Like problem comes in with Valeant, they raised their

Like many companies Valeant has stockholders that they have to keep the best interest of. Over the past years Valeant has racked up quite a large amount of debt, the company has a thirty billion debt hanging over their heads. In order to lessen the debt Valeant has bought out smaller pharmaceutical companies, and raised the price of the drugs that they manufacture, this has put them in spotlight, as people don’t typically like it when companies raise the price on a medication they have been on the markets for years. Although pharmaceuticals cost a lot of money to produce, most of the budget goes towards the year of research and testing. It is understandable for companies to want to make a profit, but the problem with this action was they raised prices of drugs that were already on the market. The drug prices typically decrease after a certain amount of years because the company that creates a new drug gets a patent that allows only that company to manufacturer that drug for ten years. This allows companies to make their money back fast. At this time is when they have the highest prices, so the companies can make as much money as they can. This is where the problem comes in with Valeant, they raised their prices and got backlash for it. This and many other issue in the past year with big pharm have caused companies stock to go down. In order to keep their stockholders attention, and make them think that the company was thriving more than it was they posted inaccurate statements about there revenue. They would tell investors about the millions of dollars of revenue they were making, but then leave out half of the expenses in order to make them think the company was stable. The companies lies there stockholders would eventually lead over to them lying in there books. It was found out that Valeant’s small mistake, might have been on purpose. The company has been under major fire after it was found out that the company has been channel-stuffing. The company had been recording sales in there revenue account, but in reality had been sending its products to a distributor it had ties with who would not be able to sell the esses, the company it was sent to would send back the products not cash, therefore the sales and revenue account would be wrong. They would then have to adjust their accounts receivable making the company look like it was more profitable than not. This practice can be considered illegal, as it sending fraudulent information to the stockholders.¬† This isn’t uncommon to see, even home brand names like Mattel have been caught up in allegations before.¬†Valeant’s mistake shows what a mistake in adjusting, and falsifying information while posting can do. It is not illegal for a company’s accountants to make a mistake, as they can adjust accordingly by debiting or crediting the error, and therefore correcting the mistake. But leaving a mistake can cause some serious problems as seen by Valeant. Since then one person has had to step down, and the board is requesting the head of financial services to step down. As with most channel-stuffing cases valeant will most likely have to pay a hefty fine.