Phar-Mor Inc. Case Study

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The Investors and related parties lost many millions, the employees lost their savings and their jobs, and the most important thing was the accounting profession integrity was at risk. So this creates many aspects must be changed. Need the changing to reinstate the public confidence in the accounting profession and to find ways to keep away from fraud in the long term. was one of the largest super discount drugstores who competed with companies like Wal-Mart in the early 1980’s up until its demise in 2002. The company was a complete success with over 300 discount super stores across the United States and employing thousands of workers. This came at a price as the company was found to have engaged in some unlawful business practices that soon came crashing down as the scheme perpetrated by Michael Monus and other former Coopers & Lybrand employees would use their knowledge of the industry to deceive the public.
From its inception Phar-Mor Inc. became one of the five largest retail drug store chains in the U.S. The company grew in just seven years with over 300 stores and 25,000 employees nationwide.
Its low cost strategy proved to be the key to its success; as company sales reached $3 billion in FY 1991. The success of Phar-Mor Inc. came to an abrupt halt in 1992 as Michael Monus, the companies president was fired that year and
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scandal the court found auditor Coopers & Lybrand failed to show there audit was in compliance with Generally Accepted Auditing Standards. The fraud continued for a period of six years and the attorneys claimed that had the auditor been more diligent they would have been able to uncover the actions of its audit client Phar-Mor Inc. The attorney claimed the internal auditors did not provide sufficient documentation to the external auditor, Coopers & Lybrand, and failed to acquire pertinent information regarding highly material transactions during the course of its audit

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