Read Wells Fargo
Answer the following questions regarding Wells Fargo.
1. Because Wells Fargo is a publicly traded company, KPMG would have performed the audit of the financial statements and internal control over financial reporting using PCAOB Auditing Standards. Research those standards (visit www.pcaobus.org) to answer the question: What is the auditors’ responsibility to detect an illegal act?
2. How would knowledge of the alleged sales practices shed insights about the effectiveness of internal controls over financial reporting?
3. Would the alleged sales practices be considered a significant deficiency or material weakness in internal control over financial reporting?
4. Visit the website of the U.S. Securities and Exchange Commission (www.sec.gov) and locate the Form 10-K filed on February 25, 2015 by Wells Fargo & Company/MN (CIK#: 0000072971) for the 2014 fiscal year (Note: The financial statements are contained in the link to Exhibit 13 of that 10-K filing). Based on that financial information filed with the SEC just prior to the first public announcement of the alleged sales improprieties, assess the following:
a. Would the cumulative effect of the inappropriate recording of customer fees be considered material to the Wells Fargo financial statements for 2014?
b. Would the $185 million fines be considered material to the Wells Fargo financial statements?
