Business Context and Reporting Period
This Form 8-K filing by Bio-Rad Laboratories, Inc. (the "Company") was submitted on September 6, 2013, reporting events occurring on August 30, 2013. The filing addresses a significant corporate governance event: the resignation of the Company's independent registered public accounting firm, Ernst & Young LLP ("Ernst & Young"), effective August 30, 2013.
Key Financial Metrics
This filing does not contain financial performance data such as revenue, profit, cash flow, margins, debt, or liquidity. The document focuses exclusively on the change in the registrant's certifying accountant and related internal control matters.
Material Changes and Events
- Accountant Resignation: Ernst & Young resigned as the Company's auditor effective August 30, 2013. The resignation was confirmed in a letter delivered on September 5, 2013.
- Audit Committee Action: The Audit Committee approved the acceptance of the resignation and initiated a process to select a new independent registered public accounting firm.
- Filing Impact: The Company has not yet determined if the timing of the resignation will affect its ability to file the Form 10-Q for the quarter ending September 30, 2013.
- Audit History: Ernst & Young's audit reports for the years ended December 31, 2012, and 2011 were unqualified and did not contain adverse opinions, disclaimers, or modifications regarding uncertainty, scope, or accounting principles.
- Disagreements: The Company reported no disagreements with Ernst & Young on accounting principles, practices, or auditing scope during the fiscal years 2011-2012 or the interim period through August 30, 2013.
Guidance, Risks, and Contingencies
Internal Control Weaknesses: The filing references a previously disclosed material weakness in internal control over financial reporting. This weakness resulted from significant deficiencies in:
- The accounting close process.
- The revenue recognition process.
- The reagent rental process at certain international subsidiaries.
- Expenditure controls at the Company's German subsidiary.
Additionally, a significant deficiency was identified regarding controls over the financial reporting process involving immaterial errors. The Company states that remediation efforts, including the development of improved controls and procedures, are ongoing under the oversight of senior management and the Audit Committee.
Reportable Events: Except for the aforementioned material weakness, the Company stated there were no other "reportable events" as defined by SEC Regulation S-K.
Investor Verification Checklist
- Verify the identity and selection timeline of the new independent registered public accounting firm.
- Confirm whether the resignation of Ernst & Young impacts the filing date of the Form 10-Q for the quarter ended September 30, 2013.
- Review the status of remediation efforts for the material weakness in internal controls, specifically regarding revenue recognition and international subsidiary controls.
- Examine the attached Exhibit 16.1 (Letter from Ernst & Young) to confirm the auditor's agreement with the Company's statements regarding the resignation.