Internal control is a process which consists of five components designed to provide reasonable assurance on the company objectives’ achievement, such as effectiveness and efficiency of operations, compliance with laws and regulations, the reliability of financial accounting information and safeguarding assets. It is an important business practice as it can help the company to reduce risk by detecting and preventing fraud and protecting the company’s properties and resources. Wells Fargo has poor corporate culture as there is a lack of integrity and ethical values in their internal control. The employees had created about 2 million bank and credit card accounts in the name of their customers without their acknowledgment and consent in order to achieve the extreme sales targets set by the management for the employees to cross-sell additional banking products or services to the existing …show more content…
However, the existence of this unethical accounting scandal issue has been unfolded by the employees since 2005 (Cowley, S., 2016), but the management failed to take any action to prohibit these illegal activities instead they continue practicing this until it is being exposed to the public. According to Wells Fargo CEO John Stumpf, they also failed to make any public disclosure regarding to these illegal activities. The amounts involved in this issue were seen to be immaterial to the bank’s size (Curtis, C., Verschoor, CMA, CPA, 2016). The management have override the internal control of Well Fargo. This shows that the bank has poorly evaluates and communicates the internal control deficiencies periodically to the responsible parties to take corrective actions and therefore, allowing illegal activities to take