Sketchy Financials Send Supermicro Auditors Running For the Hills (theregister.com) 11
The Register's Tobias Mann reports: Supermicro shares took a nose dive on Wednesday, sliding more than 30 percent after the accounting firm hired to review its reporting practices resigned after determining they were just a bit too sketchy to warrant the risk. "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 audit committee's representations," Ernst & Young wrote in a resignation letter, which also raised alarm bells regarding Supermicro CEO Charles Liang's influence over the board. The concerns, disclosed in a recent SEC filing, only serve to stoke the fires of controversy surrounding Supermicro, which, after more than two months, still hasn't filed its 10-K annual report and faces the possibility of being de-listed from the Nasdaq as a result. [...]
EY's resignation apparently came months after it raised concerns with management regarding the "governance, transparency, and completeness of" Supermicro's financial reporting, and warned that the release of the server maker's annual report was at significant risk. In response, Supermicro's board appointed an independent special committee and hired Cooley and forensic accounting firm Secretariat Advisors to review its internal controls and governance procedures. It seems EY was not too pleased with the special committee's findings which apparently raised yet more red flags. "After receiving additional information through the Review process, EY informed the special committee that the additional information EY received raised questions, including about whether the Company demonstrates a commitment to integrity and ethical values," the SEC filing reads.
EY's resignation apparently came months after it raised concerns with management regarding the "governance, transparency, and completeness of" Supermicro's financial reporting, and warned that the release of the server maker's annual report was at significant risk. In response, Supermicro's board appointed an independent special committee and hired Cooley and forensic accounting firm Secretariat Advisors to review its internal controls and governance procedures. It seems EY was not too pleased with the special committee's findings which apparently raised yet more red flags. "After receiving additional information through the Review process, EY informed the special committee that the additional information EY received raised questions, including about whether the Company demonstrates a commitment to integrity and ethical values," the SEC filing reads.
Very sad....;-( (Score:1)
Re: (Score:3)
Yes, it is sad. I used to run an email security company and our hosted anti-spam offering ran on SuperMicro servers. The hardware was very nice and reliable and performed very well.
The SuperMicro IPMI implementation was insecure as hell with all kinds of security problems, though, so we had to make sure that wasn't accessible on the open Internet (which is probably wise anyway.)
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The SuperMicro IPMI implementation was insecure as hell with all kinds of security problems, though, so we had to make sure that wasn't accessible on the open Internet (which is probably wise anyway.)
I have run into that as well. Our solution was to have the IPMI accessible cross-wise in the internal interfaces from redundant external-facing servers. But we would have done that for any IPMI. They are all at least highly suspect.
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To this day I have many small format servers running on Supermicro hardware/mainboards. Many have been in perfect operation for a dozen years or more. To see this level of mismanagement taking down what was a great budget server components company for a long time is to me, sad. Yes, they've always had their issues. But, many customers throughout the years I was in service, have been privy to a relatively powerful server to run their business via Supermicro, and got WAY more for their dollar than a Dell or HP unit would have provided them. Sorry to see them go down this path. :-(
OVH rely mostly if not exclusively only on SuperMicro for their bare metal server offering and I have had many models there without any problems. Apparently, they investigated them for hardware attacks as well:
https://www.datacenterknowledg... [datacenterknowledge.com]
The ship is abandoning the rats (Score:1)
Tip: If you are a top executive and most your accountants suddenly want to "vacation" out of country, you should follow.
When your auditor fires you... (Score:3)
When your auditor fires you because they say they can't trust statements made by management or the internal audit team, then it's time for the board to hold the management team responsible and start naming replacements. And the internal audit team should be fired as well. Hopefully they don't just decide to fire everyone and liquidate the whole company, because I always kind of liked their stuff.
There is only one reason Ernst & Young would turn down your money to put their name on the paperwork: if they clearly see that you aren't worth defending in federal court after checking your math and asking management about how it's so wrong and getting unsatisfactory answers.
Re: When your auditor fires you... (Score:2)
Agree entirely.
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When your auditor fires you because they say they can't trust statements made by management or the internal audit team, then it's time for the board to hold the management team responsible and start naming replacements.
You'd think, but when you own the company and have been giving out fake financial statements for years [npr.org], who will take over?
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Internal audit can get replaced by the board (who they work for). If things are this messed up, the board is probably incompetent or complicit in what is going on.
If EY is not signing off on things, we are likely deep into criminal territory. External audit can sign off with conditions and limitations if there are honest problems. As they get paid a lot for not that much work, if they refuse to sign, they likely suspect being lied to.
Get out while you can (Score:2)
If the top brass has been sitting on their hands and can't put together a passable financial statement+annual report even after 4+ months while backed by a top-tier accounting firm like Ernst & Young, something is fundamentally bad, even criminally bad inside that company.
My guess is that a liquidation is imminent.
oh come on just SAY it (Score:2)
SO much song and dance there. Let me clear that up for you...
"So many of the company employees and reps we've spoken with have been hiding information, been deceptive, or are just outright lying to us, that we are unable to create an accurate financial report. Good luck!"