According to reports, subsidiary Medco, which manages pharmacy-benefit programs for businesses and health insurance companies, recorded co-payments made to pharmacies as part of its revenue, even though it did not actually receive any money paid by customers to these pharmacies.
All the money, paid by customers with a prescription drug card, went to the pharmacies with the company receiving none of it. Medco handles 65 million prescriptions a year, the second biggest in the US.
The $12.4bn worth of unclaimed revenue was reported to the SEC on Friday in an 11-K filing (annual report of employee stock purchase, savings and similar plans).
These payments totalled almost 10% of its overall reported revenue and break down as $2.8bn in 1999, $4bn in 2000 and $5.5bn in 2001.
But the company, which is audited by rapidly disintegrating and convicted firm Andersen, denied any wrongdoing in its accounts and maintained that all accounting had been done in line with US standards GAAP.
The SEC has not charged the company with any breach of accounting rules.
Does Darwin's theory apply to taxation? Colin ponders...
The EC has been instructed to draft a European Union (EU) directive authorising an EU financial transaction tax, which would apply to ten of the EU’s 28 member states
Accountancy watchdog the FRC has dropped its investigation into the former chief financial officer of Tesco, nearly two years after the supermarket was engulfed in an accounting scandal
Colin imagines how Apple's logo might change in the wake of the EC's ruling over its Irish tax arrangements