Super Micro Computer Inc SMCI shares are plunging in early trading Wednesday after the company announced that its independent auditor resigned over governance and transparency concerns.
What To Know: In a new regulatory filing Wednesday, Super Micro said Ernst & Young sent in its letter of resignation as the company’s registered public accounting firm.
Super Micro initially engaged with Ernst & Young in March 2023 to audit the company’s financials for its fiscal year ending June 2024. Super Micro said the auditor resigned before issuing a report on the company’s financials or the company’s internal controls over financial reporting.
In late July, Ernst & Young communicated concerns about several matters related to governance, transparency and completeness of communications, and warned that timely filing of the company’s annual report was at significant risk.
In response, the board appointed a special committee to review the matters. The committee submitted preliminary information to the company and its auditor.
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Based on additional information from the review process, Ernst & Young raised questions about whether the company demonstrates a commitment to integrity and ethical values, about the willingness of the board to act as an independent oversight body and whether the firm could rely on information from certain members of management.
"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,” Ernst & Young said in its resignation letter.
Super Micro said it disagrees with Ernst & Young’s decision to resign. Despite the disagreement, the company plans to take the concerns raised by the firm seriously and will carefully consider any findings by the special committee. The investigation is ongoing and no final findings or recommendations have been communicated.
Super Micro noted that it doesn’t expect any resolution of matters raised to result in any restatements of quarterly reports for the company’s fiscal year ending 2024, or for any prior fiscal years.
SMCI Price Action: Super Micro shares were down 32.2% at $33.33 at the time of publication, according to Benzinga Pro.
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