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
and efficiency in confirmation requests and decrease waiting periods. Depending on the number of client accounts, manually creating confirmations could span over a few hours. Therefore, electronic confirmations can be created and then given a designated time to be released, which gives staff more time for other projects. Confirmation.com, for example, enables the reviewer to check the status of confirmations sent out, which in turn increases staff productivity. Unlike manual confirmations, which can be lost in the mail or expensive, electronic confirmations are more secure being sent and received via computer and worth every penny (How Electronic Confirmations Enable More Accurate Responses, While Saving Time and Money 2013) (Couturier 2015).

Unfortunately, there is also a downside to utilizing electronic confirmations, which include: interception, alteration, and fraud.
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
2008).