Introduction
Cardinal Health, Inc is a chain of more than 400 health care services companies with main quarters in Dublin, Ohio. Cardinal Health specializes in distribution of pharmaceuticals and a variety of medical products local and overseas with thousands of customers.
United States Securities and Exchange Commission vs Cardinal Health Inc.
During 2007, the United States Securities and Exchange Commission accused Cardinal Health, Inc, a pharmaceutical company, of fraud for its internal control. Cardinal Health faced serious accusations for fraudulent earnings and revenue presentations and other inadequate accounting practices. The SEC put under investigation this pharmaceutical company due to its false picture of its operational statements. The main target of the unethical practices of accounting was inflate its operating revenue. At the same time, other unethical accounting procedures was found, but this time I am to focus in the principal and previous fact mentioned.
Fraud: Operating Revenue Recognition
Cash flow is one of Financial Statements more manipulate and easy to alternate when it is about operating expenses, and it is very complex at the time of
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The company prefers to hold its bulk inventory orders after the ended of its last quarter longer than the usual 24 hours to convert this from bulk revenue to operating revenue. The 24-Hour Lever was implemented with the objective to inflate its operating revenue and its growth rates. Also, the 24-Hour Lever strategy was not disclosed during any period of its implementation. The result of this fraudulent technique was the representation of $48.5 billion by $1.2 billion in the company’s revenue. Revenue account, bulk revenue, was the principal account modified and used to inflate Cardinal Health Inc’s