McKesson and Robbins Inc.

A U.S. corporation whose *financial reporting practices were investigated in the 1930s by the *Securities and Exchange Commission (SEC). The SEC investigation was a landmark event in the evolution of external auditing: it drew attention to the requirement for auditors to seek *audit evidence outside a client’s accounting system in order to support accounting balances. McKesson and Robbins Inc. inflated their inventory and *accounts receivables balances by $19 million, and the external auditor (Price Waterhouse & Co.) failed to detect the *fraud. The SEC investigation "arguably more than any other in the history of corporate auditing, had the effect of changing generally accepted auditing practice almost instantly - especially with respect to *evaluating evidence from a reliable source" (Lee, 1993, 133). Further reading: McKesson and Robbins Inc. (1982)

Auditor's dictionary. 2014.

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