ethics case | Accounting homework help

On April 13, 2006, Bausch & Lomb (B&L) CEO Ron Zarrella indicated that B&L would not be recalling their soft contact lens cleaner Renu with MoistureLoc. Drugstores in the United States were, however, removing the product from their shelves due to a concern over reported infections related to Fusarium keratitis, a fungus frequently found in drains and sinks. Zarrella went on to say that Renu kills the fungus that causes the infection, and he was considering how to rebuild the brand and mitigate the “ripple effect” caused to other B&L products. Up to April 12, B&L’s shares had fallen by 7% due to these health concerns.

On April 13, 2006, Bausch & Lomb (B&L) CEO Ron Zarrella indicated that B&L would not be recalling their soft contact lens cleaner Renu with MoistureLoc. Drugstores in the United States were, however, removing the product from their shelves due to a concern over reported infections related to Fusarium keratitis, a fungus frequently found in drains and sinks. Zarrella went on to say that Renu kills the fungus that causes the infection, and he was considering how to rebuild the brand and mitigate the “ripple effect” caused to other B&L products. Up to April 12, B&L’s shares had fallen by 7% due to these health concerns.

When Zarrella was first questioned,he knew that there had been a number of incidents of infection in Hong Kong, which B&L had reported to the U.S. Centers for Disease Control and Prevention in December 2005, as well as other reports in the United States. However, another product from the Greenville plant was also implicated. Although the incidence of infection were five times higher for Renu than for any other cleaner, the evidence was not enough to halt production and sales. At the time, lens care contributed 20% of the company’s revenue, which had amounted to $1.75 billion in the first nine months of 2006. When the recall was announced, the company’s stock rose 12.7% but was $10 below its early April level. Lawsuits subsequently occurred.

What lessons should be taken from B&L’s Renu experience?

What should Zarrella have done, and when?

Sources: Juliann Walsh and Duncan Moore, “Bausch & Lomb Refuses to Recall Suspect Lens Cleaner,” Toronto Star, April 13, 2006, C4.

Barnaby J. Feder, “Bausch & Lomb Halting Lens Cleaner Sales Worldwide,” International Herald Tri-bune, May 31, 2006

Prepare a report with a minimum of 1,000 words for the following case study.

· Case Study: Where Were the Accountants?

After reviewing the case study, consider the following questions in your report.

· Why do you think accountants didn’t recognize potential problems in the case study and speak out?

· What advice would you give Norm regarding becoming a professional accountant?

The facts of the case study should be included in the report