Johnson & Johnson Fraud Analysis

1277 Words6 Pages
The paper will seek to perform fraud analysis and evaluation on Johnson & Johnson an American corporation that deals with medical devices and pharmaceuticals in the global markets. The brand of Johnson& Johnson also consists of various medications and first aid supplies. Recently, Johnson & Johnson agreed to pay more than $ 2.2 billion in the resolution of the criminal and civil allegations filed against the company on promoting the prescription drugs not approved by the U.S Food and Drug Administration. The conduct of the company could affect the health and safety of patients as well as damaging the public trust. The lawsuit indicates the efforts of the Justice Department in preventing and combating health care fraud in the U.S economy.
Sarbanes
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The company was alleged to have engaged in fraudulent activity, but the external auditors were negligent to write a note on the issue. GAAP requires all material information should be fully disclosed in the notes sections. Since, it might have some future impacts on the financial performance of the company. The auditors did not fulfill the requirements of the full disclosure principles of GAAP. The health care fraud case is a major event that has effect on the public perception of the company. Therefore, the external auditors are expected to indicate the material issues relating the matter and their effects on the financial performance of the company.
Johnson & Johnson violated various SOX regulations after engaging in health fraud actions in the society. Under section 802 of the SOX regulations, the health fraud case violated the regulations by the covering up of the prescriptions that were not approved by the FDA. The actions of concealing information from the consumers and the public indicated the lack of proper administration of the company. SOX regulations provide that fraudulent administration of any company should be liable for fine and imprisonments. This could also indicate the facts of destroying the corporate audit records and
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