audit - They argued four main facts in relation to due...

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Ryan Petteruti February 2, 2011 Audit-Falk Case 4.6 Phar-Mor, Inc. 1. Eight plaintiffs comprised of investors and creditors decided to sue Coopers under Section 10(b) of the Federal Securities Exchange Act of 1934 and under Pennsylvania common law. The plaintiffs did not allege that Coopers knowingly participated in the fraud, nor did they allege Coopers liable. Rather, the plaintiffs argued that Coopers made misrepresentations in its audit opinions. Sears’ attorney stated, “The question is whether Coopers falsely and misleadingly stated that it conducted a GAAS audit and falsely and misleadingly told plaintiffs that Phar- Mor’s worthless financial statements were fairly presented.”
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Unformatted text preview: They argued four main facts in relation to due diligence, carelessness and the emphasis on generating revenue from new clients rather than properly budgeting for audits. 2. Coopers, the defendant, demanded that this was a massive fraud perpetrated by Phar-Mor’s management. They illustrated that the fraud was a collusive effort by multiple individuals within the upper management of the company who continually worked to hide evidence form the auditors. Their attorney stated “It’s a first. . that effectively turns outside auditors into insurers against crooked management.”...
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This note was uploaded on 03/16/2011 for the course ACG 4632 taught by Professor Falk during the Spring '09 term at FSU.

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