As per the internal investigation by Nutanix, the noncompliant use of its evaluation software has taken place over a multi-layer period. Due to this, it suffered a financial impact of $11 million and has started taking remediation actions.
This was concluded during the Audit Committee investigation in relation to third-party software use and 10-Q document filing with the Securities and Exchange Commission (SEC).
It identified a kind of material weakness in its internal control of financial reporting. This led to the operating and accrued expenses understatement for the period beginning in August 2014.
The company estimated the expenses around $11 million which are recorded as cumulative expenses in the second quarter 2023 report. According to CFO, Rukmini Sivaraman, third-party software use impact on operating expenses will low. Further added, “We have also held the responsible employees accountable. This matter had no material impact on our historical financials, and we believe it will have minimal impact going forward,”.
According to the CFO, their internal financial controls were weak and therefore, it has happened. To avoid this misuse in the future, the company will strengthen the internal control for financial reporting.