Sean 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. Phar-Mor’s first six years of existence seemingly were
manipulate or knowingly reckless. 7. A) Factors that would have contributed to a high inherent risk assessment of Phar-Mor Inc. include their excessive growth in a highly competitive market, the motivation from management to maintain that growth, rapid expansion, results from previous audits, their involvement with related parties, inventory being their biggest account, and the random behavior of Phar-Mor’s founder and COO. B) I think the auditors should have equal responsibility for detecting material misstatements
The 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 statements
~ Case 6 Phar-Mor, Inc.: Accounting Fraud, Litigation, and Auditor Liability Mark S. Beasley, Frank A. Buckless, Steven M. Glover, Douglas F. Prawitt LEARNING OBJECTIVES After completing and discussing this case, you should be able to . . Identify factors contributing to an environment conducive to accounting fraud . Understand what factors may inappropriately influence the client-auditor relationship and auditor independence Understand auditor legal liability issues related to suits brought
Summary 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-Mor's 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 with
Summary of the Phar-Mor fraud case 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
Phar-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 “How to Steal $500 million” to analyze how incentives/pressures
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
Phar-Mor was operated as an American discounted drug and variety store opening its first doors in Youngstown, Ohio in 1982. It came to be when the heir to Giant Eagle; David Shapira and the former Tamarkin VP Michael Monus established the well-known drug store. (Press 1996) Between the years 1985-1992 it expanded from 15 to 310 stores in 34 different states and the sales of the stores at hit virtually $1.5 billion dollars. The low priced drugs and all of the different locations of the stories