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Ernst & Young (audit firm) failed to properly evaluate how Medicis Pharmaceutical Corp. (company) was calculating its reserve for sales returns. Financial Restatement Summary Medicis Pharmaceutical Corp. had to restate more than three years worth of financial statements in 2008 (Censuring E&Y, PCAOB Hits Firm’s Lack of Skepticism). According to an inspection by PCAOB of Ernst & Young (audit firm) they found that there was an inaccurate interpretation of FAS 48, “Revenue Recognition When Right of Return Exists. Medicis was using an exemption to that rule for expired or soon-to-expire products that customers had returned to its distributor, but it did not apply to resellers or distributors (in this case) since the returned products were not sellable. This exemption can only be used if the product being exchanged is of the same kind and quality, the company was not supposed to consider the two products (soon to expire & customer returns) the same for calculating this reserve.

The article also stated that Medicis was reserving for most of its estimated product returns at the cost of replacing the product rather than at the gross sales price of the product, which also caused a material effect on Medicis’s revenue calculations. Medicis’s practice was considered a “flawed accounting rationale,” according to the PCAOB, which conflicted with GAAP and Ernst & Young’s company policies, yet it was not evaluated by the audit firm. Censuring E&Y, PCAOB Hits Firm’s Lack of Skepticism) Medicis and Ernst & Young have settled a shareholder lawsuit stemming from the restatement for $18 million. Surprisingly, Ernst & Young is still listed as Medicis’s independent auditor. The audit firm stated that they have “implemented changes to their policies and procedures that directly address the PCAOB’s concerns and will enhance quality in the future. (Censuring E&Y, PCAOB Hits Firm’s Lack of Skepticism) The board also sanctioned four current and former partners of the firm, three will pay the PCAOB a total of $100,000, and two of the auditors that were involved were barred from associating with an accounting firm that audits public companies listed in the United States. Conclusion From learning about error correction and accounting changes this week, I have more insight to the issues stated in this article, as accounting errors and changes have effects on a company’s previous, present, and future financial statements.

In this case there was a change in accounting principles, and a change in accounting estimate, causing errors in the financial statements. These types of accounting changes provided inaccurate and unreliable information that had to be restated. Medicis had improperly calculated its reserve for sales returns using an inaccurate exemption. Medicis audit firm; Ernst & Young, also failed to properly evaluate this error and also violated PCAOB’s auditing rules which caused them a $2 million dollar penalty. The restatement also caused a shareholder lawsuit for $18 million.

Sustainability and CSR Research Paper with example of three MNC or small medium Enterprise. Also need to provide Citation and reference in APA format, table of content and appendix page.

Choose three MNCs or SMEs (or combination of) for review, analysis, and recommendations 1. Review the MNCs and/or SMEs, website: to determine definition or position on Corporate Social Responsibility (CSR) and Sustainability and to discuss what practices, policies and/codes are in place 2. Highlight two of the “Dilemmas to CSR and/or Sustainability” that are most prominent in each of the companies (for example Sustainability, Social Responsibility, Human Rights, Poverty, Environment and Climate Change, Corruption) and the action to implement change for the better? 3. Provide specific examples of what the company does for each of the responses that you highlight. 4. Assess the level of commitment to CSR and/or Sustainability practices of both company’s (philanthropy versus sustainability initiatives – in other words, is their CSR focus on how “they spend their profit” or on how “they make their profit”?)

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