Phar-Mor Inc.Phar-Mor Inc. has become a well-known pharmacy for selling its products at a very high discount rate. In ten years the business has grown to 310 stores and serves 32 states across the country. The company later became known for one of the largest frauds committed in the 1990s. Phar-Mor Inc. also involved its subsidiary Tamco in the illegal activities. Both companies did not have adequate records, resulting in overbilling of $4 million. The next problem for Phar-Mor Inc became the formation of the World Basketball League. The president of Phar-Mor Inc. owned 60% of WBL and was responsible for its losses, which he allegedly covered using funds from the pharmaceutical business. He also embezzled $200,000.00 for improvements to his personal home. Phar-Mor Inc. was able to cover their losses with the help of what they consider a “temporary account.” They moved all fraudulent activity through this account, because they knew that auditors would not look at accounts that have a zero balance. According to the CPA Journal there are five SOX sections that address aspects of Phar-Mor management's fraudulent activities: "Audit Partner Rotation," "Conflicts of Interest," "Corporate Responsibility for Financial Reporting," "Management Evaluation of Internal Controls” and “Code of Ethics for Senior Financial Executives.” SOX would be able to prevent the same audit firm from being hired for more than five years. Some members of the fraudulent group were also former employees of the auditing firm. Because of the Conflict of Interest section, Phar-Mor Inc. would not be able to hire employees from Cooper without breaking the one-year rule. In this case it would be much more difficult for top management to hide illegal activities without knowing the audit procedures. O......half a card......for the audit service, but he earned even more for consultancy and other activities. The accounting firm has rejected attempts to limit or prevent them from carrying out consultancy work for audit clients; they insist that there is no real conflict of interest. Enron used off-balance sheet entities to manipulate its earnings and hide its debt. The Sarbanes-Oxley Act requires greater disclosure about off-balance sheet entities. The Sarbanes-Oxley Act of 2002 also requires auditors to distinguish between audit and non-audit services or to avoid any conflict of interest. So this section could be useful in identifying fraudulent activities, since Enron would not be able to hire Andersen for audit purposes. Additionally, the audit partner responsible for audit review must rotate every five years. This will prevent ongoing fraud from occurring for more than a few years.