|
|
Item 4.02.
|
Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review
|
Aspen Technology, Inc. (the “Company”) has determined that the Company’s previously issued unaudited condensed consolidated financial statements contained in the Company’s Quarterly Reports on Form 10-Q for the quarters ended September 30, 2018, December 31, 2018 and March 31, 2019, should not be relied upon for the reasons described below.
In completing its procedures to finalize the financial statements for the fiscal year ended June 30, 2019, the Company identified errors affecting the transition adjustment through the recording of revenue and related contract balances upon the adoption of Accounting Standard Update No. 2014-09, Revenue from Contracts with Customers, or ASC 606, and the classification of contract cost assets and related deferred tax assets and liabilities on its balance sheet. In connection with the review of the matters described above, on September 5, 2019, management (a) concluded that the previously issued financial statements and other financial data for the quarters ended September 30, 2018, December 31, 2018 and March 31, 2019 should be restated and should no longer be relied upon for the reasons described below and (b) determined that the disclosures related to those financial statements and related communications issued by or on behalf of the Company with respect to the quarters ended September 30, 2018, December 31, 2018 and March 31, 2019 should no longer be relied upon.
During the course of its review, the Company concluded that its financial statements for the quarters ended September 30, 2018, December 31, 2018 and March 31, 2019 were not prepared in accordance with generally accepted accounting principles and required adjustments that decreased total contract assets by $87.6 million, decreased net deferred income taxes by $19.4 million, and decreased retained earnings by $68.3 million as of June 30, 2018, and decreased total contract assets by $84.0 million, decreased net deferred income taxes by $19.4 million, decreased accounts receivable by $3.7 million, and decreased retained earnings by $68.3 million as of September 30, 2018, December 31, 2018 and March 31, 2019. These errors did not impact previously reported income statement accounts, the Company’s annual spend business metric, its cash flow from operations or its free cash flow non-GAAP metric.
The Company has completed its assessment of the errors, which will be corrected in the Form 10-K for the year ended June 30, 2019, and determined that the errors were the result of a material weakness in internal control over financial reporting.
Both management and the Audit Committee have discussed with KPMG LLP, the Company’s independent registered public accounting firm, the matters disclosed in this Item 4.02.