The Case Of Phar Mor Inc.

Phar-Mor, Inc. applied a variety of different fraudulent reporting techniques to "cook the books" and commit one of the biggest corporate frauds in American history. A number of things were done to cover up the massive losses the company was taking including issuing fake invoices for merchandise purchases, making fake journal entries in order to increase inventory and decrease cost of sales, recognizing inventory purchases but then not accruing the corresponding liability, and over-counting merchandise.

Throughout history and in our own time, legitimate accounting methods have been utilized to fraudulently engage in manipulating activities that results in illicit gains to the perpetrators and losses to individuals and financial institutions.

The main objective of the Sarbanes-Oxley act was to reduce fraud. So far that objective seem to have been obtain. Since SOX was enacted, there has not been a major domestic corporate financial scandal uncovered other than the options back-dating scandal that occurred before July 2002 (Jahmani & Dowling, 2008). It is a tax advantage because companies and investors are not losing money.

The Sarbanes-Oxley Act of 2002 (SOX), also known as the Public Company Accounting Reform and Investor Protection Act and the Auditing Accountability and Responsibility Act, was signed into law on July 30, 2002, by President George W. Bush as a direct response to the corporate financial scandals of Enron, WorldCom, and Tyco International (Arens & Elders, 2006; King & Case, 2014;Rezaee & Crumbley, 2007). Fraudulent financial activities and substantial audit failures like those of Arthur Andersen and Ernst and Young had destroyed public trust and investor confidence in the accounting profession. The debilitating consequences of these perpetrators and their crimes summoned a massive effort by the government and the accounting profession to fight all forms of corruption through regulatory, legal, auditing, and accounting changes.

The Sarbanes-Oxley is a U.S. federal law that has generated much controversy, and involved the response to the financial scandals of some large corporations such as Enron, Tyco International, WorldCom and Peregrine Systems. These scandals brought down the public confidence in auditing and accounting firms. The law is named after Senator Paul Sarbanes Democratic Party and GOP Congressman Michael G. Oxley. It was passed by large majorities in both Congress and the Senate and covers and sets new performance standards for boards of directors and managers of companies and accounting mechanisms of all publicly traded companies in America. It also introduces criminal liability for the board of directors and a requirement by

The Sarbanes-Oxley can into play when the SEC conducted an investigation to determine if fraud exists in major corporations. The SEC request CEO’s and CFO's of the publicly-traded corporations file a sworn statement ensuring that the organization used integrity when it came to their financial statements and other documentation they file with the SEC that year. There

The purpose of the Sarbanes-Oxley Act is to protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities law, and for other purposes. (Lander, 2004) The Act created new standards for public companies and accounting firms to abide by. After multiple business failures due to fraudulent activities and embezzlement at companies such as Enron Sarbanes and Oxley recognized a need for the revamping of our financial systems laws, rules and regulations. Thus, the Sarbanes-Oxley Act was born.

Prior to the 2002 scandal of Enron, the standards for financial reporting were much more relax than the regulations that businesses encounter today. The Sarbanes Oxley Act of 2002(SOX) came into play as a response to the unruly financial reporting to the public from companies such as Enron, Arthur Andersen, Tyco and WorldCom. The public scandals created insecurities for any American to invest in big companies, due to fear of additional fraud encounters. The Sarbanes Oxley Act was enacted to try create some trust between these big companies and the hardworking individuals who were investing in them. The fraud scandals were front page news stories and the government hoped that passing this legislation

PART C: It seems that whenever there is a corporate scandal, Congress responds by trying to strengthen the laws. Sarbanes-Oxley was passed to address the Enron accounting abuses. Review the video links and information about Sarbanes-Oxley found in the text and module. Many of the SOX provisions were contained in the Federal Sentencing Guidelines.

This paper provides an in-depth evaluation of Sarbanes-Oxley Act, which is said to be promoted to produce change in the corporate environment, in general, by stressing issues of public accountability and disclosure in the financial operations of business. It explains how this is an Act that represents the government's and the Security and Exchange Commission's concern in promoting ethical standards in terms of financial disclosure in the corporate environment.

Sarbanes-Oxley Act, also known as SOX. Although SOX tremendously reduced accounting fraud and enhanced regulation from SEC, the side-effects will always happen: Opponents think implementing SOX will loses more than gains. The additional regulations is costly and makes public firms react negatively. Both of the cost and negative reacts would be the drawback to the economy (Jahmani, Dowling 57).

The Sarbanes-Oxley Act was passes in 2002 in response to a handful of large corporate scandals that occurred between the years 2000 to 2002, resulting in the losses of billions of dollars by investors. Enron, Worldcom and Tyco are probably the most well known companies that were involved in these scandals, but there were a number of other companies guilty of such things as well. The Sarbanes-Oxley Act was passed as a way to crackdown on corporations by setting new and improved standards that all United States’ public companies and accounting firms were and are required to abide by. It also works to hold top level executives accountable for the company, and if fraudulent behaviors are discovered then the executives could find themselves in hot water. The punishments for such fraudulence could be as serious as 20 years jail time. (Sarbanes-Oxley Act, 2014). The primary motivation for the act was to prevent future scandals from happening, or at least, make it much more difficult for them to happen. The act was also passed largely to protect the people—the shareholders—from corporations, their executives, and their boards of directors. Critics tend to argue that the act is to complicated, and costs to much to abide by, leading to the United States losing its “competitive edge” in the global marketplace (Sarbanes-Oxley Act, 2014). The Sarbanes-Oxley act, like most things, has its pros and cons. It is costly; studies have shown that this act has cost companies millions of

The much needed blowup was offered by the massive scandals at Enron and Worldcom followed by Adelphia and the rest. In their efforts to restore investors’ confidence in the capital market, the United States’ Congress enacted Sarbanes-Oxley Act in 2002 (SOX). The SOX had ambitious goals to fix the root cause of the failures in corporate America, accountabilities in the boardrooms (Grasso, Tilley, & White, 2009: Kessel, 2011). In particular, the Act ensures that accounting records and reports are fairly presented and reliable (Verschoor, 2012: Aubert & Grudnitski, 2013). SOX achieves these by requiring certifications by the Chief Executive Officers (CEO) and the Chief Financial Officers (CFO). In addition, attestations by independent auditors of accuracies of the financial reports and internal controls over the accounting records.

The Sarbanes-Oxley Act of 2002 (SOX) was put into effect because of the corporate scams that were being committed in that time period. Congress passed the act to force companies to keep closer tabs on their internal controls. Under SOX, companies are required

The Sarbanes-Oxley Act is meant to bring accuracy and reliability of corporate disclosures by requiring certifications done to the quarterly and annual reports by the chief executive and financial officers.[3] The Sarbanes-Oxley Act was enforced in July 2002 following a series of high profile accounting scandals. For all financial statements that were to be filed deadlines were provided to comply with the provisions