The Case Summaries For Phar Mor Inc. Fraud Essay

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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 were riddled with material misstatements and fraud acts of theft were blatant. For example, the senior financial officers including the CEO grossly over stated inventory to hide losses.
Further, the bucket account was to steal money and direct those funds to other services outside of normal company business. “The whistle was blown when a Phar-Mor check was written to cover the World Basketball League expenses of the private investment of CEO Monus” (Williams,2011, p58). Furthermore, the senior financial officers were previous auditors of the organization external auditing firm.
Could SOX have prevented the Phar-Mor fraud? How? Which specific sections of SOX?
Yes, SOX could have prevented the Phar-Mor fraud. However, I do believe if a person or persons are determined to disobey the law they are difficult to quell. Moreover, prevention methods can make fraud acts more difficult to perform without detection. SOX Title II and Title V could have prevented the Phar-Mor fraud.
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