Washington

A Massachusetts biotechnology company that usually likes to keep a high profile received some unwanted publicity this week when government auditors raised questions about its financial viability.

Auditors from the health department were asked to trawl through the accounts of Advanced Cell Technology (ACT) of Worcester by Congressman Joe Pitts (Republican, Pennsylvania), who is strongly opposed to human cloning. He says that he wanted to find out whether the company had illegally used federal money from the National Institutes of Health (NIH) when it created cloned human embryos in November last year (see Nature 414, 477; 2001).

The auditors say that they found “no evidence that NIH's funds supported ACT's embryo-cloning activities”. But they did find that ACT's accounting system was inadequate, and that the company had made “unallowable” equipment purchases with the grant money.

They also found what the published audit calls “concerns regarding ACT 's financial viability”. And the audit raises what it terms “concerns regarding the continuity of NIH-funded research” under two NIH grants totalling $1.8 million, since the grants' principal investigators left the company this spring after one year of service with the company.

ACT says it had done nothing wrong, but has agreed to return the funds in question to the government, in line with the auditor's recommendations.

Michael West, president of ACT, accuses Pitts of making misleading statements about his company on the basis of the audit. “After weeks of looking at every scrap of paper in the company, they found no evidence that we misappropriated grant funds for human embryo research,” he says. “So they tried to make it look like we were misappropriating grant money in other ways — and it's not true.”

ACT is in no worse shape financially than many other similar companies, West says. “We're clearly a small, struggling biotechnology company,” he says, “but we're doing better than most.”