CNS AR24 Digital - Book - Page 64
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that the controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that
was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that
are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole,
and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or
on the accounts or disclosures to which it relates.
Fair Value - Level 3 Investments - Refer to Notes 4 and 5 to the consolidated financial statements
Critical Audit Matter Description
Certain of the Company9s consolidated funds hold Level 3 investments that are reported at fair value. The fair value of these
investments is determined based on unobservable pricing assumptions (or "inputs"). These investments have limited
observable market activity and the inputs used in the determination of fair value require significant management judgment or
estimation.
We identified the valuation of these investments as a critical audit matter because of the unobservable pricing inputs used to
estimate their value, and changes in the value of these investments directly impacts the amount of unrealized gain/loss the
Company recognized for the period. Performing audit procedures to evaluate the appropriateness of these inputs used in
determining the fair value required a high degree of auditor judgment and an increased extent of effort, including the need to
involve our specialists who possess significant valuation expertise.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the unobservable pricing inputs used by management to estimate the fair values of these
investments included the following, among others:
" We tested the design, implementation, and operating effectiveness of controls over the determination of the
inputs used to value these investments.
" With the assistance of our fair value specialists, we evaluated management9s valuation inputs, including the
determination of the unobservable pricing inputs used to estimate fair value. Our procedures included but were
not limited to:
3 Testing the underlying source information of the assumptions, as well as developing a range of
independent estimates and comparing those to the inputs used by management.
3 Evaluating the impact of current market events and conditions, as well as relevant comparable
transactions, on the valuation techniques and assumptions used by management (e.g., sector and
geographic location performance, occupancy rates and other market fundamentals, and interest rate
environment).
/s/ DELOITTE & TOUCHE LLP
New York, NY
February 21, 2025
We have served as the Company9s auditor since 2003.
F-4
