Peregrine-Twenty years of fraudulent cash balances

Randal J. Elder, Diane J. Janvrin, Paul Caster

Research output: Contribution to journalArticle

1 Scopus citations

Abstract

In July 2012, Peregrine Financial Group filed for bankruptcy following the discovery that $215 million in customer balances had been embezzled. Investigation revealed that its Chief Executive Officer, Russell Wasendorf, Sr., fooled auditors and regulators for 20 years by preparing fictitious bank statements and cash balance confirmations to hide the theft of cash. The fraud was uncovered when Peregrine's regulator, the National Futures Association (NFA), demanded that Peregrine participate in an electronic confirmation process for verification of customer accounts. This case discusses how the fraud was allowed to go undetected for 20 years, the importance of auditing cash, and how new electronic confirmation technology improves the ability to authenticate confirmation responses. The case is suitable for use in both auditing and accounting information system courses.

Original languageEnglish (US)
Pages (from-to)337-343
Number of pages7
JournalIssues in Accounting Education
Volume29
Issue number2
DOIs
StatePublished - May 2014

Keywords

  • Audit confirmations
  • Auditing cash balances
  • Electronic confirmations

ASJC Scopus subject areas

  • Accounting
  • Education

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