NEW YORK (AP) – Shares of Super Micro Computer dropped 33% on Wednesday. This happened after the server maker revealed that Ernst & Young had resigned as its public accounting firm. According to a regulatory filing by Super Micro, EY resigned while auditing the tech company’s most recent fiscal year. The accounting firm expressed concerns in July regarding issues such as transparency and internal control related to financial reporting. Wednesday’s filing notes that later, Super Micro’s board initiated a review. Additional information obtained during this review led EY to question whether Super Micro ‘demonstrates a commitment to integrity and ethical values,’ as well as transparency and oversight independent of the CEO and other management. The Associated Press reached out to EY for a statement on Wednesday.
Super Micro Computer’s shares experienced a significant 33% decline following the resignation of their accounting firm, EY. According to Super Micro’s regulatory filing, EY’s resignation letter indicated that they could “no longer be able to rely” on the representations from the company’s management and audit committee. This led EY to conclude that they could no longer provide audit services in accordance with applicable law or professional obligations.
EY tendered its resignation letter last week, as revealed in Wednesday’s filing, which also noted that Super Micro’s review is still ongoing. The audit would have been EY’s first for the company. In a statement, Super Micro expressed disagreement with EY’s decision to resign and announced that they are now “working diligently” to appoint new auditors. The company further stated that they do not anticipate “a resolution of the matters raised by (EY)” to necessitate any restatements of previously reported quarterly financial results. Super Micro also promised to provide a business update the following week.The resignation of Super Micro Computer’s accounting firm comes just two months after short-selling firm Hindenburg Research released a report alleging extensive accounting manipulation. The report pointed to ‘glaring accounting red flags’ and evidence of undisclosed transactions. It also accused Super Micro of rehiring top executives involved in a 2018 scandal. At the time of August’s report, Super Micro said it would not comment on ‘rumors and speculation.’ Following these accusations, The Wall Street Journal reported last month that the Justice Department was beginning a probe into Super Micro, citing people familiar with the matter. Back in 2020, the Securities and Exchange Commission charged Super Micro with improper accounting for ‘prematurely recognizing revenue and understating expenses’ from at least fiscal 2015 to 2017.
Shares of Super Micro Computer experienced a dramatic 33% decline on Wednesday following the announcement that Ernst & Young (EY) has resigned from its position as the company’s public accounting firm. This development came to light after Super Micro Computer revealed that EY had stepped down during an audit of the technology company’s most recent fiscal year.
According to a regulatory filing from Super Micro, EY’s resignation was prompted by concerns raised in July regarding transparency and internal control over financial reporting. These issues led the company’s board to initiate a review.
During this review, EY further questioned Super Micro Computer’s commitment to integrity and ethical values, as well as the transparency and oversight mechanisms in place, particularly those independent of the CEO and other senior management. The Associated Press contacted EY for a statement on this matter.
Super Micro’s regulatory filing reveals that EY’s resignation letter stated it can no longer rely on representations from the company’s management and audit committee. EY concluded it couldn’t provide audit services in accordance with applicable law or professional obligations. EY sent its resignation letter last week. According to Wednesday’s filing, the company’s review is ongoing. The audit would have been EY’s first on Super Micro’s behalf. In a statement, Super Micro said it disagreed with EY’s decision to resign and is now working diligently to select new auditors. The company added that it doesn’t expect a resolution of the matters raised by EY to result in any restatements of previous-reported quarterly financial results. The company will provide a business update next week.
The resignation of Super Micro Computer’s accounting firm comes just two months after short-selling firm Hindenburg Research released a report alleging extensive accounting manipulation. The report pointed to ‘glaring accounting red flags’ and evidence of undisclosed transactions. It also accused Super Micro of rehiring top executives involved in a 2018 scandal. At the time of the August report, Super Micro stated it would not comment on ‘rumors and speculation.’ Following these accusations, The Wall Street Journal reported last month that the Justice Department was beginning a probe into Super Micro, citing people familiar with the matter. Back in 2020, the Securities and Exchange Commission charged Super Micro with improper accounting for ‘prematurely recognizing revenue and understating expenses’ from at least fiscal 2015 to 2017.
Super Micro Computer Inc., a San Jose, California-based server maker, has experienced a significant stock plunge of 33% following the resignation of its accounting firm. This development comes after the company paid a $17.5 million civil penalty.
Super Micro has been capitalizing on the recent artificial intelligence wave, which has influenced many tech companies. Despite the recent stock decline, Super Micro’s shares have managed to remain up by approximately 17% year to date. In August, Super Micro reported a substantial increase in fourth-quarter revenue, reaching $5.31 billion, which is a 143% increase compared to the $2.18 billion reported in the same quarter of 2023. As of Wednesday, shares in Super Micro Computer Inc. closed down $16.05, ending the day at $33.07.
