Globalization, the transition of family-owned companies into multinational companies, the increase in the scale and product diversity of companies, and technological developments are important factors in the increase in corporate scandals in recent times. With the increasing number of company scandals, the efficiency of corporate governance, independent audits, the internal audits and internal control systems of enterprises, how well enterprises’ financial statements reflect their real financial status, and the quality of the auditing work of independent auditors have become questionable in the eyes of stakeholders. The experienced scandals have adversely affected the sectors in which the businesses involved in the scandal operate, damaged the confidence of investors, had negative consequences in terms of reputation, and caused question marks regarding the global perspectives of relevant sectors. The environment of trust in markets has been damaged, and the need for regulatory authorities to take specific actions has come to the fore. Generally analysing the past major collapses and failures reveals issues such as agency problems, information asymmetries, manipulation of financial data, conflicts of interest between shareholders and managers, and accounting frauds for better presenting an enterprise’s financial status, with individual and collective acts of misconduct by employees and managers being frequently encountered. One of the most important major corporate scandals in the world in the recent past is related to Wells Fargo. Wells Fargo is a bank operating in the USA and dates back to 1852. As of 2015, the bank served nearly 70 million customers at 8,700 different locations. This study examines the Wells Fargo scandal using the case study method and reveals the factors that caused the scandal.

The main points that emerged as a result of analysing the business case of Wells Fargo can be summarized as follows:

· The main root cause of the scandal is understood to have been the pressure for profit that the senior management created on the employees.

· Although enterprises’ profit ambitions and expectations seem to be issues that increase the financial performance of companies and shareholders in the short term and is in the interest of all relevant stakeholders, these may have a negative impact due to the financial and reputational risks that the business will be exposed to in the long run due to the agency problems they will cause.

· Mis-selling practices in the Wells Fargo case can be encountered widely, especially in businesses operating in banking, insurance, and other financial sectors, as well as in institutions that generate revenue through sales volumes and operate with the logic of branches, regions, or agencies. For this reason, establishing effective control mechanisms that will reduce the inherent risk levels to an acceptable residual risk level is extremely important in such organizations where mis-selling can often be experienced due to their organizational structure.

· Although the requirements of the three lines model seem to have been established on paper, ensuring the effective functioning of this structure will contribute to reducing the risks businesses will be exposed to.

· Within the framework of independent auditing standards, the primary responsibility for detecting and preventing fraud on financial statements is assigned to the top management of enterprises. Independent auditors should take into account the risk of fraud during their work by considering that the controls established within the enterprise may have been violated and that the audit procedures may not reveal fraud. In the case of Wells Fargo, the risk of fraud must certainly be included within the scope of the audit work and independent auditors must certainly follow the appropriate auditing procedures in order to be able to conclude that an independent auditor is not at fault for failing to detect fraud. 

· Wells Fargo has an internal auditing unit operating under the Audit Committee. The irregularities that are the subject of the case were not detected by the internal auditing unit. Therefore, including the risks arising from sales fraud in the risk assessment studies to be carried out by the internal audit units is thought to be necessary, especially in institutions operating in the banking sector and that have branches and sales networks.

· In addition, establishing full independence for internal auditing units will contribute significantly to the existence of an effective third line.

· This case shows regulatory authorities that sales-related frauds may occur in businesses with organizational structures such as Wells Fargo, that this may have significant consequences that may cause the collapse of a business, and that apparently effective control mechanisms and lines may not actually be operative at a sufficient level.