The Case Of Phar Mor Inc. - 1433 Words

The Case of Phar-Mor Inc. Fraud will always be an issue but it has been more prevalence in the past before there were any specific guidelines for business entities and accountants to adhere and conform to. It is observed that those with higher positions in a company could let the power get to them at times and can use that power for their personal benefits. The Sarbanes-Oxley Act set standards to try to prevent future scandals like in the case of Phar Mor Inc., the Waste Management scandal and Enron. Sarbanes-Oxley (SOX) was created to address the reoccurrence the likes of the several major scandals of the past. The nature of those past years scandals made it clear that preventative measures was a possible way to prevent any future scandals. And the efficacy of Sarbanes Oxley Act, many people as well as companies believed that fraud is easy to prevent. In the case of Phar-Mor fraud, the company was involved in cover up and some accounts were created to hide the fraudulent activities. Bad inventory counts in the stores were made to help with the cover up and deceit about activities that cost hundreds of millions of dollars. (Williams, S.L., 2011) The Sarbanes Oxley Act came to existence after numerous scandals on financial misappropriation and inaccurate accounting records. The nature of scandals made it clear there are possible measure that could be used to prevent future occurrence of financial scandals. And the existence and effectiveness of Sarbanes Oxley has causedShow MoreRelatedCase 4.6. Phar-Mor Inc.8093 Words   |  33 Pages|Case 4.6 | |Instructional Notes | | | |Phar-Mor, Inc.: Read MoreThe Case Summaries For Phar Mor Inc. Fraud Essay1302 Words   |  6 PagesThe Case Summaries for Phar-Mor Inc. Fraud, Waste Management Scandal, Enron Scandal and Answers Phar-Mor Inc. Fraud Summary Phar-Mor Inc. fell prey to greed from the top. Unfortunately, the auditing firm assisted the organization with the conspiracy to defraud the users of financial reporting, the government, and the stakeholders. The chief officers used the funds for personal usage and appropriated funds to functions that were not related to the organization business. The financial statementsRead MoreEssay about Case 4.6 Phar-Mor, Inc.618 Words   |  3 PagesIf there was a reckless misrepresentation and lack of due diligence in verifying accuracy of financial information that is free of material misstatements, that alone would give me a reason to sue the auditors. B) Negligence as it is used in legal cases involving independence auditor is defined as â€Å"failure to conduct an audit with due professional care in the performance of work† C) The primary difference between negligence and fraud is fraud is the intentional concealment or misstatement of informationRead MoreEssay about Phar Mor Inc Case Study1184 Words   |  5 PagesSean Russi The Case of Phar-Mor Inc ACCT-525 October 31, 2012 Case Summary The case of Phar-Mor Inc was one of the biggest pre-Enron frauds that have been uncovered. Phar-Mor Inc established in 1982 Phar-Mor was a small little known discount drugstore. Phar-Mor became well known for offering medications at a 25-40% discount rate compared to your normal pharmacy store prices. 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Understand what factors may inappropriately influence the client-auditor relationship and auditor independence Understand auditor legal liability issues related to suits broughtRead MorePhar-Mar Inc. Accounting Scandal2283 Words   |  10 PagesSummary Phar-Mor, Inc. was a deep-discount store that had substantial growth in a short period of time. It started with 15 stores and grew to over 310 stores in thirty two states between 1985 and 1992. At first Phar-Mor was seen as a major prospect in the retail market. With sales of over $3 billion and growing, Phar-Mors success even worried some of the biggest retail giant, including Wal-mart. The president, founder, and COO of Phar-Mor was Mickey Monus, who became quite extravagant withRead MoreBy Reviewing Sox’S Sections It Was Noted There Are Four1253 Words   |  6 PagesBy reviewing SOX’s sections it was noted there are four sections that could address the aspects of the fraudulent activities at Phar-Mor. It’s very complicated to precise the fraud would be successfully prevented in this case since it was perpetuated at a very high level thereby there is a great chance the executives would have found a way to hide it. In this case as the fraud was perpetrated at the top executive’s level, SOX probably would prevent the involvement of some other employees in the schemeRead MorePhar-Mor Fraud Essay1845 Words   |  8 PagesPhar-Mor, Inc was a thriving discount grocery store in the late 1980’s. Phar-Mor was moving product quickly but profit margins were not significant enough to pay the bills. By the early 1990’s, Phar-Mor declared bankruptcy due to fraudulent financial reporting and misappropriation of assets, making it one of the largest frauds in U.S. history. Below, we will use auditing standard AU 316.85 Appendix A in conjunction with the video â€Å"How to Steal $500 million† to analyze how incentives/pressuresRead MorePhar-Mor Inc1766 Words   |  8 PagesAssignment 1: Phar-Mor Inc By: Rich Allen SID: 250421110 Date: July 18th, 2013 Prof: M. TeKare 1a). A company would want to hire a member of its external audit for a number of reasons. The external auditor would have extensive knowledge of how the company works due to analyzing statements and performing many audit procedures and tests on the company and therefore would reduce time in order to become effective as an employee. The company would know the former auditor personally and have