The Phar Mor case involved a massive collusive fraud by management. Although there were no claims the auditors participated in the fraud, plaintiffs' attorneys were able to convince the jury that the firm was liable for fraud on the grounds it made representations recklessly with regard to GAAS and GAAP.
(c) 1997 NYSSCPA. Reprinted from The CPA Journal, July 1997, copyright 1997, with permission from the New York State Society of Certified Public Accountants.;