Thursday, July 20, 2006
Take off the SOX
Corporate America largely regards the 2002 Sarbanes-Oxley accounting law as a settled matter. So, it's telling that the pressure keeps mounting to relieve smaller public companies of the evident burdens the law places upon them.
"I never intended to have these guys comply with what General Motors complies with," former Pennsylvania lawmaker and current head of the Biotechnology Industry Organization Jim Greenwood told us at an editorial board meeting this month as he motioned to two local biotech executives who accompanied him. Both men said the law's one-size-fits-all reporting requirements (the dreaded Section 404) unduly burden companies like their own. As a proportion of revenues, compliance costs smaller firms several times what it costs larger ones -- among whom the real targets lurked, not among the mom and pops.
One of them, Gary Lessing, chief financial officer of cancer-drug developer Avalon Pharmaceuticals of Germantown, reports that nearly 2 percent of his company's $30 million in expenditures last year were related to Sarbanes-Oxley. The company, founded in 1999, has no sales as it awaits its oncological discoveries. That's typical in biotech, where products take years to reach the market. "Every dollar comes out of spending for novel therapeutics on cancer," he said.
posted by Brian Moran @ 9:31 AM