Inside the world of business
Auditors keen to rebalance public perceptions post-crash
AFTER BANKERS and property developers, auditors have probably suffered the worst reputational damage from Ireland’s banking crisis.
Rightly or wrongly, the general public has questioned how auditors could sign off the accounts of banks given subsequent issues that have emerged at these institutions.
Bodies such as ACCA, which represents 140,000 accountants globally, have begun the debate about how the audit function can be reformed. Individual firms however continue to point to a narrow legal interpretation of their responsibilities to shareholders as justification for serious issues going undetected.
The legal move by Ernst Young, auditors to Anglo Irish Bank during the boom years, to stop an inquiry by the Chartered Accountants Regulatory Board into its work at Anglo, sends out all the wrong signals. The auditors claim no complaint has been made against the firm and that the investigation is simply a reaction to media reports.
Far better if auditors fully participated in such investigations and stood over their performance.
Bob Semple, a partner at PricewaterhouseCoopers, weighed into the debate last night, outlining to a Chartered Accountants Ireland meeting how audit committees needed to engage in much deeper analysis of risks facing their companies. Semple also pointed to the danger of “reluctant compliance”.
So far so good, but Semple suggested if we demanded more from directors we also needed to pay them more. Such a move would be a hard sell to shareholders, not to mention the general public.
Amarin to strike it lucky with oil find
BETTING THE house on one horse is always a risky business as drug developer Amarin discovered when its highly touted Huntington’s disease therapy floundered in a clinical trial. The Elan spin-off quickly found itself on its uppers. Former chief executive Tom Lynch found enough cash to retool his drug as a prospective cardiovascular therapy. Still, only the injection of $70 million in late 2009 to fund critical phase III trials gave it the chance to prove its potential. Fountain Healthcare, another Elan spinout, led that funding round. That proved a prescient move by Manus Rogan and his team.
Amarin has now completed its recovery from corporate intensive care and believes it has a multibillion dollar drug on its hands. A trial late last year showed the drug – essentially a highly refined Omega-3 fish oil – was effective in treating people with very high readings of something called triglycerides in their blood – a factor that leaves them more prone to heart disease. The latest trial shows it is just as effective in helping people with a slightly lower risk. Crucially, at 40 million in the US alone, this patient market is 10 times larger than that of the earlier trial.
Amarin could go it alone and commercialise the drug. The more likely outcome is a partnership with a larger player. Big pharma is crying out for a blockbuster and, as a single product company, Amarin could be a clean “takeout” for existing market player GlaxosmithKline, Pfizer or a host of others – a highly profitable outcome for Fountain.
