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
Internal controls is defined as a process, effected by an entity’s board of directors, management, and other personnel, designed to provide reasonable assurance
10) Kieso, Donald E., Weygandt, Jerry J., Warfield, Terry D. Intermediate Accounting. Hoboken, NJ: Current Developments for Audit Committees 2002. Pricewaterhouse Coopers analysis on recognizing revenue. External
The report on internal controls, according to ExxonMobil’s CEO, Treasurer and Controller, states they are solely “responsible for establishing and maintaining adequate internal control over (ExxonMobil’s) financial reporting.” They evaluated the effectiveness of internal controls over financial reporting based on COSO’s framework and concluded that controls were effective (MD&A, F-22). The report in internal controls acknowledged us—ExxonMobil’s independent public accounting firm PricewaterhouseCoopers LLP (PwC)—stating that the Corporation maintained effective internal control over financial reporting for 2009 and 2010 as it is the responsibility of management to maintain and assess its effectiveness. We, PwC, are responsible only to express an opinion on internal controls, which we opined in 2009 as unqualified (MD&A, F-22).
Determine the resources required, ensure adequate resources are provided, focus on the organization’s priorities, and the importance of documentation.
When conducting an audit, professional standard must require auditors to consider the clients control environment. According to (www.aicpa.org) professional standards is the comprehensive source of auditing and attestation pronouncements issued by the AICPA, along with the AICPA Code of Professional Conduct and Bylaws .The control environment refers to the overall tone of an organization as it relates to issues such as financial checks and balances. The tone reflects the attitude, awareness, and actions of the board of directors, management, and owners who influence the control consciousness of its people. There were some weaknesses that were evident in Lincoln’s control environment.
in making sure the correct methods are followed out with regards to health, safety, hygiene matters;
Also, to comply with the policies and procedure and code of practice and ensure that records are up to date and properly maintained. And make sure that the health and safety policy is followed to the latter.
A Review of Management Techniques and Practices at Wells Fargo Bank. Over the past 150 years, Wells Fargo Bank has become one of the largest financial institutions in the North America. Wells Fargo Bank is much more than a bank. It’s a premium financial service provider.
• Demand discipline, Integrity and professional conduct from all our team members. • To nurture the present and enrich the future to build better
It is imperative for supervisors to focus on what is required in order for his/her employees to accomplish their job. They must be supportive of their employees and provide continual feedback on their job performance .Supervisor need to include their employees when making changes that effect they way they perform their jobs or finding new way to do things that were problematic. Supervisors should give their employees more responsibly to make them feel more valued and powerful. There is also a major need for promotion, pay increase and compensation system (educational reimbursement, vacation incentives etc.
In this approach, the focus will be on the internal control objectives so that the control design can be well assessed. First, the auditor will define the control measures and objectives and then find out which measures already installed meet the objectives (Tyrer, 1994).
Bureaucratic control- This will keep everything in order and keep the chain of command in order. It will decrease the amount of problems between employees and typical mistakes because the job is explained to the employee in detail and rules are strictly implemented.
Identify the potential risks which affect the company and manage these risks within its risk appetite;
The success of a company is very dependent upon its financial accounting. In accounting there are numerous Regulatory bodies that govern the accounting world. These companies are extremely important to a company because they set the standards when it comes to the language and decision making of a company. These regulatory bodies can be structured as agencies, associations, commissions, and boards. Without companies like the Security and Exchange Commission (SEC), The Financial Accounting Standards Board (FASB), the Governmental Accounting Standards Board (GASB), Internal Accounting Standards Board (IASB), Internal Revenue Service (IRS), and other regulatory bodies a company could not make well informed decisions. In this paper the author will look at only four of them.