Given the high materiality of R&D spend and clinical trial accruals, coupled with the life science sector’s increasing output of innovation originating from emerging growth companies, it is evident that process excellence is in demand. Here we reflect on the maturation of clinical trial financial management and the impact of best practices towards an expedited and streamlined period close.
Legacy Close Processes:
Status-quo processes leave numerous variables, time lags and audit challenges that jeopardize a defensible and review-ready position for clinical accruals. Often processes lived within excel and are not scalable, particularly when working towards an IPO or acquisition; The need to close in a timely manner is critical and dated excel processes typically do not back that.
Does our current pre-close and close process create meaningful workbooks and documentation that satisfy audit needs?
Are Accounting and Clinical Operations professionals spending excess time to align on trial activities and resulting financial implications?
Do vendor confirmations and estimates come in regularly. on-time and at the accuracy and granularity needed?
Have we needed (or contemplated) a true-up during a financial close period?
Are change orders or amendments interrupting activities and delaying the close process?
Has our company established and documented a materiality threshold?
Is our PO process solid and structured to enable an efficient period close?
Are activities broken out accurately by activity level or is estimation required?
Is clinical trial financial management causing any delay in our time to close?
From an accounting standpoint, the goal is to hand-off to auditors the process, methodology and documentation that accounts for a company’s prepaid clinical spend position reconciled against the sum of all accrued R&D/clinical work performed. Reality in the industry to date has increasingly proven that intolerable differences exist between excel workbooks, vendor estimates/confirmations and actuality. Companies that surface these disparities and understand true variance drivers are better positioned from a financial planning and resource perspective, while also protecting the organization’s best interests from audit and regulatory implications.
A New Standard in Financial Close Best Practice:
Today, process excellence and industry gold standard is the ability to:
Efficiently reconcile between prepaid and accrued positions for clinical trial spend
Demonstrate financial accuracy on a trial/program-level
Provide clear and robust documentation around forecast methodology and adjustment rationale
Clinical trials are inherently dynamic, complex and prone to change, which equate to chaos when left to static excel workbooks. The life sciences industry, particularly Finance and Accounting teams, are leaning into compliant automation across various facets of the financial statement. R&D spend and clinical outsourced financials commonly represent the most material segment, and sponsors across the ecosystem are tapping into the benefits of SaaS technology.
For today’s life science companies, the Auxilius cloud-based SaaS platform is solving within multi-variant environments - Combining multiple treatment arms, complex clinical cohorts, site-level activity, patient visit dynamism, enrollment variation and more to provide companies with a synthesized, real-time view at a granular level of detail to achieve process excellence.
Why do customers love Auxilius?
Efficiency Gains, Financial Accuracy and Regulatory Assurance
Why do auditors love Auxilius?
SOC 1 & 2 Certified, Reliability and Clean Documentation that Expedites Review