Most of you may not appreciate this point and as a veteran of Wells Fargo I have come to see some patterns over the years.
- When the problems are rampant, control groups in the three lines of defense (front line risk groups, second line risk and compliance and the third line or audit services) are actually smiling and their ranks increase in size . The last few years should illustrate this point very clearly .
- Despite the news items that say Wells Fargo has not laid off people for several years, there have been small scale reorga resulting in people being ‘displaced’ - euphemism for laid off. The control groups were untouched.
- For any senior management , it is important to send a signal to the Board and the investment community that ‘this time it is different and we mean business’. More than the actual act of letting people go and other cost reduction measures , making a statement to the public is far more important
- Internal Audit is often the canary in the coal mine. Audit is usually safe. . It generally sends a very bad message to the regulators when auditors are fired . But when the situation is really dire, it will be foolish for audit to justify growing when the firm is shrinking.
The last point is the most important for those who are predicting what is happening next. For anyone reading this post who is familiar with the inside scoop from audit , I will look into those reports very carefully. If audit has stopped hiring - that will be very telling that we have a huge layoff of the biggest kind coming .
Who in audit can shed light on this ?