Information technology services provider DXC Technology Company agreed to pay an $8 million penalty to settle Securities and Exchange Commission (SEC) charges it made material misstatements regarding its non-GAAP disclosures over a two-year period.

DXC, based in Virginia, violated the anti-fraud provisions of the Securities Act of 1933 and reporting provisions of federal securities law by materially increasing its non-GAAP net income through misclassifying transaction, separation, and integration-related (TSI) costs, the SEC alleged in a press release Tuesday. GAAP represents generally accepted accounting principles.

The details: From the end of fiscal year 2018 through the third quarter of FY2020, DXC disclosed it excluded TSI costs from its non-GAAP measures. In doing so, the company was “misclassifying tens of millions of dollars of expenses as TSI costs and improperly excluding them in its reporting of non-GAAP measures,” the SEC stated in its order.

During this period, DXC did not have adequate disclosure controls and procedures in place specific to its non-GAAP financial measures, the agency said. The company could not ensure its business practices for TSI cost classifications were consistent with its description of those costs in its periodic SEC filings and earning releases. Also, DXC’s controller group was unable to review TSI cost classifications because of the company’s insufficient disclosure controls and procedures, the SEC said.

“DXC’s controllership and disclosure committee negligently failed to evaluate the company’s non-GAAP disclosures adequately, particularly concerning TSI costs, and failed to implement an appropriate non-GAAP policy and to maintain disclosure controls and procedures,” the agency alleged.

By misclassifying TSI costs, DXC materially overstated its non-GAAP net income by a total of at least $83 million across two quarters in FY2019 and one in FY2020, the SEC concluded.

Compliance ramifications: DXC was lauded by the agency for its cooperation and remediation efforts. The company “voluntarily undertook a robust review of its TSI practices, voluntarily and promptly produced documents and made witnesses available, and compiled and presented information in the form requested by the staff on multiple occasions,” according to the order.

DXC enhanced its disclosure of TSI costs and replaced nearly all its senior executive and financial leadership personnel present during the relevant period, the SEC said.

Company response: “DXC Technology has resolved this legacy matter, which related to the presentation of non-GAAP [merger and acquisition] costs principally related to the 2017 merger that formed DXC,” a company spokesman said in an emailed statement. “Our current management team has proactively clarified its disclosure, reduced these non-GAAP costs, cooperated fully with the SEC, and is happy to put this matter behind us.”

The company neither admitted nor denied the SEC’s findings.