Essay on Bausch + Lomb's Unethical Practices and the FASB Codifications

Essay on Bausch + Lomb's Unethical Practices and the FASB Codifications

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Bausch + Lomb, now a division of Valeant Pharmaceuticals International, Inc. began in 1853 in Rochester, New York, as a small optical shop that grew to become a multi-billion dollar corporation with approximately 12,000 employees worldwide. Its mission is to help you see better to live better, and to protect and enhance the gift of sight. Its products consist of three different marketed goods. The first of which is its vision care segment that includes products such as contact lenses, and solution to clean and care for them with. Its second line of products is pharmaceuticals, such as over the counter eye drops, as well as medicine to treat a range of eye conditions such as glaucoma and conjunctivitis. Bausch and Lomb’s last line of products include a full suite of products such as intraocular lenses and other surgery equipment needed for cataract and vitreoretinal surgeries (About Bausch + Lomb).
However, in the 1990s the company’s vision care sector ran into ethical accounting issues relating shipment of its product and the subsequent revenue recognition. The market for contact lenses began shifting away from traditional contact lenses, and instead became focused on the new frequent replacement and disposable lens model created by Johnson and Johnson (Maremont). Where Bausch and Lomb went wrong is, “The company increased reported revenues from sales of contact lenses and sunglasses by shipping the products to warehouses although there were no legitimate orders, by secretly agreeing to allow customers to return unwanted lenses and by recording sales in the fiscal year 1993 even though the items were not shipped until after the fiscal year ended on Dec. 25.” (Norris). This process is known as channel stuffing, and done by forcing...


... middle of paper ...


... better position than they truly are to encourage extra investment, and approval of new loans. The practice of channel stuffing, while beneficial in the short term, is very detrimental to a company’s long-term financial healt



Works Cited

"About Bausch + Lomb." Bausch + Lomb. N.p., n.d. Web. 16 May 2014.
Financial Accounting Standards Board (FASB). Accounting Standards Codification TM. Financial Accounting Standards Board (FASB), 2010. Web. 16 May 2014.
Maremont, Mark. "Numbers Game At Bausch & Lomb?" Bloomberg Business Week. Bloomberg, 18 Dec. 1994. Web. 16 May 2014.
Norris, Floyd. "Bausch & Lomb and S.E.C. Settle Dispute on '93 Profits." The New York Times. The New York Times, 18 Nov. 1997. Web. 16 May 2014.
Plunkett, Linda M., and Robert W. Rouse. "Revenue Recognition and the Bausch and Lomb Case." CPA Journal Sept. 1998: n. pag. CPA Journal. Web. 16 May 2014.

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