BIO Applauds Reps. Hurt and Meeks for Introducing H.R. 1564 to Avoid Burdensome Regulations
Washington, D.C. (April 16, 2013) Washington, D.C. (April 16, 2013) – The Biotechnology Industry Organization (BIO) today lauds Congressmen Robert Hurt (R-VA) and Gregory Meeks (D-NY) for introducing H.R. 1564, a bill to allow emerging small companies, such as small biotech companies, to maintain their working relationship with an independent auditor.
The Public Company Accounting Oversight Board (PCAOB) has recommended that small public companies periodically rotate the external audit firm charged with verifying their internal financial controls. This change would require emerging biotech companies to pay expensive audit fees and regulatory costs. H.R. 1564 would prevent PCAOB from adopting this onerous regulatory burden.
Jim Greenwood, BIO President and CEO, made the following statement:
“BIO supports Rep. Hurt and Rep. Meeks in their efforts to ensure that emerging, small biotechs are not burdened by costly and unnecessary regulations. Such a change would place an undue burden on emerging biotech companies, who have few audit firms available to them and no product revenue to pay for expensive audit fees and other regulatory costs.
“BIO fully appreciates and agrees that strong auditing standards can enhance investor protection and confidence. BIO members strongly support this goal. However, unnecessary and burdensome auditing standards can have a negative impact on biotech companies. Overregulation can force an emerging public biotech company with little or no product revenues to divert its limited cash and internal resources away from drug development. This could lead to research programs being curtailed or delayed.
“If compliance costs of additional regulations such as mandatory auditor rotation are substantial, it will have an unnecessary and negative impact on the limited financial resources of micro cap and small cap companies at the forefront of developing new treatments and cures for patients suffering from devastating diseases such as cancer, Alzheimer’s, diabetes, Parkinson’s Disease and HIV/AIDS.
“Furthermore, mandatory audit firm rotation will shift corporate governance away from internal audit committees tasked with oversight of auditors and audit quality. BIO believes that mandatory audit firm rotation would not enhance audit quality and would instead unnecessarily burden our companies. During this difficult economic climate, lawmakers are seeking more effective ways for emerging companies to flourish, and a required audit firm rotation goes against the heart of those intentions.
“Growing biotech innovators face a decade-long, billion-dollar development timeline, and their research is supported by private investment capital rather than product revenue. A dollar spent on increased audit fees is a dollar that is diverted from life-saving research.
“BIO supports strong investor protections, but mandatory audit firm rotation would be a blunt instrument hampering the growth of job-creating small businesses. BIO applauds Rep. Hurt and Rep. Meeks for introducing legislation that will allow research-intensive biotechs to spend valuable innovation capital on developing medicines for patients rather than government red tape.”
In 2011, the PCAOB issued a concept release that, if adopted, would require that small public companies periodically rotate the external audit firm charged with verifying their internal financial controls. BIO commented on the PCAOB’s concept release in 2011.
For more information on emerging biotech companies, please visit http://www.bio.org/category/emerging-companies.
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