April 13, 2005
I currently chair two audit committees for accelerated filers. Both are in the bioscience/life science industry. Both are in the research and development stage with minimal revenues grants, collaborations, etc. Both companies spent more than a million dollars on outside help and increased audit fees to comply with 404. Both had two significant deficiencies but nothing even close to a material weakness. I believe 404 is a good idea as I am for strong internal controls and particularly the right entity level controls. However, there needs to be a way to use judgment to approach 404 based on the industry, size, complexity, life cycle stage, etc of an organization vs a one size fits all. The benefits for the costs cannot be justified as it currently is being implemented.