Economics
  • ISSN: 2155-7950
  • Journal of Business and Economics
Internal Control and Audit Failure at Valeant Pharmaceuticals


Uma V. Sridharan, Linda U. Hadley

(Columbus State University, USA)


Abstract: This paper analyzes the audit failure and events leading up to the financial restatements at Valeant Pharmaceuticals. Valeant, a pharmaceutical firm headquartered in Laval, Quebec, trades on both the New York (NYSE) and Montreal Stock Exchanges under the ticker symbol VRX. Valeant was a high flyingstock that rose about 1000% in a short span of fiveyears. The firm grew primarily through acquisition, having acquired nearly 100 companies, including Bausch and Lomb — a leading manufacturer of contact lenses. In October 2015, shortly before the firm’s third quarterly earnings announcement, Southern Investigative Research Foundation (SIRF)published an articleabout a federal lawsuit filed by R&O Pharmacy in California highlighting accounting irregularities. This paper examines the events leading up to the accounting irregularities and the internal control andaudit failuresat the firm. Valeant is currentlyunderSEC investigation.


Key words: COSO; revenue recognition; auditor responsibility; toneat thetop; internal control

JEL codes: M, K, A




Copyright 2013 - 2018 Academic Star Publishing Company