Abstract
Abstract Sometimes companies attempt to inflate reported earnings and assets by recording dubious transactions near the end of the fiscal year. Auditors often refer to such transactions as “New Year's Eve Parties”. This case study is based on reports in the business press about what appears to be a classic “New Year's Eve Party”. At the end of 1993 Bausch & Lomb (B&L) recorded some very questionable sales, which in essence involved B&L forcing distributors to take large shipments of inventory. The case, which is designed for use in auditing courses, requires students to consider indications of risks and to evaluate several accounting and auditing questions from the perspectives of an audit manager, a partner in charge, a controller, and a member of a quality review team.
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