The Wall Street Journal reports that Valeant Pharmaceuticals International, based on an internal review has found issues in their
This will force a restatement of several years.
Who would you hold responsible?
Who's responsible - The Internal Auditors, the CAO or the External Auditor?
Answers
I do NOT like the choices. The question/choices is trying to blame the people who should have caught the "fraud" but NOT the "perpetrators".
You forgot to include, (1) The Board of Directors (2)
The whole system has it's share of blame too. Wall Street analysts have known Valeant's business model for years. In fact, I read that Valeant is NOT the only firm with the business model.
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While the Board & Management may be responsible, it is the responsibility (fiduciary) of the CAO/
Note I said purposely. So if the Board/CEO dictated this action, then they share responsibility, but the CAO/CFO are not vindicated for their actions.
I am NOT vindicating the CFO/CAO, I am just pointing out that you forgot to include the Board and Management (which includes both the CFO/CAO). It is not like the CFO/CAO (even with their fiduciary duties) concocted the scheme on their own.
I agree, but if we were to talk in general as opposed to specifically Valeant's situation, then it is possible that the three groups mentioned may be solely at fault.
Management is responsible for preparation of financial statements. Regardless of who made what error, management is responsible. If somebody's job is on the line (and it should be) it may be appropriate for the audit committee with the help of outside counsel to review the facts to see who should be dismissed.
Management is always responsible.
The external
If the weak internal controls were reported to the Board and the Board took no action, the Board shares responsibility.
Lyle and Lawrence are correct. Management is responsible and if the restatement is something of significance the board should do an investigation to understand where controls failed
Valeant's case is more than just financial restatements. The whole business model of creating a shadowy pharmacy as a distribution channel to increase sales does NOT stop with Management. At the very least, the Board is complicit and failed to protect the shareholders (public).
If they are an SEC registered company, ultimately Management is responsible.
https://www.sec.gov/rules/final/33-8238.htm (Per Section 404 of the
The Board. Fiduciary duty to the shareholders comes with those board seats.
There are many on the right and the left who believe that corporations are run by an old boys club and get away with all sorts of nefarious, insider dealings or are rewarded with lucrative stipends so long as they don't rock the boat.
The easiest way to exorcise this is to hold boards personally accountable. Make liability stick. Put shareholder's interests first.
Excuse me? Management is responsible? Not the people with specialized knowledge and
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As Emerson said, the CFO/CAO is/are part of management. So, there is no blame shifting from the "CFO industry".
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