1) At Peregrine, the risk factors, especially those aligned with control environment factors and the “tone at the top” are discussed. The risks included having a paper based confirmation system for the entire business; no segregation of duties, which meant that only one or very few people were working on the financial statements, and in this case Mr. Wasendorf was the only one and had altered all bank documents using only Photoshop, excel, scanners, and printers. Continuing on, time off was not required at Peregrine, which could have ultimately discovered this fraud much earlier, by allowing someone else to sit in the absentee’s seat and review all of their work. Additionally, Peregrine lacked internal auditors or an audit committee at the time. The presence of the internal auditors could have decreased odds of misstatement incentives to commit fraud by management, called fraudulent financial reporting, and overseen…