At every point along the business lifecycle, life sciences companies are on the fast track. They’re chasing after a new discovery or a new method of treatment, or actively anticipating approval to commercialize their latest product. The many compliance requirements they face threaten to slow them down. Fortunately, for publicly traded life sciences companies, Sarbanes-Oxley compliance has become more efficient than in years past, and the related processes and procedures can be continually streamlined.
In fact, compliance with the Sarbanes-Oxley Act has come a long, long way since the law was put in place more than 15 years ago. Savvy companies that know where to turn to be efficient in this area can keep their attention on the business on hand and not get bogged down with a system of bloated controls.
Here’s how fast-moving companies like those in life sciences can make sure their Sarbanes-Oxley compliance program is in tip-top shape:
Attack the bloat: As time progresses, the clinical trials add up and so do the complexities—and the internal controls around ensuring the financial integrity of the growing business. The focus shouldn’t be on adding layer upon layer of controls but instead be all about the right controls. When this happens, redundancies are eliminated, management has assurance that nothing is missing, and compliance becomes a less burdensome and much more effective exercise.
Keep motivated: Sarbanes-Oxley earned its share of attention because of the costs involved in the early years, but the benefits are clearly impressive: A decade-long decline in financial restatements can be attributed to the internal controls over financial reporting provisions of Sarbanes-Oxley, according to this recent article.
When controls are properly designed, a company’s risk of a material misstatement shrinks. Stakeholders and investors gain trust in the underlying controls of the company that help ensure the integrity of its financial reporting and safeguard its assets. All of that goes away if a restatement is needed—restated financials erode shareholder value and their confidence in management, and they’re a major distraction that can derail a company’s movement forward. These are motivating factors for making sure your controls program is exactly where it should be at this stage.
Always be prepared: A streamlined Sarbanes-Oxley program uncovers the risks that matter most as well as operational inefficiencies. The result is a more agile organization that can more easily adjust to regulatory shifts and emerging risks as they arise.
Bring in flexibility: At first, after the law was introduced, the internal controls aspect of Sarbanes-Oxley seemed so inflexible, with a check-the-box mentality and an assumed rigidness of auditors’ expectations. But today’s smartly implemented Sarbanes-Oxley programs are customized for each company and their particular risks. Advances in technology and outsourcing options make it so implementation, testing and monitoring are more cost-efficient and effectively carried out. When it’s time to apply new controls, companies can bring in specialized expertise only when it’s needed.
Minimize surprises: Team up with Sarbanes-Oxley aces who know what auditors are focused on, what documentation they expect to see and the likely questions they may ask. The audit process will go a lot smoother, and overall costs can go down, if it’s thought about up-front.
Stick with industry experts: Companies in the medical device, pharmaceutical or biotechnology fields face unique challenges compared with other industries. Life sciences companies need trusted advisors who understand the nuances and sensitivities they’re dealing with, whether they have just one product in the pipeline or they’re juggling multiple rounds of gaining FDA approval.
Similar to other industries in the fast lane (like tech companies), those in the life sciences sector have to deal with constant uncertainties as they go through developing, acquiring approvals, licensing and selling their products. The process of complying with the Sarbanes-Oxley Act shouldn’t be one of those uncertainties.
Compliance can be significantly streamlined by zeroing in on the controls that matter with the help of a highly skilled, diverse team of experts who have extensive life sciences experience. They can assist with designing, testing and monitoring controls; folding best practices into your program; as well as overseeing the entire process. The principles behind Sarbanes-Oxley can also be implemented, in a more flexible way, for private companies so that they are fully prepared for a major transaction, like going public, with solid internal controls.
With a collective team by your side, the compliance solution you need scales to the stage you’re in and the milestones you’re about to meet. Expertise and experience will get you through it.
RoseRyan has had a dedicated Sarbanes-Oxley Compliance solution since the 2002 law’s regulations went into effect. Public companies gain efficiency in their design and testing of internal controls, with a right-sized controls set that addresses their current risks. We also help private companies set themselves up with solid internal controls before a major transaction through our Financial Integrity solution. RoseRyan director Stephen Ambler currently guides this practice area.