This document summarizes the Phar Mor accounting fraud case, which involved fraudulent accounting practices at Phar Mor, a discount drugstore chain. The case discusses factors that contributed to an environment where fraud could occur, such as aggressive growth targets and compensation incentives. It also examines how the client-auditor relationship may have inappropriately influenced auditor independence. Lastly, it considers auditor legal liability issues related to suits brought by plaintiffs in the aftermath of the fraud. The case aims to help students understand accounting fraud, litigation, and auditor liability.