The consulting firm had concerns about the tech company’s internal controls, board independence, and accounting practices
Super Micro Computer (SMCI) stock dropped 32% in the Wednesday morning trading, after the server company announced that its auditor, Ernst & Young, had resigned. The departure follows months of disagreement over Super Micro Computer’s governance practices and board independence.
The conflicts between Ernst & Young and Super Micro Computer began in late July, as the auditor raised concerns regarding the company’s internal financial controls, governance, and transparency. In response, Super Micro formed a special board committee to investigate the issues. But Ernst & Young ultimately concluded it could no longer stand behind the company’s financial statements.
In its resignation letter, EY said it was “unwilling to be associated with the financial statements prepared by management,” citing recent information that made it impossible to rely on representations made by Super Micro’s executives and audit committee.
The news comes more than a month after short-seller Hindenburg Research accused the tech firm of accounting irregularities and alleged dealings with sanctioned Russian companies, which tanked the share price.
Super Micro Computer stock is still up about 16% so far this year, and was trading at about $33 per share shortly after markets opened Wednesday morning.
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