumption used to develop the quantitative component. (AS 2501.16) Both financial statement and ICFR audits | AS 2501.16 |
Issuer H1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Allowance for Credit/Loan Losses | The issuer used loan risk ratings to estimate its ACL. The firm did not identify and test any controls over the reasonableness of loan risk ratings. (AS 2201.39) ICFR audit only | AS 2201.39 | Significant risk |
Issuer I1 deficiency
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The firm did not perform procedures to test the accuracy and completeness of certain issuer-produced reports beyond testing their mathematical accuracy that the issuer used to identify performance obligations and allocate transaction prices to those obligations and the firm used in its substantive procedures. (AS 1105.10) Financial statement audit only | AS 1105.10 |