- Inspection year
- 2024
- Report date
- 25-Jun-2025
- PCAOB release
- 104-2025-103
- Audits reviewed
- 14
- Audits w/ Part I.A deficiencies
- 10
- Part I.A deficiency rate
- 71%
- Part I.A deficiencies
- 36
- Part I.B deficiencies
- 5
- Report
- View PDF ↗
Deficiencies (36)
Grouped by issuer and in the same order as the PCAOB report, so each item ties back directly to the source.
Issuer A7 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Allowance for Credit/Loan Losses | The firm selected for testing two controls over the issuer's determination of the ACL. The issuer used certain system-generated reports that it obtained from an application that was hosted by a service organization in the performance of these controls. The firm obtained the service auditor's report for this service organization and identified certain complementary user controls related to user access that the service auditor's report described as necessary. The firm identified control deficiencies in its testing of these complementary user controls and selected for testing a compensating control that consisted of the issuer's review of user access. The firm did not identify and test any controls over the accuracy and completeness of the user population used in the operation of this compensating control. (AS 2201.68) Both financial statement and ICFR audits | AS 2201.68 | |
| 2 | Allowance for Credit/Loan Losses | For loans that were collectively evaluated for impairment the issuer determined the qualitative reserve component of the ACL using certain qualitative factors. The firm's approach for substantively testing the qualitative component of the ACL was to test the issuer's process. The following deficiencies were identified: · The firm tested one of the issuer's controls over the determination of the ACL during an interim period. The firm did not evaluate the specific review procedures that the control owners performed to evaluate the reasonableness of certain significant assumptions related to the qualitative factors. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 3 | Allowance for Credit/Loan Losses | For loans that were collectively evaluated for impairment the issuer determined the qualitative reserve component of the ACL using certain qualitative factors. The firm's approach for substantively testing the qualitative component of the ACL was to test the issuer's process. The following deficiencies were identified: · The firm tested one of the issuer's controls over the determination of the ACL during an interim period. The firm did not perform procedures to update the results of its testing from the interim date to year end. (AS 2201.55) Both financial statement and ICFR audits | AS 2201.55 | |
| 4 | Allowance for Credit/Loan Losses | For loans that were collectively evaluated for impairment the issuer determined the qualitative reserve component of the ACL using certain qualitative factors. The firm's approach for substantively testing the qualitative component of the ACL was to test the issuer's process. The following deficiencies were identified: · The firm did not evaluate whether the issuer had a reasonable basis for certain significant assumptions related to the qualitative factors. (AS 2501.16) Both financial statement and ICFR audits | AS 2501.16 | |
| 5 | Investment Securities | The firm did not identify and test any controls over the issuer's determination of the categorization of its available-for-sale (AFS) securities within the fair value hierarchy as set forth in FASB ASC Topic 820 Fair Value Measurement. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 6 | Investment Securities | The firm selected for testing a control that consisted of the issuer's review of the fair values of a sample of AFS securities. The firm did not assess whether the extent and timing of the issuer's review was sufficient to address the risks of material misstatement. Further the firm did not evaluate whether the items identified for follow up by the control owner were appropriately resolved. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | |
| 7 | Investment Securities | The sample size the firm used in its substantive procedures to test the fair values of these securities was too small to provide sufficient appropriate audit evidence because the 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) Both financial statement and ICFR audits | AS 2301.16; AS 2301.18; AS 2301.37; AS 2315.19; AS 2315.23; AS 2315.23A |
Issuer B2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Allowance for Credit/Loan Losses | The firm selected for testing a control that consisted of the issuer'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 assumptions used to develop 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 estimated the ACL using various significant assumptions. The firm did not evaluate whether the issuer had a reasonable basis for certain significant assumptions it used. (AS 2501.16) Both financial statement and ICFR audits | AS 2501.16 | Significant risk |
Issuer C3 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Allowance for Credit/Loan Losses | The firm selected for testing a control that included the issuer's reviews of certain assumptions used to estimate the quantitative component of the ACL. In evaluating the design of this control the firm did not evaluate whether a threshold that the control owner used to identify items for investigation was sufficiently precise to detect material misstatements. (AS 2201.42) Both financial statement and ICFR audits | AS 2201.42 | Significant risk |
| 2 | Allowance for Credit/Loan Losses | The firm selected for testing a control that included the issuer's reviews of certain assumptions used to estimate the quantitative component of the ACL. In evaluating the design of this control the firm did not evaluate the specific review procedures that the control owner performed to evaluate the relevance of external information used in the operation of this control. (AS 2201.42 and .44) Both financial statement and ICFR audits | AS 2201.42; AS 2201.44 | Significant risk |
| 3 | Allowance for Credit/Loan Losses | The firm did not perform sufficient substantive procedures to evaluate the reasonableness of certain significant assumptions the issuer used to estimate the ACL because the firm did not evaluate (1) whether the assumptions were consistent with other external factors including economic conditions and (2) the relevance of certain market information the issuer used. (AS 1105.04 and .06; AS 2501.16) Both financial statement and ICFR audits | AS 1105.4; AS 1105.6; AS 2501.16 | Significant risk |
Issuer D2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Business Combinations | During the year the issuer acquired a business. The following deficiencies were identified: · The firm did not identify and test any controls over certain assets acquired and liabilities assumed as of the acquisition date. (AS 2201.39) Both financial statement and ICFR audits | AS 2201.39 | |
| 2 | Business Combinations | During the year the issuer acquired a business. The following deficiencies were identified: · The issuer engaged a specialist to determine the fair values of certain acquired assets as of the acquisition date. The firm did not perform procedures to test or test controls over the accuracy of certain issuer-produced data used by the company's specialist to determine the fair values of these assets. (AS 1105.A8a) Both financial statement and ICFR audits | AS 1105.A8a |
Issuer E6 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Allowance for Credit/Loan Losses | The issuer assigned each loan a loan risk rating which was an important input in estimating the quantitative component of the ACL. The firm selected for testing a control that included the issuer's reviews of loan risk ratings and tested the control at an interim date. The firm did not perform procedures to update the results of its testing from the interim date to year end. (AS 2201.55) ICFR audit only | AS 2201.55 | |
| 2 | Business Combinations | During the year the issuer acquired a business. The firm selected for testing a control that included the issuer's review of the fair values of acquired assets and the related significant assumptions. The firm did not evaluate the specific review procedures that the control owner performed to assess the reasonableness of certain of these significant assumptions. (AS 2201.42 and .44) ICFR audit only | AS 2201.42; AS 2201.44 | Significant risk |
| 3 | Business Combinations | During the year the issuer acquired a business. The firm selected for testing a control that included the issuer's review of the fair values of acquired assets and the related significant assumptions. The firm did not identify and test any controls over the accuracy and completeness of the data used in the operation of this control. (AS 2201.39) ICFR audit only | AS 2201.39 | Significant risk |
| 4 | Business Combinations | The firm also selected for testing a control that included the issuer's review of the loan risk ratings assigned to the acquired loans. The firm did not evaluate the specific review procedures that the control owners performed to assess the reasonableness of these loan risk ratings. (AS 2201.42 and .44) ICFR audit only | AS 2201.42; AS 2201.44 | Significant risk |
| 5 | Business Combinations | The firm also selected for testing a control that included the issuer's review of the loan risk ratings assigned to the acquired loans. The firm did not identify and test any controls over the accuracy and completeness of the data used in the operation of this control. (AS 2201.39) ICFR audit only | AS 2201.39 | Significant risk |
| 6 | Business Combinations | The firm did not identify and test any controls over the completeness and existence of the assets acquired and the liabilities assumed at the acquisition date. (AS 2201.39) ICFR audit only | AS 2201.39 | Significant risk |
Issuer F3 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Notes Receivable | The firm's internal inspection program had inspected this audit and reviewed this area but did not identify the deficiencies below. The issuer engaged specialists to assist the issuer in estimating the amount of certain notes receivable and collectability of these notes receivable at year-end using various significant assumptions. The firm's approach for testing these notes receivable was to review and test the issuer's process. The following deficiencies were identified: · The firm did not perform procedures to evaluate the reasonableness of certain significant assumptions developed by the company's specialists beyond comparing certain of these assumptions to assumptions used in a prior year. (AS 1105.A8b) Financial statement audit only | AS 1105.A8b | Significant risk |
| 2 | Notes Receivable | The firm's internal inspection program had inspected this audit and reviewed this area but did not identify the deficiencies below. The issuer engaged specialists to assist the issuer in estimating the amount of certain notes receivable and collectability of these notes receivable at year-end using various significant assumptions. The firm's approach for testing these notes receivable was to review and test the issuer's process. The following deficiencies were identified: · The firm's approach for evaluating the reasonableness of another assumption was to develop an expectation of this assumption. The firm did not test or test any controls over the accuracy and completeness of the data produced by the issuer that the firm used to develop its expectation. (AS 1105.10) Financial statement audit only | AS 1105.10 | Significant risk |
| 3 | Notes Receivable | The firm's internal inspection program had inspected this audit and reviewed this area but did not identify the deficiencies below. The issuer engaged specialists to assist the issuer in estimating the amount of certain notes receivable and collectability of these notes receivable at year-end using various significant assumptions. The firm's approach for testing these notes receivable was to review and test the issuer's process. The following deficiencies were identified: · The firm used an auditor-employed specialist to evaluate another assumption the company's specialist used. The firm did not identify that the auditor-employed specialist did not evaluate the relevance and reliability of certain external information used by the company's specialist. (AS 1105.A8a; AS 1201.C6 and .C7) Financial statement audit only | AS 1105.A8a; AS 1201.C6; AS 1201.C7 | Significant risk |
Issuer G4 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Business Combinations | During the year the issuer completed a business combination and issued a convertible note. The following deficiencies were identified: · The firm capitalized transaction costs related to the business combination and the convertible note issuance. The firm did not (1) evaluate whether the issuer's capitalization of these costs was in conformity with FASB ASC Topic 805 Business Combinations and (2) evaluate the reliability of certain external information it used to test these costs. (AS 1105.04 and .06; AS 2301.08) Financial statement audit only | AS 1105.4; AS 1105.6; AS 2301.8 | |
| 2 | Business Combinations | During the year the issuer completed a business combination and issued a convertible note. The following deficiencies were identified: · The convertible note included embedded features that required bifurcation in accordance with FASB ASC Topic 815 Derivatives and Hedging. The firm did not perform any procedures to determine the fair value of these embedded features beyond asserting the value was not material as the probability of occurrence of the associated contingent events was remote. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 3 | Inventory | The issuer tracked certain of its inventory in a system that was hosted by a service organization. The firm used information from this system in its testing of this inventory but did not perform any procedures to evaluate the reliability of this information. (AS 2301.08) Financial statement audit only | AS 2301.8 | |
| 4 | Inventory | The firm's substantive procedures to test certain inventory included performing substantive analytical procedures. The firm did not determine whether the expectations it used in these substantive analytical procedures were based on predictable relationships. (AS 2305.13 and .14) Financial statement audit only | AS 2305.13; AS 2305.14 |
Issuer H4 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Accounts Receivable | For certain accounts receivable the firm sent positive confirmation requests to the issuer's customers and received no responses. The firm did not perform alternative procedures that provided sufficient appropriate audit evidence that these balances represented valid receivable balances as of the confirmation date. (AS 2310.31) Financial statement audit only | AS 2310.31 | |
| 2 | Accounts Receivable | For certain accounts receivable the firm sent positive confirmation requests to the issuer's customers and received no responses. The firm did not perform alternative procedures that provided sufficient appropriate audit evidence that these balances represented valid receivable balances as of the confirmation date. (AS 2310.31) Financial statement audit only | AS 2301.8; AS 2301.13 | |
| 3 | Inventory | The firm's substantive procedures to test certain unbilled receivables included selecting a sample of customer balances for testing. The firm did not perform procedures to determine whether the performance obligation had been satisfied when revenue was recognized. (AS 2301.08 and .13) Financial statement audit only | AS 2510.12 | |
| 4 | Inventory | The firm did not perform procedures beyond inquiry to test the amounts relieved from inventory and recorded in cost of goods sold. (AS 2301.08) Financial statement audit only | AS 2301.8 |
Issuer I3 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The firm selected for testing a control that consisted of the issuer's review of the calculation of gross premiums earned and unearned premiums. The control owner utilized system queries in performing its review. The firm's testing of this control was not sufficient because its procedures were limited to inquiring of the control owner and reviewing query parameters for reasonableness. (AS 2201.42 and .44) ICFR audit only | AS 2201.42; AS 2201.44 | |
| 2 | Revenue | The firm did not identify and test any controls that addressed the risk that revenue was recognized from policies with premiums that were deemed uncollectible. (AS 2201.39) ICFR audit only | AS 2201.39 | |
| 3 | Insurance Reserves | The firm selected for testing a control that included the transfer of certain insurance reserve data from one system to another system. The firm did not test the accuracy and completeness of the transfer of these data. (AS 2201.42 and .44) ICFR audit only | AS 2201.42; AS 2201.44 |
Issuer J2 deficiencies
| # | Area | Deficiency | Standard | Flags |
|---|---|---|---|---|
| 1 | Revenue | The firm's substantive procedures to test revenue consisted of performing substantive analytical procedures and for certain revenue tests of details. The following deficiencies were identified: · The firm used certain data in its substantive analytical procedures but did not test or test any controls over the accuracy and completeness of these data. (AS 2305.16) Financial statement audit only | AS 2305.16 | |
| 2 | Revenue | The firm's substantive procedures to test revenue consisted of performing substantive analytical procedures and for certain revenue tests of details. The following deficiencies were identified: · The firm's tests of details for certain revenue included recalculating revenue for a sample of revenue transactions. The firm did not perform procedures to test or test controls over the accuracy and completeness of certain issuer-produced information it used to recalculate this revenue. (AS 1105.10) Financial statement audit only | AS 1105.10 |