Response to the following :
Assume that scenario in Problem is a material weakness. Prepare a draft of the auditor's report for an audit of ICFR. Assume that First Coast's auditor is issuing a combined report for the financial statement audit and audit of internal control.
Scenario in Problem:
During its assessment of ICFR, management of First Coast BankCorp and its auditors identified the following deficiencies that individually represent significant deficiencies: the design of controls over the estimation of credit losses (a critical accounting estimate); the operating effectiveness of controls for initiating, processing, and reviewing adjustments to the allowance for credit losses; and the operating effectiveness of controls designed to prevent and detect the improper recognition of interest income. In addition, during the past year, First Coast experienced a significant level of growth in the loan balances that were subjected to the controls governing credit loss estimation and revenue recognition, and further growth is expected in the upcoming year.