Super Micro Crashes After Auditor Resigns

Super Micro Computer says Ernst & Young resigns as auditor amid a review after EY communicated concerns about several matters relating to governance, transparency and completeness of communications in July.

SMCI stated in a filing that in late July 2024, EY communicated to the Audit Committee concerns about several matters relating to governance, transparency and completeness of communications to EY, and other matters pertaining to the Company’s internal control over financial reporting, and that the timely filing of the Company’s annual report was at significant risk.

EY stated in resignation letter that:

“...we are resigning due to information that has recently come to our attention which has led us to no longer be able to rely on management’s and the Audit Committee’s representations and to be unwilling to be associated with the financial statements prepared by management, and after concluding we can no longer provide the Audit Services in accordance with applicable law or professional obligations”

SMCI responded:

"Although the Company recognizes EY’s decision is final, it disagrees with EY’s decision to resign as the Company’s independent registered public accounting firm – the Special Committee has not yet obtained all information relevant for the Review and has not concluded the Review.

Nevertheless, the Company has taken the concerns expressed by EY seriously, and will carefully consider the findings of the Special Committee and any remedial or other actions recommended by the Special Committee following conclusion of the Review."

This news triggered an almost 30% collapse in the tech company's shares...

Is this a sign of things to come for other tech giants?

The resignation comes a month after the US Justice Department launched a probe into an ex-employee’s claims that Super Micro violated accounting rules.