Phar Mor

A) The topic concerning this case is negligence law. The issue is whether Simon would be successful perusing a negligence claim.

The organizational structure of Phar-Mor was ineffective and lacked many control activities including: segregation of duties, authorization, documentary and IT controls. As a result, Phar-Mor’s president had a stronghold on certain upper level management and executives which gave him the opportunity to control the fraud and hide it from other members of the organization and supposedly Phar-Mor’s auditors, Coopers and Lybrand LLP.

6. What is your appraisal of Blue Nile’s financial performance based on the data in

This course is the first in a two-part series that deals with auditing a company 's financial reports, internal controls, and

The one pattern within the data that appears to be inconsistent yet if the auditors had established an internal control systems would be Monus the founder moving so freely throughout every aspect of the company with no one checking his movements. From choosing what properties to purchase to purchasing supplies. In any company there should be segregation of duties. For example, the person making the deposits should not be the person writing the checks. Had there been stipulations made it would not have been so convenient to commit the

2. Using the evidence you found during your reading, summarize the background of this case in three complete sentences.

As indicated by PCAOB, the written representation cannot be a substitute for substantive procedures. Thus, auditors did not perform adequate procedures to test the management’s estimates. What’s more, inquires were heavily relied on the management’s integrity. Auditors ignored the professional skepticism. Finally, the 30 years and 15 years useful lives, which were adopted previously by Little Drummer, were not appropriately audited. Since the engagement team did not contact the predecessor auditors, the team did not get any audit documents from predecessor auditors regarding the assumptions of 30 years and 15 years. There was no evidence to show the reasonableness of these two assumptions.

3. What is Corning’s technology strategy at the time the case was written? What is your evaluation of this strategy? BE decisive happy face or sad face. Defend your definitive position

The main source used in planning the audit is the WesFarmer’s annual financial report together with the relevant

3. Research auditing standards and describe the typical procedures that an auditor would perform in auditing a fair value estimate such as the

Read the Zoom Snowboard case (on Canvas). Please stop at page 1205 …just glance through page 1206. Then, please complete the template below. This audit planning case is worth 5% of your grade. It requires you to be familiar with Chapters 6, 8 and 9.

This case established that an auditor could be sued by a primary beneficiary for damages from negligence. A primary beneficiary is a party that has a direct benefit from the audit. Non-privity parties could also sue for gross negligence. This increased the auditor’s legal exposure to third parties. The SEC of 1934 reflected these changes and many others; one significant change was that auditor’s had a much higher litigation risk due to their new responsibility to third parties.

A word of advice: Read the case questions before reading the case. Focus only on the information you need to answer the questions. Do your assignment in Word and always

Auditors should plan the audit so that the engagement is conducted in an effective manner.

Phar-Mor easily skirted the annual audit by Coopers. The Coopers partner leading the audit had previously came under scrutiny for missing audit budgets, and thus, was under increased pressure to maintain audit costs. Continuing, the fact that Monus was likely to contribute additional business to the accounting firm led to a desire to please him. Eager to cut costs and in the first year of their engagement,