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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merger‚ Silverman announced he would reduce his day-to-day involvement with the company and assume the company’s chairmanship in preference of CUC’s founder and CEO Walter Forbes. Just months after the merger‚ in April 1998 Cendant uncovered massive accounting improprieties at CUC which resulted in one of the largest financial scandals of the 1990s. At the time‚ Vice Chairman E. Kirk Shelton‚ was reported to have inflated the company’s revenue by $500 million over a period of three years. When this report
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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.: | |Accounting Fraud‚ Litigation‚ | |and Auditor Liability
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Mungkin pertanyaan ini akan menjadi sangat mustahil‚ bila fraud memang diciptakan oleh manajemen perusahaan. 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
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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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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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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 “look the other way” that the client
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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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