The secret of the Supermicro Incident: The accountant who visa financial report resigned quickly, how deep is the water behind it? Analysis of 4 types of "accountant opinions"

At the end of 2023, due to its stock price soaring dozens of times, Supermicro, known as the AI ​​monster stock, was on the verge of delisting. The reason was that Ernst & Young resigned quickly, the accounting firm that issued its financial statements, What secrets does hide that cannot be told?

Recalling similar incidents in the past, Oceanic Beverages, which produces Apple Sidra, released major news in April 2019. When accounting firm PwC issued its 2018 financial report, it issued a large amount due to certain related party transactions. "Unable to express opinion" on the question. Then, a hollowing-out scandal broke out in 2020 for Pharmally-KY. When Deloitte certified its 2019 financial report, it issued an unqualified "unqualified opinion" and was later accused of falsely reporting the financial report. The court awarded compensation and even a prison sentence to the accountant who signed the contract, and also caused joint and several compensation to the firm.

The accountant has a negative opinion or is unable to express an opinion, indicating that there is a major problem with the financial report

In order to comply with corporate public offering and listing regulations, or if the capital exceeds NT$ 30 million stipulated in the Company Law, or due to the needs of specific persons, the company will ask accountants to check its financial statements.

After review, the accountant will issue an opinion on the financial statements, which can be simply divided into four categories: unqualified opinion, qualified opinion, negative opinion and disclaimer of opinion. In the industry, an unqualified opinion is called a clean opinion, which means that the content of the company's financial report has been endorsed by the accountant after being reviewed and should be trustworthy. As for the rest, you should carefully read the "Accountant's Audit Report" on the first page of the financial report to see where the doubts arise. If there are minor problems, a qualified opinion will be issued. If there are major problems, a negative opinion or a disclaimer of opinion will be issued.

English	Accountant's opinion	Quality of financial statements
Unqualified Opinion	Proper presentation of financial statements	excellent
Qualified Opinion	After excluding some ranges, the financial statements properly express	Read the report carefully
Adverse Opinion	The financial statements do not express themselves properly	inferior
Disclaimer of Opinion	I don't know whether the financial statements are properly presented	inferior

A negative opinion or an inability to express an opinion is equivalent to the company paying to appoint an accountant to audit the accounts, and then the accountant comes forward to confirm that there are serious problems with the company's financial statements. This time, Ernst & Young resigned directly. As for the major problems in the financial report, it simply did not comment, leaving Supermicro in the crisis of being delisted. It said that the accountants had discovered some problems and would rather offend their customers than protect themselves.

Problems that trigger warnings from accountants: false accounts, abnormal transactions, financial crisis

For company-side accounting statements, each country has its own accounting principles that are allowed to apply, such as IFRS (International Financial Reporting Standards), GAAP (Generally Accepted Accounting Principles), etc. Basically, these principles have implemented strict accounting standards for the vast majority of transactions. There is really not much gray space for interested parties to manipulate statements, including assets, liabilities, and profits and losses.

Company management and accountants can become enemies with each other. The trigger usually lies in:

1. Accounting fraud

For example, income is falsified and increased, assets (such as cash, accounts receivable, inventory, etc.) disappear out of thin air, and liabilities (such as cost items or expense items, etc.) are deliberately hidden. If it is an accidental "wrong account", usually after the company corrects the error, there should be no serious problems. However, if the company cannot explain clearly or understand the account, the accountant firmly believes that every step will leave traces and will definitely break the casserole and investigate. In the end, until the truth comes out.

2. Abnormal transactions

If it involves transactions that are illegal or benefit others and obviously cause damage to the company, especially transactions with related parties, or transactions with non-related parties on the surface, but in fact transactions with "shadow related parties" who take orders from related parties, Once the actual beneficiary is exposed to the sun, he will die.

3. Financial crisis

It is estimated that in the near future, the company may not be able to continue operating, and may even be at risk of bankruptcy.

Going back to the real cases mentioned earlier, in the end, Deloitte stepped on the landmine, PwC safely entered the market, and Ernst & Young quit. There are 3 choices, 3 plots. In the accounting circle, some veteran accountants, toward I have been sitting in the office from 9 to 5, signing signatures for decades, and have never stepped on any mistakes. Some novice accountants have just ascended to the throne of partners, but something happens before they are even hot. Whether it is fate or luck, If a company has secrets that are not known to everyone, but after all something was missed in a sophisticated plan. If you return to the professional sensitivity of an accountant and sense the warning signal, you will be able to avoid disaster and seek good luck.