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US SEC says IT services firm DXC made 'misleading' non-GAAP disclosures
© Reuters. FILE PHOTO: People exit the headquarters of the U.S. Securities and Exchange Commission (SEC) in Washington, D.C., U.S., May 12, 2021. Picture taken May 12, 2021. REUTERS/Andrew Kelly/File Photo
By Kanishka Singh
WASHINGTON (Reuters) -The U.S. Securities and Exchange Commission said on Tuesday that IT services firm DXC Technology had made misleading disclosures about its non-GAAP financial performance in multiple reporting periods from 2018 until early 2020.
DXC said it had resolved the matter and cooperated with the SEC.
"Without admitting or denying the findings in the order, DXC consented to a cease-and-desist order, to pay an $8 million penalty, and to undertake to develop and implement appropriate non-GAAP policies and disclosure controls and procedures," the SEC said in a statement, referring to disclosures that do not adhere to Generally Accepted Accounting Principles (GAAP).
DXC materially increased its reported non-GAAP net income by negligently misclassifying tens of millions of dollars of expenses as non-GAAP adjustments, the SEC added.
"DXC Technology has resolved this legacy matter, which related to the presentation of non-GAAP M&A costs principally related to the 2017 merger that formed DXC," the company said in an emailed statement on Tuesday.
DXC was founded in 2017 when Hewlett Packard Enterprise (NYSE:HPE) spun off its enterprise services business.
"Our current management team has pro-actively clarified its disclosure, reduced these non-GAAP costs and cooperated fully with the SEC, and is happy to put this matter behind us," the company added on Tuesday.
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