McKesson Corporation, auditing discussion help

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Read through Internet Assignment 17-32 in your textbook. Answer the questions, but check the discussion board before you begin to be sure to choose a different company’s 10-K than that chosen by any of your classmates who have already posted. Comment on the postings of your classmates. McKesson Corporation FY Ended March 31, 2012 McKesson Corporation based out of Alpharetta, Georgia, is a medical supplies, pharmaceuticals, and health services corporation that supplies pharmaceuticals at a retail level most notably with the Walmart Corporation. McKesson Corporation has been involved in multiple accounting scandals, one of which influenced the way audits are now conducted. The McKesson & Robbins scandal in 1938 (Fox, n.d. , para. 16) led to an overhaul of auditing procedures that included the adoption of Generally Accepted Auditing Standards, the creation of independent audit committees, and the requirement of a physical inventory inspection. The 10-K filed for McKesson Corporation for the fiscal year ended March 31, 2012 indicated “Other Commitments and Contingent Liabilities” in Financial Note 19 located on pages 9199 of their filing. Many of their contingent liabilities are due to their involvement in various legal proceedings and class action lawsuits. One of their most prominent pending lawsuits is being brought against them by various public payers (such as Medicaid) over the average wholesale price of prescription drugs. It is alleged that McKesson, along with First Data Bank, conspired to improperly raise the average wholesale price of certain prescription drugs that resulted in higher drug reimbursement payments to the plaintiffs of this suit. The anticipated loss of these lawsuits is immeasurable and would adversely affect their financial position, therefore they would have to disclose this information in the footnotes rather than attempting to estimate the loss. Some of the ways auditors could search for contingent liabilities are: 1. Make inquiry of independent counsel – a letter sent from the client to their attorney detailing the information requested of the auditor can act as confirmation. 2. Review correspondence from governmental agencies – an auditor can review any notices or memos submitted to the client by government agencies that would list proposed assessments or settlement requests. 3. Reading the minutes of meetings with board of directors, committee members, and/or stockholders. 4. Reviewing contracts, loan agreements, and leases. 5. Inspecting documents. Sources: http://www.investopedia.com/articles/economics/12/four-unknown-massive-frauds.asp http://www.sec.gov/Archives/edgar/data/927653/000119312512204736/d318930d10k.htm
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McKesson Corporation
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Surname 1
Name of Student
Instructor
Course
Date
McKesson Corporation
McKesson Corporation is a medical supply of pharmaceuticals that is based in
Alpharetta, Georgia. It incorporates supplies in health services corporations particularly at retail
level like in the Walmart Corporations. Besides its supplies, it has been involved i...


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