Wells Fargo Scandal

Control Weaknesses and The Fraud Triangle

Control Weaknesses

• Failed to maintain strong audit practices in accordance with GAAS, resulting in internal accounting controls being bypassed, undetected.[Opportunity]

• Failed to implement strong controls relating to Cognizant's SEC filings, such as Sarbanes-Oxley Quarterly Global 302 Certifications and Annual Report on Form 10- K and Proxy Statement disclosure questions. [Opportunity]

• Segregation of duties was not adhered to by Senior executive level employees who bypassed controls to approve and authorize payments to facilitate bribery. [ALL]

Control Weaknesses

• Verifications that payments were made for intended purpose and not for unethical activities were not performed. [Opportunity, Pressure]

• Weak Board of Directors and audit committee [Opportunity] • Audit complexity - satellite location, etc [Opportunity/Rationalization] • Lack of access to information by others (internal/external)

[Opportunity/Rationalization]

Recommendations

• Implement conflict of interest and code of ethics policy that is updated annually.

• Provide training to employees on ethical practices. • Facilitate auditors in conducting audits of offshore locations and

provide auditors with greater access to offshore location.

Recommendations

• Overhaul internal control procedures. • Monitor offshore locations for implementation and adherence to

updated accounting controls

• Assign oversight to the board of directors, regarding foreign operations and management