EY has resigned as the auditor for Super Micro Computer, a leading US-based IT infrastructure provider, saying it can no longer rely on the management team's representations, as reported by the Wall Street Journal.
EY quit while auditing Super Micro's financials for the fiscal year ending June 30, according to its most recent securities filing. In a letter sent to Super Micro on October 24, EY said that its resignation was driven by "information that has recently come to [its] attention which has led [it] to no longer be able to rely on management's and the audit committee's representations."
In August, Super Micro announced that it would delay the filing of its annual report, as EY raised concerns about its internal controls over financial reporting and the transparency of its communications. The delay came just one day after short-seller Hindenburg Research said that it had found "glaring accounting red flags" at Super Micro. Hindenberg further claimed that Super Micro had engaged in "undisclosed related party transactions, sanctions and export control failures." And, last month, the WSJ reported that the Department of Justice was probing the company after a former employee accused it of accounting violations.
In recent years, auditors globally have been held to account for failing to detect or report fraud at their audit clients, as we discussed in our 2023 Deeper Dive report, "Renal Failure: A Crisis in Audit Culture?" EY has itself been the subject of this, having faced intense scrutiny for its audit work at collapsed German fintech Wirecard. EY's decision to resign at Super Micro may be a signal that auditors are increasingly willing to give up short-term revenue to protect their long-term reputation.
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