Accounting News

Friday, February 10, 2012
PCAOB Releases Ruling on E&Y

The Public Company Accounting Oversight Board (PCAOB) has issue the final rulings and sanctions on Earnst & Young for the problems at Medicis Pharmaceutical Corporation.

PCAOB ruled that the accounting firm failed to properly evaluate the sales returns reserve of Medicis's financial statements. The company reported the reserve as only the replacement cost when it should have been the gross sales price per GAAP. This is because the product returned was not defective product but expired product and the company allowed customers to receive a credit memo for the full cost of the product.

As a result of the order Earnst & Young has been fined $2,000,000 and the three responsible CPAs were fined $50,000 and $25,000. Robert Thibault has lost his CPA and Ronald Butler and Thomas Christie were censured.

If you are more interested in the timeline of the problems you can read the entire ruling here.

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