Valeant Pharmeceuticals Case Study
2.0 DISCUSSION
2.1 Accounting scandals incurred by the organization (s) One of the multinational pharmaceutical companies is Valeant Pharmeceuticals International, Inc. in Laval, Canada which produces a wide range of pharmaceutical products in the field of dermatology, eye health, neurological and generic brands (VALEANT Pharmaceuticals International, Inc., 2018). However, this company was involved in financial statement fraud and also corruption in 2016 which there was deviation by offering cheats and using secret shell companies and hidden email addresses by Andrew Davenport and former executive Valeant, Gary Tanner at the cost of investors at the Valeant drug maker as indicated by the authorities (Egan, 2016). However, their activities …show more content…
Firstly, Valeant said it recorded and recognized the revenue when the sales have made to Philidor. Then, it said it changed the approach and began to consolidate Philidor inventory on Valeant’s balance sheet and delayed recognition of revenue until sales were made to the final customers (McKenna, 2016). The revenue had said to be double counted when Valeant recognized the revenue again after consolidation. Valeant Pharmaceuticals promised to make amendment of their earnings for two years and this might be the possible abuse of revenue recognition. Moreover, Philidor’s financial statements or results were consolidated with Valeant’s, but Valeant never disclose the details to the people (Lu, 2017). Valeant Pharmaceuticals’ auditor, PricewaterhouseCoopers was then been given the responsibility to double-check their numbers and disclosures of financial statements at the end of February (McKenna, 2016). Besides, Valeant Pharmaceuticals had almost $30 billion of bad debt and involved in accounting fraud related to the Philidor Rx Services. This accounting fraud has been under investigation by the U.S attorney’s office in New York (Keown, 2017). After that, Micheal Pearson and Howard Schiller were caught for investigation in the Philidor scandal (Keown, …show more content…
Valeant Pharmaceuticals International Inc was believed to build on a secret relationship with the speciality pharmacy (Mangan, 2016), Philidor Rx Services and this pharmacy was fully controlled by Valeant. Philidor Rx Services was a speciality mail-order pharmacy formed with Valeant’s assistance (Raymond, 2016) and it helped Valeant to sell high price medications to the patients in order to boost its drug sales. In 2014, Tanner tends to promote Philidor to Valeant executives, J.Michael Pearson to raise his concerns that Philidor can start working with rival drug makers and able to reduce the drug maker’s dependency on the pharmacy (Silverman, 2016). As a result, Valeant agreed to purchase Philidor in December 2014. The deal was successful and Valeant made a payment of $100 million to Philidor’s owners. Tanner helped Davenport earned $40 million in proceeds and as a result, Davenport transferred $10 million to Tanner. The payments made to Tanner were allegedly “laundered” through a series of shell company bank accounts (Silverman, 2016). Their action which illegally uses Philidor as a tool for personal profit has been charged with fraud. Their action was being alleged for illegally converted Valeant shareholder money into their own personal
2.1 Accounting scandals incurred by the organization (s) One of the multinational pharmaceutical companies is Valeant Pharmeceuticals International, Inc. in Laval, Canada which produces a wide range of pharmaceutical products in the field of dermatology, eye health, neurological and generic brands (VALEANT Pharmaceuticals International, Inc., 2018). However, this company was involved in financial statement fraud and also corruption in 2016 which there was deviation by offering cheats and using secret shell companies and hidden email addresses by Andrew Davenport and former executive Valeant, Gary Tanner at the cost of investors at the Valeant drug maker as indicated by the authorities (Egan, 2016). However, their activities …show more content…
Firstly, Valeant said it recorded and recognized the revenue when the sales have made to Philidor. Then, it said it changed the approach and began to consolidate Philidor inventory on Valeant’s balance sheet and delayed recognition of revenue until sales were made to the final customers (McKenna, 2016). The revenue had said to be double counted when Valeant recognized the revenue again after consolidation. Valeant Pharmaceuticals promised to make amendment of their earnings for two years and this might be the possible abuse of revenue recognition. Moreover, Philidor’s financial statements or results were consolidated with Valeant’s, but Valeant never disclose the details to the people (Lu, 2017). Valeant Pharmaceuticals’ auditor, PricewaterhouseCoopers was then been given the responsibility to double-check their numbers and disclosures of financial statements at the end of February (McKenna, 2016). Besides, Valeant Pharmaceuticals had almost $30 billion of bad debt and involved in accounting fraud related to the Philidor Rx Services. This accounting fraud has been under investigation by the U.S attorney’s office in New York (Keown, 2017). After that, Micheal Pearson and Howard Schiller were caught for investigation in the Philidor scandal (Keown, …show more content…
Valeant Pharmaceuticals International Inc was believed to build on a secret relationship with the speciality pharmacy (Mangan, 2016), Philidor Rx Services and this pharmacy was fully controlled by Valeant. Philidor Rx Services was a speciality mail-order pharmacy formed with Valeant’s assistance (Raymond, 2016) and it helped Valeant to sell high price medications to the patients in order to boost its drug sales. In 2014, Tanner tends to promote Philidor to Valeant executives, J.Michael Pearson to raise his concerns that Philidor can start working with rival drug makers and able to reduce the drug maker’s dependency on the pharmacy (Silverman, 2016). As a result, Valeant agreed to purchase Philidor in December 2014. The deal was successful and Valeant made a payment of $100 million to Philidor’s owners. Tanner helped Davenport earned $40 million in proceeds and as a result, Davenport transferred $10 million to Tanner. The payments made to Tanner were allegedly “laundered” through a series of shell company bank accounts (Silverman, 2016). Their action which illegally uses Philidor as a tool for personal profit has been charged with fraud. Their action was being alleged for illegally converted Valeant shareholder money into their own personal