Phar-Mr Audit Case Summary
Finn’s willingness to go along with the actions of Monus made an already bad situation worse. Finn as the CFO should not have allowed himself to be involved in financial frauds of any sort just to show a profit. Finn should taken control of the situation right then and told Monus what he was doing was wrong and he wouldn’t take part in any of it. Shapir was just as wrong because he was aware of what Monus and Finn were doing and he just ignored it until it the fraud got out of hand. Coopers & Lybrand as the auditors did not exercise due professional care in performing the audit. I don’t feel they obtained sufficient competent evidential matter and they did not use professional judgment when they informed Phar-Mor in advance which stores
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According to the standards of the AICPA and IMA the actions of Finn and Cherelstein caused them not to meet their ethical obligations. Cherelstien, a CPA, hired to be the controller of Phar-Mor. As a CPA there are certain principles and expectations on the part of the public in the performance of professional services that are expected to be met. The principles include (1) responsibilities; (2) the public interest; (3) integrity; (4) objectivity and independence; (5) due care; and (6) scope and nature of services. Cherelstein did not use professional and moral judgment when Anderson informed him of the company keeping two sets of books. Cherelstein tried to resolve the conflict but he at the time only consider the company interest and not the public interest. Also, he was not free of conflicts of interest in meeting his professional responsibilities because he tried to give Monus sometime to turn thing around instead of avoiding relationship with Phar-Mor that may be seen as impairing objective judgment by a “reasonable” observer. Finally, Cherelstein did not carry out his professional responsibilities with concern for the best interests of those for whom the services are performed. Then there is Finn the CFO of Phar-Mor who also holds the CMA. Finn, as a member of the
According to the standards of the AICPA and IMA the actions of Finn and Cherelstein caused them not to meet their ethical obligations. Cherelstien, a CPA, hired to be the controller of Phar-Mor. As a CPA there are certain principles and expectations on the part of the public in the performance of professional services that are expected to be met. The principles include (1) responsibilities; (2) the public interest; (3) integrity; (4) objectivity and independence; (5) due care; and (6) scope and nature of services. Cherelstein did not use professional and moral judgment when Anderson informed him of the company keeping two sets of books. Cherelstein tried to resolve the conflict but he at the time only consider the company interest and not the public interest. Also, he was not free of conflicts of interest in meeting his professional responsibilities because he tried to give Monus sometime to turn thing around instead of avoiding relationship with Phar-Mor that may be seen as impairing objective judgment by a “reasonable” observer. Finally, Cherelstein did not carry out his professional responsibilities with concern for the best interests of those for whom the services are performed. Then there is Finn the CFO of Phar-Mor who also holds the CMA. Finn, as a member of the