As you may recall Elizabeth Warren and Edward Markey have previously written to KPMG to figure out why they did not uncover the Wells Fargo fraud earlier. Well Elizabeth Warren and Ed Markey received that response in November and now they want the PCAOB to investigate what happened.
This is most likely because Wells Fargo easily ratified KPMG as their independent auditor as part of their annual proxy process in 2017. Elizabeth Warren was hoping that Wells Fargo would fire KPMG similar to what they did to their CEO. Now that they have not fired KPMG she is out for her pound of flesh.
The reason that Warren and others have questioned this is because Wells Fargo committed tons of fraud for years by setting up fake accounts for their clients.
What resulted is that the Consumer Financial Protection Bureau fined Wells Fargo $100 million for creating 1.5 million deposit accounts and over 500,000 credit card accounts. These accounts were not authorized by the customers.
What KPMG contends in their response is that they were aware of matter, but that they were able to get comfortable that it did not materially impact the financial statements or the controls over those financial statements.
I’m not too sure how KPMG reached that conclusion because $100 million is a pretty significant financial impact to me. Additionally, there is no way that KPMG could have known that the amount would have only been $100 million.
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