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In 2016, the biggest American bank Wells Fargo admitted that its employees had created as many as 2 million accounts without authorization from customers, and these fraudulent activities caused customers to incur fees. This scandal disappointed the public and people lost trust in Wells Fargo. Wells Fargo terminated at least 5,300 people including managers and salespeople because of that fraudulence. This essay aims to analyze the causes of these fraudulent activities in Wells Fargo from the perspectives of representation, accountability and control. It starts from representation which illustrates the relationship between accounting presentation and reality, and analyzes the root causes of the fraudulent activities. After that, it discusses the accountability in management accounting system and who should be accountable. Finally, this essay analyzes the control system and its challenges.

The annual reports of Wells Fargo are prepared by the accountants who are responsible for communicating the reality about the organization in a certain way, and people can think and make decisions based on the picture that organization conveyed (Hines, 1988). Hines (1988) also mentioned that when communicating reality, the accountants are free to define, shape, and measure what the reality is as long as people’s conception of reality can be reflected. This means ordinary people think accountants are responsible for providing information about preexisting reality, however, the truth is that the accountants are not communicating reality but are constructing reality. The reason is that the accounting methods do not convey anything new about reality but convey information which is important in creating reality, and the picture of reality cannot take into account all factors (Hines, 1988). Therefore, the accounting representation of Wells Fargo communicated the reality created by the organization.

Based on the analysis of Wells Fargo’s annual reports, the accounting representation communicated the reality created by the organization, and it told good stories to the annual reports users. However, the annual reports are silence in some negative parts. The growing sales targets and incentive compensation led to great pressure to employees, and the unrealistic sales goals were the root cause of the misconduct.