Clinical Accrual CAMs Don't Need To Be Calamitous!

Audit Prep Guideposts To Ready Your Company For THE Most Likely Critical Audit Matter

While CAMs are not a calamity, they absolutely raise the stakes and spotlight critical matters highlighted in the audit. Since instituted by the PCAOB, CAMs have increased transparency and strengthened investor confidence in the audit quality.

In the vibrant and ever-changing life science sector, many public filers are Emerging Growth Companies and therefore not required to disclose CAMs in their audit reports. However, research shows that nearly half voluntarily adopt and apply CAM requirements.

As public filers round the corner on H2, the time to prepare your company for CAM implementation is now. Particularly if you are a clinical-stage biotech.

Why Should Clinical-Stage Biopharma Companies Prepare Today?

Most public filers have between 1-2 CAMs. What is specific and unique to the life science sector is the degree of outsourced R&D spend - In a recent review of over 500 public bioscience company 10Ks, Auxilius found that over a third of companies had a CAM specific to their clinical trial accruals in the last year. Outsourced R&D spend constitutes the most frequent life science CAM, followed by revenue recognition, licenses and collaborative arrangements, valuation of IPR&D. This makes sense, as these estimates are highly material, complex, time-intensive, subjective and require significant judgement from management and audit teams. The SEC wants clinical program-level reporting and disaggregation of R&D costs. Herein is a challenge, calling for an intense tracking of granular-level data to support a complete and accurate accrual estimate.

Who Does This Apply To?

If you’re reading this and…

1. Are a public filer or aspire to be a public filer
2. Have active clinical trials
3. Haven’t solidified an audit-ready, end-to-end financial workflow for accurate clinical accruals…

….The time is now.

What Should You Do To Be Audit Ready?

• Step 1: Educate and inform key stakeholders, including financial management, audit committee members and key investors
• Step 2: Consider requesting a review or scenario plan exercise with your audit and assurance firm to proactively identify CAM exposure
• Step 3: Ensure your documentation around outsourced R&D spend and methodology used for clinical trial accruals is iron-clad
  • Embed SOX-supporting control protocols that define the accrual methodology with a system and defined processes to track accruals consistently​
  • Catalogue all contracts, trial protocols, change orders, statements of work and site-level costs at the activity, patient and procedural level​
  • Establish a single source of truth that activates input, review and sign-off from clinical operations​
  • Pare real-time EDC data with contracts at the site, investigator, vendor-level for a bottoms-up, per patient cost accrual​
  • Consider the use of a buffer for invoiceables as part of the assumption for the accrual estimate
  • Stay traceable to the transaction-level, providing your auditor with an evidence-based estimate that leverages actual patient-level clinical activities performed in the period

We Can Help!

Auxilius customers constitute nearly 20% of the still thriving biotech companies that went public since 2020. Single tenant, cloud-based, purpose-built SaaS - We simplify the finance and accounting complexities faced by clinical trial sponsors through an automated and purpose-built tool that is SOX-assured and SOC 1 + SOC 2 compliant. Let us know if we can help!

Get in touch with our team to learn more ways to gain control and increase compliance around clinical trial financial management.