I try to stay RATIONAL but it is very difficult now! Here are several reasons to stop an audit. Which one do you choose?
$Super Micro Computer (SMCI.US)$ Ernst & Young (EY) and other major accounting firms have frequently decided in recent years to no longer serve certain clients or industries for accounting audits, often due to several factors:
1. Regulatory pressure and supervision: Regulators such as the US Securities and Exchange Commission (SEC) and European regulators have greatly increased their supervision of audit firms. EY may decide to stop auditing companies where the risk of non-compliance or fraud is too great, to avoid reputational damage or fines.
2. Incompatibility of services (Independence Issues): EY also offers consultancy services in addition to audit. To remain independent, audit firms are often not allowed to provide consultancy or advisory services to audit clients. When EY wants to carry out important consultancy assignments, it can choose to stop the audit role for the same client.
3. Risk and Liability: Conducting audits carries significant legal risks, especially for complex companies in sectors such as technology or financial services. EY may withdraw when legal risks become too high, such as in companies with a "history of accounting problems"[Perhaps that is the GREAT REASON ? ].
4. Cost efficiency: Sometimes clients may require audits that are no longer profitable for EY, especially if the cost to perform the audit exceeds the expected return. [Also possible ?]
5. Strategic focus and restructuring: EY and other major accounting firms are continually adjusting their strategic focus, sometimes moving away from serving certain sectors or clients to focus on more strategically interesting or profitable markets.
These factors illustrate why a large firm such as EY may decide to terminate certain audit assignments.
1. Regulatory pressure and supervision: Regulators such as the US Securities and Exchange Commission (SEC) and European regulators have greatly increased their supervision of audit firms. EY may decide to stop auditing companies where the risk of non-compliance or fraud is too great, to avoid reputational damage or fines.
2. Incompatibility of services (Independence Issues): EY also offers consultancy services in addition to audit. To remain independent, audit firms are often not allowed to provide consultancy or advisory services to audit clients. When EY wants to carry out important consultancy assignments, it can choose to stop the audit role for the same client.
3. Risk and Liability: Conducting audits carries significant legal risks, especially for complex companies in sectors such as technology or financial services. EY may withdraw when legal risks become too high, such as in companies with a "history of accounting problems"[Perhaps that is the GREAT REASON ? ].
4. Cost efficiency: Sometimes clients may require audits that are no longer profitable for EY, especially if the cost to perform the audit exceeds the expected return. [Also possible ?]
5. Strategic focus and restructuring: EY and other major accounting firms are continually adjusting their strategic focus, sometimes moving away from serving certain sectors or clients to focus on more strategically interesting or profitable markets.
These factors illustrate why a large firm such as EY may decide to terminate certain audit assignments.
Conclusion from me; It is extremely difficult to find out the truth. Uncertainty is something investors absolutely do not want. Accounting rules today are very complex and EY could also be FINED, which is why the company is distancing itself out of PRUDENCE! Perhaps there is to much Bla ... bla ... ? ![]()
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Money Thrill OP : A Super Micro spokesperson told "CNBC" in a statement that the company “disagrees with E&Y’s decision to resign, and we are working diligently to select new auditors.”
Representatives for Ernst & Young and Deloitte didn’t respond to requests for comment?
LivingYears Money Thrill OP : this could be the straw that breaks the camel's back. 10k late, attack from Hindenburg, insider whistle blow etc can still be explained away. it's a I say U say situation. now an independent 3rd party that's supposed to sign off on what SMCI got to say is refusing to say it, tells alot. the reasons given by E&Y strengthened Hindenburg accusations. possibly more downside...
RandomTrader_ : To my knowledge, I have friends that have worked in EY, they usually don’t just leave a client like that especially when there’s millions to be made for EY. Them walking away straight up before earnings season seems to show huge red flags in SMCI’s books.
At this point, buying in on this stock feels more like gambling then value investing. I might even short this stock depending on what it closes by end of today’s trading session.
MonkeyGee : if E&Y had anything, the right thing to do is issue a Qualified or Adverse Opinion. If the disagreement remains unresolved and the auditor believes it impacts the fairness of the financial statements, they may issue a qualified opinion, an adverse opinion, or, in extreme cases, disclaim an opinion on the audit report.
Right now, all I'm seeing is that E&Y is upset that the client didn't agree with their opinion. why is it not factual enough to stated on paper? because it's just an opinion.
mzZephyr : too many
… run while you still can! i made the painful decision to cut loss yesterday. not worth taking the risk anymore!
Money Thrill OP MonkeyGee : Indeed, good insight. E&Y don't give a opinion. And agree with your opinion ... " ... Right now, all I'm seeing is that E&Y is upset that the client didn't agree with their opinion. why is it not factual enough to stated on paper? because it's just an opinion ..." .![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
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