Peregine: Twenty years of fraudulent cash balances

Document Type

Article

Publication Date

5-2014

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.

Comments

Copyright 2014 American Accounting Association

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Publication Title

Issues in Accounting Education

Published Citation

Randal J. Elder, Diane J. Janvrin, and Paul Caster (2014) Peregrine—Twenty Years of Fraudulent Cash Balances. Issues in Accounting Education: May 2014, Vol. 29, No. 2, pp. 337-348. doi: http://dx.doi.org/10.2308/iace-50690

DOI

10.2308/iace-50690

Peer Reviewed

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