Bio-Rad Laboratories (BIO), a manufacturer of life science research and clinical diagnostic products, has been expensing software development costs it should have been capitalizing. The errors were made “prior to and during 2020, 2021 and 2022” and discovered in the fourth quarter of 2022, impacting all three financial statements.

The company corrected financials for 2020 and 2021, including:

—In 2021, Bio-Rad understated Op Income by $10.9 million, or 2.22%
—In 2021, Bio-Rad underrated Op Cash Flow by $13 million, or 1.98%
—In 2020, Bio-Rad understated Op Income by $10.4 million, or 2.53%
—In 2020, Bi-Rad understated Op CAsh Flow by $9.6 million, or 1.66%

Bio-Rad’s internal-use software is amortized on a straight-line basis over the estimated useful life of between 3-5 years. Costs incurred during the preliminary project stage, as well as maintenance and training costs, are expensed as incurred.