Wells Fargo: Did KPMG Perform Its Duties? An Auditing Case About Consumer Fraud

Feng, N. C., Fuerman, R. D., & Heron, N. (2022). Wells Fargo: Did KPMG perform its duties? An auditing case about consumer fraud. Corporate Ownership & Control, 19(2), 121–126. https://doi.org/10.22495/cocv19i2art10

6 Pages Posted: 21 Sep 2022

See all articles by Nancy Chun Feng

Nancy Chun Feng

Suffolk University

Ross D. Fuerman

Suffolk University - Department of Accounting

Nicole M Heron

Suffolk University - Department of Accounting

Date Written: February 18, 2022

Abstract

This article describes the implementation of a case study that uses as its setting the role of KPMG in the Wells Fargo consumer fraud scandal as a way for students to learn about what can happen during an audit failure and what should be done to prevent audit failure. As the case details illustrate, it features the only recent significant Big 4 audit failure that is still being resolved, the audit failure includes many aspects of an auditor’s job, including some that typically are not covered in traditional course textbooks, and it highlights the auditor’s role within the broader context of corporate governance. This case study exposes students to several auditing standards and laws related to 1) consumer fraud; 2) contingent liabilities; 3) materiality; 4) illegal acts; 5) audit evidence; 6) audit opinions; 7) auditor independence and mandatory rotation; 8) auditor liability under the Securities Act of 1933; and 9) auditor liability under the Securities Exchange Act of 1934. The case was used in two undergraduate auditing classes and a graduate auditing class. Student opinion surveys were used to ascertain the learning outcomes of the case study. The survey results suggest strong student engagement and support for learning in groups while collaborating on the case study. The case results also show particularly strong knowledge enhancement with regard to understanding the auditor’s duty to disclose illegal acts, understanding consumer fraud, understanding audit evidence, understanding materiality, and understanding contingent liabilities.

Keywords: Illegal Acts, Consumer Fraud, Audit Evidence, Materiality, Contingent Liabilities, Auditor Regulation

JEL Classification: M420, M480, K420

Suggested Citation

Feng, Nancy Chun and Fuerman, Ross D. and Heron, Nicole M, Wells Fargo: Did KPMG Perform Its Duties? An Auditing Case About Consumer Fraud (February 18, 2022). Feng, N. C., Fuerman, R. D., & Heron, N. (2022). Wells Fargo: Did KPMG perform its duties? An auditing case about consumer fraud. Corporate Ownership & Control, 19(2), 121–126. https://doi.org/10.22495/cocv19i2art10, Available at SSRN: https://ssrn.com/abstract=4193057

Nancy Chun Feng

Suffolk University ( email )

120 Tremont St
Boston, MA 02108
United States
617-573-8719 (Phone)

Ross D. Fuerman (Contact Author)

Suffolk University - Department of Accounting ( email )

Sawyer Business School
Department of Accounting
Boston, MA 02108
United States
617-573-8615 (Phone)

HOME PAGE: http://www.suffolk.edu/business/faculty/12328.php

Nicole M Heron

Suffolk University - Department of Accounting ( email )

Sawyer School of Management
Boston, MA 02108
United States

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