Phar-Mor Case Study

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The Phar-Mor Inc. was founded 1982. The Phar-Mor company is located in about thirty-four states with at least 20,000 employees. However, in 1992 they had to file bankruptcy due to fraud one of the biggest cases before Enron. Phar-Mor Inc. consist of fictitious inventory that were used to cover up operation losses, personal expense that Monus’s used for his World Basketball League, but he hid them in the inventory expense account for several years. He had others to help him cover up the loss, such as, CFO, the Controller and Vice President as well as the accounting manager. So, this fraudulent activity of Phar-Mor was strictly top management that included the people who should have whistled blow the problem and that was the accounting firms, auditors but they helped Monus cover up the fraud for years that cause investors and employees over $500 million dollars. 1. Could SOX have prevented the Phar-Mor Fraud? How? Which specific sections of SOX? Yes, it is my belief that if the Sarbanes-Oxley Act were in place in 1982 the laws and sections would have prevented the fraudulent act earlier by using the laws and regulation as guidelines for corporate responsibilities. The auditors would have been fire from the accounting firm because of the rotation regulation system people that rotated them out would have found the cover up earlier, but because that system was not in place in the 80’s they created a partnership to do wrong, if the following five Sections were in place in the

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