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ACC 696 Milestone One
SNHU
September 18, 2022
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I. Background
The company that has been selected for the case study is Wells Fargo. The Wells
Fargo Scandal is the topic chosen for the study. Wells Fargo is one of the popular names in
the financial sector. It is a reputed bank that was founded by William Fargo and Henry Wells.
It was founded in March 1852. It is considered to be a highly prestigious bank in the United
States (Cruz, Bien Justine, 2018). The company offers a wide range of financial services to
customers in the United States.
The Wells Fargo scandal was related to the cross-selling program implemented by the
bank for several retail accounts. In September 2016, the scandal revealed that the employees
of Wells Fargo had faked nearly 3.5 million customer accounts in order to meet the sales
goals of the bank (Welch, 2022). Wells Fargo admitted to committing the mistake of opening
unauthorized customer accounts and falsifying the information of the customers. The agents
of the reputed bank even forged the signatures of the customers and transferred and
manipulated assets between the accounts. All these activities were done without the consent
and knowledge of the customers (Cruz, Bien Justine, 2018).
The main rationale for choosing the Wells Fargo Scandal is that it is a scandal of the
bank of the United States that is a popular example of ethical violation. Another reason for
choosing the situation and the company is that its unethical sales practices or sales integrity
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violation is an important topic in recent times.
A number of ethics violations were discovered in the case of the Wells Fargo scandal.
One of the important ones is the sales integrity violation. The company has violated the
responsibility of treating the customers with utmost fairness. Moreover, the bank has also
gone against its own vision and value statements that states Wells Fargo continuously strives
to “set the standard among the world’s great companies for integrity and principled
performance.” The company also states that “We value what’s right for our customers in
everything we do.” The value of honest practices in business has been violated by the
financial institution of the United States (Welch, 2022).
II. Ethical Violations
a) The main participants who committed the violation in the case of the Wells Fargo scandal
are the employees of the bank and the management. The management of the bank was too
aggressive and had framed impractical sales goals for the employees. Meeting the
performance goals set by the management was challenging for the employees. In order to
meet the goals, they created fake accounts of the existing customers of the bank. The fake
accounts were opened for free, but the information of the customers was used without
consent. It enabled the employees of Wells Fargo to meet their sales goals.
In this case, the ethical responsibility of professional accountants is to ensure that the
employees of Wells Fargo perform their professional duties and responsibilities with the
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highest integrity (Ethics and The Accounting Profession. Ethics and the Accounting
Profession, 2020). They are also responsible for ensuring that the employees discharge their
responsibilities free of any conflicts of interest. Maintaining the confidentiality of the
information of the customers is another important ethical responsibility of professional
accountants.
The ethical violation case of the Wells Fargo scandal affected the stakeholders in a
number of ways. Many of the employees who were involved in the ethical violation were
removed from their jobs. The executives of the bank were panned as well as punished
publicly. The management of Wells Fargo lost the trust of the customers in the United States.
b) A number of principles of the AICPA Codes of Professional Conduct were violated in the
Wells Fargo Scandal. One of the codes that were violated was integrity. Integrity is considered to
be at the core of professional recognition (Jenkins et al., 2020). By employing
dishonest means in order to meet the sales target, the employees of Wells Fargo violated the
integrity principle. Another principle that was compromised in the Wells Fargo scandal was
the objectivity principle. Due to conflicts of interest, the employees of the bank were unable
to discharge their professional responsibilities. The confidentiality principle of the AICPA
Codes of Professional Conduct was also violated. The confidentiality of the information of
the customers of the bank was not maintained by the employees.
(i) Independence in fact, as well as appearance, is vital in order to maintain professional
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autonomy and esteem in the profession. It is important for professionals to maintain
independence when carrying out their roles and responsibilities within professional
boundaries. The professionals need to be independent in fact as well as in appearance to
avoid the impairment of the professionals in rendering the assigned responsibilities (Jenkins
et al., 2020). It ensures that the professionals carry out their functions without any kind of
bias or conflict of interest.
(ii) The main participants of the Wells Fargo scandal did not adhere to the ethical and moral
principles of the AICPA Codes of Professional Conduct. The sales integrity was
compromised by the employees as well as the management of the bank. The employees
created unauthorized bank accounts for the existing customers and did not carry out their
responsibilities in an ethical manner.
(iii) The main stakeholders of the Wells Fargo scandal did not maintain objectivity.
According to the principle of objectivity, professionals should not allow any kind of bias,
undue influence of others, or conflict of interest to override business and professional
judgments (Sonnerfeldt & Loft, 2018). However, the need to meet the sales target of the
company, influenced the employees of Wells Fargo and affected their professional and
business judgments negatively.
(c) The ethical violations of Wells Fargo had several implications in different aspects of the
business.
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(i) In terms of legal aspects, Wells Fargo and many of the executives were panned and
punished publicly.
(ii) In terms of the social aspect, the reputed bank lost the trust of many of its customers. The
customers felt that they were deceived by Wells Fargo. The ethical violation negatively
affected the reputation of the bank.
(iii) In terms of the economic aspect, Wells Fargo has to pay a sum of USD 142 million to the
customers on account of its actions (Sonnerfeldt & Loft, 2018).
(d) Yes, Wells Fargo has a code of conduct. According to the code of conduct of the
company, it is its responsibility to act with integrity and honesty. However, they have
violated this ethics component of their code of conduct (Sonnerfeldt & Loft, 2018). The
employees of the company have not been honest in communicating with the customers and
behaving in an ethical manner. All of these have significantly affected the trust of the
customers in the prestigious bank of the United States. The code of conduct of Wells Fargo
also states that they protect and keep the data and information of the customers confidential
(Sonnerfeldt & Loft, 2018). However, this element has also been compromised by the
employees.
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References
Cruz, Bien Justine. (2018). Wells Fargo: An article based analysis.
10.13140/RG.2.2.18452.65924.
Ethics and The Accounting Profession. Ethics and the Accounting Profession. (2020).
Retrieved September 15, 2022, from https://www.illumeo.com/blogs/illumeo-customer-
success/2020/10/22/ethics-accounting-profession
Jenkins, J. G., Popova, V., & Sheldon, M. D. (2020). Monitoring the accounting profession
under the AICPA code of professional conduct: An analysis of state board of
accountancy participation. Journal of Accounting and Public Policy, 39(3), 106742.
Sonnerfeldt, A., & Loft, A. (2018). The changing face of ethics–Developing a Code of Ethics
for Professional Accountants from 1977 to 2006. Accounting History, 23(4), 521-540.
Welch, J. (2022). Wells Fargo: a corporate recovery model to bank on. Journal of Business
Strategy, (ahead-of-print).
