Evaluating Rite Aid Using COSO
Research Rite Aid’s fictitious financial reporting schemes that took place around 1999: the main schemes were that they overstated ending inventory values to reduce cost of goods sold, adjusted gross profit entries to reduce cost of goods sold, and improperly recognized vendor rebates to reduce cost of goods sold.
Consider your findings about the Rite-Aid frauds.
Using the COSO guidance, describe three components of COSO that Rite Aid failed to maintain that contributed to the fraud (hint- start with the 17 principles underlying the 5 major components of COSO).
Describe the internal controls you would recommend that could have prevented or detected these frauds that could have been implemented in a one page paper.
