Company: CFG-PE
Filing Date: 2025-02-13
Form Type: 10-K
Source: 0000759944-25-000013
Chunk: 914

Company: CITIZENS FINANCIAL GROUP INC/RI
Filing Date: 2025-02-13
Form: 10-K
Item: Item 6
Chunk 914
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 into the econometric models, and (iv) tested the arithmetic accuracy of the models’ calculations of the expected credit losses.  

•We (i) evaluated the appropriateness and relevance of the qualitative factors, including management’s consideration of the economic forecasting uncertainty and adjustments to the modeled reserves for the industry sectors facing challenges in the current macroeconomic environment, (ii) tested the accuracy and evaluated the relevance of the historical loss data used in determining the qualitative allowance, (iii) evaluated the reasonableness of the Company’s assessment and determination of the qualitative factors and related impact on the estimation of the qualitative allowance and (iv) tested the arithmetic accuracy of the calculation of the qualitative allowance. 

•We tested the arithmetic accuracy of the calculation of the overall ACL and assessed the reasonableness of the related disclosures.

Citizens Financial Group, Inc. | 84

Goodwill – Refer to Note 10 to the consolidated financial statements

Critical Audit Matter Description

Management has identified and assigned goodwill to two reporting units, Consumer Banking and Commercial Banking. 

Management reviews the goodwill of each reporting unit for impairment on an annual basis as of October 1st or more frequently if events or circumstances change that indicate an impairment may exist.

Management performed a quantitative goodwill impairment test associated with its annual impairment assessment date. The fair value of the Company’s reporting units was determined using a combination of income and market-based approaches. Under the income approach, key assumptions included cash flow projections based on multi-year forecasts, long-term earnings growth rate, and discount rates. Under the market-based approach, key assumptions included determination of comparable public companies, valuation multiples, and utilization of a market control premium associated with cost synergies and other cash flow benefits that arise from obtaining control over a reporting unit, and guideline transactions, when applicable.

We identified the goodwill impairment test as a critical audit matter because these fair value determinations require management to make significant estimates and assumptions. Performing audit procedures to evaluate the reasonableness of these estimates and assumptions required a high degree of auditor judgment and an increased extent of effort, including the involvement of our valuation specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the valuation of the Company’s reporting units included the following, among others:

•We tested the design, implementation, and operating effectiveness of internal controls over the goodwill impairment test, including controls over the (i) accounting and valuation conclusions reached by management, (ii) relevant business and valuation assumptions, and (iii) determination of its operating segments and reporting units.