Sketchy Financials Send Supermicro Auditors Running For the Hills

Supermicro shares plummeted over 30 percent after Ernst & Young resigned as the company's accounting firm due to concerns over its reporting practices. Ernst & Young stated that they could no longer rely on management's and audit committee's representations, citing information that had recently come to their attention. The resignation letter also raised concerns about Supermicro CEO Charles Liang's influence over the board. This development adds to the controversy surrounding Supermicro, which has yet to file its 10-K annual report after more than two months. The company faces the possibility of being de-listed from the Nasdaq as a result of the delayed filing. Ernst & Young had previously raised concerns with management about the governance, transparency, and completeness of Supermicro's financial reporting. In response, Supermicro's board appointed an independent special committee and hired forensic accounting firm Secretariat Advisors to review its internal controls and governance procedures. However, Ernst & Young was not satisfied with the special committee's findings, which raised further red flags. The additional information received by Ernst & Young questioned whether the company demonstrates a commitment to integrity and ethical values. The resignation and concerns over Supermicro's reporting practices have led to a significant decline in the company's shares.