CASES FROM THE REAL WORLD

The Chicago Tylenol Murders

In the fall of $1982,$ Johnson & Johnson faced a public relations nightmare when customers in Cook County, Illinois, began dying$-$eventually, a total of seven people died$-$after taking over$-$the$-$counter, Tylenol$-$branded acetaminophen capsules. Analysis showed the presence of potassium cyanide, a fatal poison in no way connected with the production of the pill. Johnson & Johnson voluntarily removed all Tylenol products from the U$.$S$.$ marketplace and offered to pay full retail price for any pills returned to the company. This represented about thirty million bottles of capsules worth more than $$100$ million. $($Significantly$,$ too, Johnson & Johnson decided on this wide$-$ranging action despite the fact that it and law enforcement realized the cyanide poisoning was limited to Cook County, Illinois.$)$

Because Tylenol was a flagship product bringing in significant revenue, this was an extreme action but one based on the company's ethics, rooted in its corpolate credo. Investigation showed that someone had tinkered with the bottles and injected cyanide into the product in stores. Although no one was ever apprehended, the entire drug industry responded, following Johnson & Johnson's lead, by introducing tamper$-$proof containers that warned consumers not to use the product if the packaging appeared in any way compromised.

The strong ethical stance taken by Johnson & Johnson executives resulted in immediate action that reassured the public. When the company eventually returned Tylenol to the market, it introduced it first to clinics, hospitals, and physicians' offices, promoting medicine's professional trust in the product. The strategy was successful. Before the poisonings, Tylenol had $37$ percent of the market of over thr counter analgesics. That plunged to $7$ percent in fall $1982$ but was resurrected to $30$ percent by gall $1983.$

Critical Thinking

In corporate credo, Johnson & Johnson identifies multiple stakeholders: users of its products $($output$),$ employees $($input$),$ employees' families $($diffused linkage$)$ and the government $($en

In which df the following situations would an auditor ordinarily issue an unqualified or unmodified financial statement auc opinion with no explanatory $($or emphasis$-$of$-$matter or other$-$matter$)$ paragraph?

Multiple Choice

The entity issues financial statements that present financial position and results of operations but omits the statement of cash flows.

The auditor wishes to emphasize that the entity had significant related$-$party transactions.

The auditor has substantial doubt about the entity's ability to continue as a going concern, but the circumstances are fully disclosed in the financial statements. The auditor decides not to refer to the report of another auditor as a basis, in part, for the auditor opinion.