Ashley Paige Hudson May 11‚ 2014 ACCT525 Week 1 Assignment The Phar-Mor case relates to a marked accounting fraud and collusion by management officials that finally surfaced in 1992‚ after several years of falsified inventory records and financial reports. Phar-Mor‚ Inc. was a private retail company that was growing attention and market share in the mid 1980’s. This chain of discount drugstores grew to 310 stores in in 34 states before investor losses reached $500
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Assignment 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
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SUMMARY Phar-Mor‚ the discount drug store that had enjoyed a decade of phenomenal financial success. It started with 15 stores and grew to over 310 stores in thirty two states from 1982 to 1992 it sales grew to $3 billion. At first Phar-Mor was seen as a major prospect in the retail market. The president‚ founder‚ and COO of Phar-Mor was Mickey Monus‚ who became quite extravagant with his money as Phar-Mor grew. The key to the company’s success was a power buying a phrase coined by Mr. Monus‚ it
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~ 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
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Sementara‚ salah satu tujuan internal audit adalah justru untuk menemukan penyimpangan‚ baik akibat dari misstatement yang disengaja (fraud) maupun yang tidak. Padahal menurut laporan “2002 Report to Nation on Occupatinal Fraud and Abuses” menyatakan bahwa aktivitas internal audit dapat menekan 35 % terjadinya fraud. Jawaban pertanyaan diatas akan lebih sulit lagi ditemukan‚ bila pihak top manajemen justru berperan aktif dengan cara mendesain tugas-tugas internal audit diperusahaannya menjadi tugas yang
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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
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1a) External auditors obviously know what to look for in an audit‚ it’s what they do for a living. Having your company’s external auditor work for your company instead can give insight as to what they look for when doing an audit and therefore make it easier for a company to commit fraud. 1b) A client hiring former auditors may or may not affect the independence of current external auditors. It may affect their independence if they would rather work for the client; they could think that if they
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Phar-Mor was known as one of the major discount chain retailers in the late 1980’s - early 1990’s. It was founded by Mickey Monus‚ a gambler in nature‚ who with the help of senior management was “cooking the books” for years to cover up his loses. The reason why senior management agreed to do this fraud is the belief in unique ability of their leader to fix everything later on. This case is known as one of the biggest accounting frauds in the corporate history of the U.S. This paper will analyze
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Phar-Mor‚ Inc. Key Facts • Started in 1982 with 1 store. Up to 310 stores in 1992 with sales of $3 billion • Retail drug store- highly competitive‚ deep discounts • Mickey Monus‚ president and COO‚ found guilty of embezzling $10 million in 1995 • Monus had an extravagant life style • Sentenced to 20 years in prison • Monus and Patrick Finn his CFO • Manipulated I.S. accounts (understate cost of goods sold and overstated inventory) for 6 years • Inventory
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In 1982‚ Phar-Mor chain of discount drug stores founded by Michael “mickey” Monus and David shapira in the United States. Phar-Mor business was to sell large quantity of merchandise with a very small profits margin. Instead‚ they had it set up were the products can get send direct delivery or shipped though Tamco Warehouse. Sam Walton was feared of Monus because he didn’t know how the Phar-Mor grew in short time. In 1992‚ the company expanded‚ it was 300 stores and they hire 25‚000 employees. Monus
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