Case 3
Contents
1.0 INTRODUCTION
Biovail Corporation was one of Canada’s largest publicly traded pharmaceutical companies. Previously, Biovail had applied advanced drug-delivery technologies to improve the clinical effectiveness of medicines. Biovail commercialised it product in Canada and international area in all aspects of pharmaceutical products which is development, manufacture, marketing, licensing, and distribution of pharmaceutical products for the treatment of chronic medical conditions. Its major production facility was located in Steinbach, Manitoba, Canada. Biovail receive bad impact when one of the trucks carrying a shipment of Wellbutrin XL was involved in a traffic accident near Chicago. After the truck accident, the company have the problem with their recognition of the profit whether they should realize or not the revenue for the third quarter. The issue for the company is the concepts of revenue recognition that have been apply in the company to show their financial results. Should Biovail Corporation recognize its revenue using FOB shipping point or FOB destination.
David Maris suspects that Biovail Corporation might have manipulated the result of their financial statement. This refers to fraudulent accounting of Biovail Corporation. David Maris, an analyst at Banc of America Securities (BAS) has investigate that Biovail might have significantly overestimated the amount of Wellbutrin XL on the truck.
1.2 PROBLEM / ISSUES OF THE COMPANY
From this case we are defined some issue. First Biovail Corporation have their problem in using the contract of shipping the product. That is two contracts that can be use FOB shipping point and FOB destination. That has a different in revenue recognize for FOB contract. This revenue recognition makes a big impact to the Biovail Corporation in their financial statement.
Second, that has a conflict of interest that can be seeing when Maris takes over the account from Treppel.
1.0 INTRODUCTION
Biovail Corporation was one of Canada’s largest publicly traded pharmaceutical companies. Previously, Biovail had applied advanced drug-delivery technologies to improve the clinical effectiveness of medicines. Biovail commercialised it product in Canada and international area in all aspects of pharmaceutical products which is development, manufacture, marketing, licensing, and distribution of pharmaceutical products for the treatment of chronic medical conditions. Its major production facility was located in Steinbach, Manitoba, Canada. Biovail receive bad impact when one of the trucks carrying a shipment of Wellbutrin XL was involved in a traffic accident near Chicago. After the truck accident, the company have the problem with their recognition of the profit whether they should realize or not the revenue for the third quarter. The issue for the company is the concepts of revenue recognition that have been apply in the company to show their financial results. Should Biovail Corporation recognize its revenue using FOB shipping point or FOB destination.
David Maris suspects that Biovail Corporation might have manipulated the result of their financial statement. This refers to fraudulent accounting of Biovail Corporation. David Maris, an analyst at Banc of America Securities (BAS) has investigate that Biovail might have significantly overestimated the amount of Wellbutrin XL on the truck.
1.2 PROBLEM / ISSUES OF THE COMPANY
From this case we are defined some issue. First Biovail Corporation have their problem in using the contract of shipping the product. That is two contracts that can be use FOB shipping point and FOB destination. That has a different in revenue recognize for FOB contract. This revenue recognition makes a big impact to the Biovail Corporation in their financial statement.
Second, that has a conflict of interest that can be seeing when Maris takes over the account from Treppel.
References: http://www.cetuesday.com/supervision-theories-and-models Vol. 3, No. 7 International Journal of Business and Management 2008 William CHUNG, The Roles of Distributor in the Supply Chain – Push-pull Boundary,william.chung@cityu.edu.hk.