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
Words: 375 - Pages: 2
The Case of Phar Mor Inc. Sara Munger ACCT 525: Current Issues in Accounting Professor: Sharon Brown July 12, 2014 The Case of Phar Mor Inc. Fraud will always be an issue but was more so in the past before there were any real guidelines that companies and accountants had to adhere to. People with higher positions within a company somehow let the power get to them at times and can use that to their advantage. Rather than taking that position and being responsible and set the
Words: 1291 - Pages: 6
Introduction: Michael “Mickey” Monus managed to lose over $500 million dollars of investor money while seemingly building a successful discount chain. Using catchy slogans such as "Phar-Mor power buying gives you Phar-Mor buying power" enabled Monus to take his chain from 1 store to over 300 in 10 short years. This phenomenal growth was attributed to selling a lot of merchandise, purchased at rock bottom prices, to turn a small profit. The success was unusually rapid and even had Sam Walton, of
Words: 719 - Pages: 3
A View of an Accounting Fraud and Litigation from Inside the Courtroom What the Jury Heard in the PharMor Case 1 In the Phar‐Mor case, several members of top management confessed to, and were convicted of, financial statement fraud. Certain of Phar‐Mor’s creditors and investors subsequently brought suit against Phar‐Mor’s independent auditor, Coopers & Lybrand, alleging the firm was reckless in performing its audits. A jury found the audit firm liable for fraud. While this module can only contain a very small
Words: 3894 - Pages: 16
to Auditing Standards, your textbook, and other relevant authoritative sources is expected where appropriate. Even where some of the questions are quite general, try as much as possible to relate your answer to the case. 1. Some of the members of Phar-Mor's financial management team were former auditors for Coopers & Lybrand. (a) Why would a company want to hire a member of its external audit team? (3pts) (b) If the client has hired former auditors, would this affect the independence of the
Words: 813 - Pages: 4
Making Phar-Mor, Phar-Less Phar-Mor was a private company that was in the super-giant drug chain business. It had achieved exponential growth and was already being compared to Wal-Mart as one of the great American success stories. The company had grown in just seven years (1985-1992) from just a few stores to hundreds. Sales went from literally nothing to over $3 billion. The founders had become pillars of their communities owning sports teams and contributing substantially to local charities
Words: 7146 - Pages: 29
Assignment Week 1 The Case of Phar-Mor Inc Devry University ACCT 525-15768 January 12, 2014 Abstract The Sarbanes-Oxley Act of 2002 was implemented with the sole purpose of assuring the investors in the financial reporting system. One example is a case such as Phar-Mor which fabricated their inventory in most of their retail stores in order to conceal a massive fraud by the leading executives. Or the Waste Management scandal which did things such as capitalizing items which should have
Words: 1536 - Pages: 7
EVIDENCE FORM I have read UB’s policy on cheating and plagiarism (see UB’s website for more information). I have done all work myself with no HELP from anybody or any source. Please put your name in the line below to certify the above statement. ____ Huang ___________Xinlu____ Last First MAX points 40 Start time__5:25__ End time__8:15____ Below ..TIME TAKEN to COMPLETE The EXAM(not including DFD time) ___150mins_________ GENERIC ANSWERS/ANALYSIS WILL NOT GET CREDIT
Words: 2938 - Pages: 12
1. Explain the Phar-Mor fraud. Phar-Mor was a discount drug retail chain, based in Youngstown, Ohio. It was founded by Michael Monus and David Shapira in 1982. Monus and company’s CFO Patrick Finn moved about 10 million from Phar-Mor to the World Basketball League to cover up losses. The senior management had cumulatively overstated income by $290 million from 1987 to 1991. The fraud made by dumpling the losses into a “bucket account” and then reallocating the sums to one of the company’s hundreds
Words: 520 - Pages: 3
Summary: The Case of Phar-Mor Inc. The Phar-Mor Inc. a deep discount drug store chain, came into existence in 1982 as an affiliate of family-owned grocery chain Giant Eagle, which also owned a distribution company, Tamco Distributors Co. and the deep discount concept consisted of using “power buying” or purchasing the largest possible amount of product at best term, then selling at discounts of up to 25% - 40% off retail prices. Phar-Mor Inc. had fictitious inventory, fund diversions and a fraud
Words: 1444 - Pages: 6
