A new article in the IIA’s publication “Internal Auditor” discusses a report released by the U.S. Office of the Comptroller of the Currency (OCC) regarding the consumer account and cross-selling failures at Wells Fargo Bank.
The report recommends fines for three former internal audit and risk management executives at the bank. While it is rare for individual internal auditors to be fined, if the OCC decides to pursue the recommendations, it could have significant implications for internal auditors, risk management professionals, and Chief Audit Executives (CAEs).
On the one hand, the report highlights specific conditions that led to the failures and the potential enforcement action, including sales practice misconduct, failure to determine the root cause of the misconduct, and engaging in unsafe banking practices. The report raises concerns about the dissemination and escalation of risks within the organization and questions the effectiveness of the Three Lines risk management system used by the bank.
On the other hand, guidance for CAEs and internal audit functions is provided. The report emphasizes the importance of a charter that covers responsibilities at every level, avoiding potential conflicts for auditors that are part of committees and therefore ensuring auditor independence, and a clear audit plan that aligns with business objectives and provides appropriate coverage for critical areas such as sales goals. It also suggests reviewing policies and procedures annually, conducting quality assurance and improvement programs (i.e. external reviews), evaluating fraud risks and removing dispensable controls. Overall, the text emphasizes the importance of continuous improvement in internal audit practices and the responsibility of internal auditors to protect organizational value and provide assurance to achieve strategic objectives.
For now the report just serves as a reminder and an opportunity for all internal auditing professionals to protect organizational value and provide assurance to achieve strategic objectives. It emphasizes the need for continuous improvement in the profession.
You can find the full article here.