Company: CFG-PE
Filing Date: 2025-02-13
Form Type: 10-K
Source: 0000759944-25-000013
Chunk: 756

Company: CITIZENS FINANCIAL GROUP INC/RI
Filing Date: 2025-02-13
Form: 10-K
Item: Item 4
Chunk 756
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 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.  

•With the assistance of internal valuation specialists, we (i) evaluated the appropriateness of the valuation methodology used and the reasonableness of the valuation and business assumptions, including the selection of discount rates, market multiples, and long-term earnings growth rate, (ii) assessed the mathematical accuracy of the valuation calculations, and (iii) assessed the reasonableness of the consolidated Company valuation in comparison to the Company’s market capitalization. 

•We tested the completeness and accuracy of the data used in the valuation of the commercial and consumer reporting units.

•We evaluated management’s ability to accurately forecast by comparing actual results to management’s historical forecasts. 

•We tested the reasonableness of management’s forecasts used in the valuation of the commercial and consumer reporting units.

/s/ Deloitte & Touche LLP

Boston, Massachusetts

February 13, 2025

We have served as the Company's auditor since 2000