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Audit Plan Scope Of Wells Fargo Corporation

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Audit Plan Scope:

The objective of this internal control over financial reporting audit is to evaluate Wells Fargo Corporation’s controls over the fair value reporting process. The internal control audit is subject to Auditing Standard No. 5 which covers “An Audit of Internal Control Over Financial Reporting That Is Integrated with An Audit of Financial Statements”. The audit plan scope will review points such as the valuation of assets, liabilities, the use of external pricing services and internal model valuations.
Risk Assessment:
Based on the information provided through Wells Fargo Corporation’s financial statements and fair value footnote, I have determined the following risk areas that are relevant to testing internal controls relative to material financial instruments. The following risks should be audited used the procedures below.
Overall Control Environment of Fair Value
• Obtain understanding and knowledge of the control environment and those charged with governance o Interview employees regarding managements philosophy and operating style o Review the human resources policies and practices regarding training, evaluation, compensation, etc. to ensure a proper control environment.
• Observe the competency of the employees in their performance of activities
• Inspect documentation and ensure proper segregation of duties

Comments: Understanding the control environment is crucial to a successful internal control audit. Auditing Standard No. 5 encourages a top-down approach that starts with the auditors overall understanding of risk in the internal controls. By focusing on the entity-level controls first, the auditors can work down towards accounts and assertions. Focusing on the control environment of the entity will ...

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...n evidence about the design and implementation of the internal controls
Comments: The portions of these investments that are subject to judgments bear more risk.
Remaining Liabilities
• Conduct a walkthrough to obtain evidence about the design and implementation of the internal controls
• Distribute internal control questionnaire employees to determine possible weaknesses in internal controls
• Evaluate the inputs used in the valuation technique

Comments: I have lumped the remaining liabilities into one category, but each should apply the appropriate control tests that have been discussed above.

Sources
Becker CPA Exam Review: Auditing http://pcaobus.org/standards/auditing/pages/auditing_standard_5.aspx#planningtheauditor http://www.cohnreznick.com/sites/default/files/Audits%20of%20Internal%20Control%20Over%20Financial%20Reporting%20(ICFR).pdf
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