Between 1999 and 2001, Merck-Medco recorded $12.4 billion of revenue that it will never collect. During this
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The $12.4 billion represents the copayment, typically $10-$25 per prescription, paid directly to the pharmacies by customers using a prescription drug card from an insurance company. Merck reported expenses equal to $12.4 billion to offset the copayment revenue on the income statement. The net income that Merck reported was correct. 5
Suggest a substantive test of balances or of transactions that could be effective in detecting the revenue misstatement.
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Related Book For
Auditing and Assurance Services An Applied Approach
ISBN: 978-0073404004
1st edition
Authors: Iris Stuart
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