Synopsis

Philip Musica and his three younger brothers used forged purchase orders, sales invoices, and shipping documents to skim profits from McKesson & Robbins, a pharmaceutical distribution company boasting $174 million of revenues and $87 million of total assets. After Musica’s suicide in 1938, investigators discovered that much of McKesson & Robbins’s inventory and accounts receivable did not exist.

Discussion Questions

1. How did the four Musica brothers “skim” profits from McKesson & Robbins?
2. What audit procedures would have detected McKesson & Robbins’ fictitious sales and inflated inventories?
3. How was the McKesson & Robbins fraud discovered?