On Wednesday morning, SunEdison filed a statement at the U.S. Security & Exchange Commission (SEC) that they will be delaying their filing for the Form 1-K annual report for 2015 beyond their due date on March 15.
What’s worse is that this further postponement is “due to the identification by management of material weaknesses in its internal controls over financial reporting.” According to them, the identified weaknesses have caused implementation of additional procedures for the management for the preparation of their financial statements.
Moreover, an investigation conducted by the Audit committee previously disclosed by SunEdison on Form 12b-25 filed with the SEC last 29th of February which concerns the accuracy of their financial position has not yet been finalized.
The Good News
But there’s good news though. According to SunEdison, additional procedures haven’t resulted to misstatements or re-statements of their “audited or unaudited consolidated financial statements or disclosures for any period previously reported.”
TerraForm Power Inc. (NASDAQ: TERP), which is controlled by SunEdison, also announced on Wednesday that they will also delay filing of the 2015 Form 10-K which is due on March 15. According to them, the reason for the delay is due to their need for completing the steps and tasks necessary to finalize their financial statements and other documents.
TerraForm claims that their delay is associated with that of SunEdison, saying in a statement, “Due to our management services arrangement with SunEdison under Management Services Agreement, our financial reporting and control processes rely to a significant extent on SunEdison systems and personnel. As a result, if there are control deficiencies at SunEdison, including with respect to the systems we utilize, it is necessary for us to assess whether those deficiencies could affect our financial reporting and, if so, address them to the extent necessary and appropriate prior to filing our Form 10-K.”
They also said that they currently identified material weaknesses in their internal control systems over financial reporting, which is primarily due to ineffective controls associated with their Enterprise Resource Planning (ERP) systems and the validation processes for revenue recognition.
Because of this, TerraForm received a notice from Nasdaq on delisting, of which the company shall reply by 16th of May to regain compliance.
The SunEdison stock, however, bounced a little last week as they settled a lawsuit that was associated with the incomplete acquisition and after the termination of their purchase of Vivint Solar Inc. (NYSE: VSLR).