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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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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three years. When this report was released to the public‚ the resulting damage to the market value for the company was approximately $14 billion‚ with their stock tumbling from a high of $41 down to nearly $12. At the time‚ this fiasco was the largest case of
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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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|Case 4.6 | |Instructional Notes | | | |Phar-Mor‚ Inc.:
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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 fraud free and
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auditors are prohibited from providing certain services to clients: book keeping or other things related to the accounting records or financial statements of the audit client‚ they are not allowed to design and implement financial information‚ appraisal or evaluation services‚ internal audit outsourcing services‚ investment banking services‚ legal services and expert services unrelated to the audit. 3. A) If I were put in this situation as an equity investor‚ I would absolutely pursue legal actions
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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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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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Phar-Mor‚ Inc. 1. 2 cases which companies have committed fraud by misstating inventory: • Rocky Mount Undergarment Company‚ Inc. • Leslie Fay Company 2. Intentional misstatements of inventory is difficult to detect‚ as was in the case of Phar-Mor‚ Inc.‚ because of the collusion by employees and/or management to commit fraud. 3. Coopers & Lybrand won the Phar-Mor‚ Inc. account with a very low bid‚ so they wanted to limit their costs by testing only 4 out of the 129 stores
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