Getting a Head Start

April 2011

Auditors at Wells Fargo aren't waiting for Dodd-Frank rules to be written to prepare to comply with the U.S. financial reform law.

Russell A. Jackson
Freelance Writer

The lack of clarity around the U.S. Dodd-Frank Wall Street Reform and Consumer Protection Act may be frustrating, but it’s not stopping San Francisco, Calif.-based Wells Fargo & Co.’s audit and security team from acting on what it does know — and preparing to act on what it doesn’t yet know. “We have a lot of people who are working on it,” says Karl Riem, executive vice president and deputy chief auditor. “Based on what we know, we have some infrastructure put in place, including an executive leadership committee that looks at the issues Dodd-Frank raises and begins to set some priorities and to move the organization where we need to go on certain things.” The financial services company — considered a “systemically important firm” by the regulators — also has established a working group made up of business line leaders and support groups to ensure it complies with the spirit and letter of the law. “They come together to move our compliance efforts through the various lines of business,” Riem notes.

In areas where Wells Fargo knows what it knows and doesn’t know, he adds, the company has reached out to its regulators to request some clarification. Indeed, says Kris Klos, the company’s senior vice president and audit director, “while the bulk of the rules have yet to be written, some dates are coming up in the near future. We’re aware of those looming deadlines and are making excellent progress.”

In other areas, though, it’s too soon to know how exactly to respond to the challenges Dodd-Frank poses. But Riem says his department is prepared for whatever the law brings. “We have a great opportunity to influence how the organization responds to the legislation,” he says, “and the role we can play. We’ve chosen to be a strong partner to the business lines on this initiative. We have a seat at the table on the executive leadership committee and on the working group. Our process is requested by the lines of business.” He likens that process to internal auditing’s role in Wells Fargo’s merger with Wachovia Corp., which was effective in December 2008. “Before we implement legislative requirements, I can see our audit department assessing if we’re ready or not,” he says.

To comment on this article, e-mail the author at russell.jackson@theiia.org.

Read more about the U.S. financial reform law in "The Dodd-Frank Construction Zone."

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