Super Micro Auditor EY Resigns, Citing ‘Integrity’ Concerns
(Bloomberg) -- Ernst & Young LLP resigned as the auditor to troubled server maker Super Micro Computer Inc., citing concerns about the company’s governance and transparency. The shares plummeted the most in six years.
Ernst & Young raised questions about the firm’s commitment to integrity and ethics, according to a filing that Super Micro released on Wednesday. “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,” Ernst & Young wrote.
The resignation comes after news broke last month that the US Department of Justice had launched a probe into an ex-employee’s claims that Super Micro violated accounting rules. A month earlier, Super Micro said it would delay its annual financial filings and that a special committee was evaluating internal controls over financial reporting. The company said Wednesday it would hold a quarterly “business update” call with investors next week.
This kind of public criticism by an auditor is “extremely rare and a huge red flag,” said Olga Usvyatsky, an accounting analyst. In two other high-profile auditor resignations this year — from SunPower Corp. and Tingo Group Inc. — the companies were ultimately delisted, she wrote in an analysis earlier this month.
