Russell Wasendorf Fraud Essay

Prior to his fraud discovery, Russell Wasendorf, Sr. was falsifying and forging manual bank confirmations to verify the company’s “increasing” cash balances. In addition, he utilized scanners, printers, and post office boxes to fool external auditors as well as the National Futures Association. Eventually Wasendorf’s twenty-year fraud scheme unfolded when electronic bank confirmations proved that he had been falsifying records and stealing from Peregrine Financial Group customers. If the electronic bank confirmations had not been utilized, Wasendorf’s fraud scheme would have continued undetected for many years to come. Therefore, one of the biggest advantages to utilizing electronic confirmations would be reducing fraud. As seen in the Peregrine Financial Group fraud scandal, eliminating Wasendorf’s opportunities to conceal his wrongdoing enabled its discovery (Elder, Janvrin, & Caster 2014) (Couturier 2015).

Prior to electronic confirmations, manual confirmations resulted in slower response times and more mistakes. Electronic confirmations increase accuracy
Interception occurs when someone has access to the electronic confirmation who does not have the proper credentials to proceed with viewing. To protect the data from unauthorized accessors, electronic data should be encrypted to ensure its protection. In addition, electronic digital signatures ensure the reliability and appropriateness of the confirmation source. Intercepted electronic confirmations run the risk of becoming altered, which could snowball into inaccuracies. Therefore, avid monitoring with programs like WebTrust or VeriSign ensure that receiving information is authentic. Fraud occurs when an electronic confirmation becomes altered and material misstatements are proven through substantive testing (AU330-The Confirmation Process 1992) (Electronic Confirmations