Introduction to Managerial

C H A P T E R O N E Introduction to Managerial Decision Making Phar-Mor, Inc., the body politics largest discount drugstore chain, filed for bankruptcy court protection in 1992, future(a) discovery of one of the largest business fraud and embezzlement schemes in U.S. history. Coopers and Lybrand, Phar-Mors former size upors, failed to detect inventory inflation and other monetary manipulations that resulted in $985 million of earnings overstatements over a three-year period. A federal jury unanimously found Coopers and Lybrand liable to a conclave of investors on fraud frivol aways. The successful plaintiffs contended that Gregory Finerty, the Coopers and Lybrand partner in charge of the Phar-Mor audit, was hungry for business because he had been passed over for additional profit-sharing in 1988 for failing to sell enough of the firms services (Pittsburgh Post-Gazette, February 15, 1996). In 1989, Finerty began selling services to relatives and associates of Phar- Mors president and CEO (who has been sentenced to prison and fined for his part in the fraud). Critics claim Finerty may set about become too shutting to client management to maintain the professional skepticism necessary for the lease of an independent audit.

The Phar-Mor case is just one of many in which auditors have been held accountable for certification of faulty financial statements. Investors in the Miniscribe Corporation maintain that auditors were at least partially responsible for the nowdefunct companys falsified financial statements; at least one jury agreed, holding the auditors liable to investors for $200 million. In the wake of the U.S. savings?and? loan crisis, audit firms faced a barrage of lawsuits, paying hundreds of millions in judgments and out-of-court settlements for their involvement in the financial reporting process of savings?and?loan clients that eventually failed. The auditing partners of Coopers and Lybrand, handle partners of other firms held liable for such... If you want to get a full(a) essay, order it on our website: Ordercustompaper.com

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