In a review of New York area companies conducted by Audit Integrity (which firm tracks companies on the basis of accounting and corporate governance practices), only one area pharma company received either an "aggressive" or "very aggressive" accounting rating -- Yep. You guessed it. None other than our buddies out in Kenilworth -- Schering-Plough.
Schering's accounting reaches the "very aggressive" mark (Audit Integrity's highest-risk rating) -- tying Citi, Morgan Stanley and Take Two Interactive, among a handful of others. That's some heady -- or perhaps, notorious -- company. Do go read the whole Crain's New York report, but here is a snippet:
. . . ."We certainly can't tell you that all 'very aggressive' companies are bad," Mr. Zwingli says. "But we can say that time and again, these companies have more negative blowups, be it poor stock performance, financial restatements, litigation or [Securities and Exchange Commission] actions". . . .
Pharma giant Schering-Plough, for instance, is rated "very aggressive." Among the problems Mr. Zwingli sees: congressional probes concerning the development and sale of drugs, amended filings with the SEC, and high levels of inventory and goodwill that open the door to asset write-downs. The CEO is also chairman, a governance no-no in some circles because it erases a last layer of management oversight.
Schering-Plough officials attribute the increases in inventory and goodwill to a biotech acquisition. The annual report was revised because of a "clerical error"—12 words were left out of a sentence. And the CEO-chairman, brought in five years ago to turn the drugmaker around, deserved the clout of a combined title.
Naturally, many companies often disagree with Audit Integrity's conclusions, but Mr. Zwingli points out that they are derived from digging through publicly available financial statements. "We're very much a Jack Friday sort of place," he says. "You know: 'Just the facts, ma'am.'. . ."
Indeed. Confidential Nota Bene: Way to go, Mr. In-