ACCOUNTING
AccountingScandals.docx

August 21 st 2006 aols chief technology officer the

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August 21 st , 2006: Aol’s Chief Technology Officer - the researcher who released the data - resigned due to the gravity of the situation. September 22 nd , 2006: A class action lawsuit is filed against the online service provider accusing the company of violating the Electronic Communications Privacy Act and deceptive business practices. The lawsuit sought $5000 for each individual whose search data was exposed. Merck Drug Scandal: May 20 th , 1999: Vioxx was approved under the US FDA, and marketed under the brand names, Vioxx, Ceoxx and Ceeoxx. September 23 rd , 2004: Merck received information about the FDA’s research results that supported the previous hypothesis of an increased risk of cardiovascular disease subsequent to the prolonged intake of the drug, Vioxx.
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9 September 30 th 2004: Merck withdrew the drug from the market due to concerns about increased risk of heart attack and other cardiovascular diseases, associated with long term or high-usage of the drug. The company also withdrew the drug because it was under fire for withholding information from patients and doctors abouts the risks associated with the drug for over 5 years, resulting in between 88,000 and 140,000 patients with cases of serious heart disease. November 5 th 2004: The medical journal The Lancet published a meta- analysis of the available studies of Vioxx. The authors of the analysis concluded that the drug should have been discontinued several years ago due to obvious negative health implications. March 2006: There were over 10,000 cases and 190 class actions filed against Merck for claims that the drug had caused adverse cardiovascular events and the inadequacy of Merck’s warnings. Violation of GAAP Aol Search Data Leak: AOL didn’t actually forsake any GAAPs (seei9ng as their scandal revolved around abuse of power pertaining to ethic and internal controls, not financial figures; which is where the GAAPs would have come into play). They even disclosed the release of data in their financial statements. However, as a result of their discrepancies, their financial statement and numerical standing suffered. It was enforced that the financial effects of this data leak be represented to the users of their financial statements as
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10 per the GAAPs. For example, the lawsuit that ensued after all the chaos was required as having to be disclosed to the public; in accordance to the full disclosure principle. Merck Drug Scandal: Merck violated the full disclosure principle as they did not express the shortcomings of their product and how they could have affected the future finances of the business (going concern and full disclosure). Going concern in that the information should have been considered as it was vital to company performance further into operations and full disclosure because this important information was something that would have been useful for the users.
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  • Fall '19
  • Merck, AOL

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