Phar Mor Case Summary

In this essay, the author

• Explains that phar-mor inc. was incorporated in 1982 as a deep discount drug store chain, with 25,000 employees in 34 states.
• Explains that the senior officers were all former employees of the cooper & lybrand accounting firm who were familiar with the audit process.
• Explains that the introduction of sarbanes oxley 02 could not have prevented phar fraud in a post sox environment.

• Explains that phar-mor inc. was incorporated in 1982 as a deep discount drug store chain, with 25,000 employees in 34 states.
• Explains that the senior officers were all former employees of the cooper & lybrand accounting firm who were familiar with the audit process.
• Explains that the introduction of sarbanes oxley 02 could not have prevented phar fraud in a post sox environment.
• Opines that since the ceo and cfo were perpetuators of these frauds at phar mor inc., they would have signed the report as not having any fraud or material misstatement.
• Describes the waste management scandal from the late 1990's. the executive management engaged in a massive financial fraud between 1992 and 1997.
• Opines that the introduction of sarbanes oxley act 2002 would not have prevented the fraud at waste management.
• Explains that the officers were responsible for establishing and maintaining internal controls which forms the basis for the preparation of quarterly releases and annual accounts. reporting to the audit committee and auditors would have been a formality.
• Opines that section 1v, code of ethics for senior finance officers, is well-intentioned. however, when corrupt practices are entrenched, this exercise is just cosmetic to comfort regulators.
• Describes enron's scandal from the early 2000s. the houston based company kept huge debts off the balance sheet by practicing structured financing using spes’ and these special entities were not included in the as part consolidations
• Opines that the introduction of sarbanes oxley 2002 would have prevented this scandal as shown in the application of the following sections:title 111, section 302 corporate responsibility for financial reports.
• Explains title iv, section 406, code of ethics for senior finance officer. once the code is established, people are trained at all levels and management set the right tone at the top.