Super Micro Computer Inc. shares jumped as much as 27% after the company hired a new auditor and filed a plan to come into compliance with Nasdaq listing requirements.

The server maker said it submitted a plan to the Nasdaq exchange for filing its 10-K financial disclosure report delayed in August. The company also announced that it appointed BDO USA as its independent auditor, effective immediately. 

“In its compliance plan to Nasdaq, the company indicated that it believes that it will be able to complete its annual report on Form 10-K for the year ended June 30, 2024, and its quarterly report on 10-Q for the fiscal quarter ended Sept. 30, 2024, and become current with its periodic reports within the discretionary period available to the Nasdaq staff to grant,” Super Micro said Monday in a statement. 

David Paul Morris/Bloomberg

If Super Micro’s plan is accepted by the exchange, its new deadline for the document will likely be pushed to February. It will be able to stay listed on the Nasdaq until a final decision about its compliance is made. If a plan isn’t approved, the company can appeal the decision.

Super Micro’s previous auditor, Ernst & Young LLP, resigned in October, citing concerns over the company’s transparency and governance. Ernst & Young is one of the Big Four accounting firms, the auditors that vet the books of the world’s largest companies. BDO USA is the sixth-largest auditor by revenue, according to Inside Public Accounting. The firm has only one other S&P 500 company as a client, according to data compiled by Bloomberg. 

Finding an auditor is a “big step for them,” even if it isn’t one of the Big Four firms, Matt Bryson, an analyst at Wedbush, said in an interview. “This is a positive step in terms of putting a plan forth in front of Nasdaq, and, at least from their perspective, hopefully being able to file their financials and put these problems to bed.” 

Having a new auditor and a plan to regain compliance with Nasdaq’s listing rules is the latest update in a tumultuous few months for Super Micro, which had gained favor with investors earlier this year as a potential beneficiary of the demand for artificial intelligence services. The San Jose, California-based company delayed filing its annual 10-K following a damaging report from short seller Hindenburg Research, and last week said it would be late with quarterly reports. 

Super Micro is also facing a U.S. Department of Justice probe. The shares had tumbled more than 80% from a peak in March through Monday’s close.

The company has gone through a delisting and relisting process before. In 2019, the shares were taken off the Nasdaq exchange after Super Micro failed to meet deadlines to file a 10-K and several quarterly reports. The company received approval to rejoin the exchange in 2020, and in the same year paid a $17.5 million penalty to resolve an investigation by the US Securities and Exchange Commission. Super Micro didn’t admit to or deny the regulator’s allegations as part of its settlement. 

Some stock bulls are reiterating their investment case for the one-time Wall Street AI darling. 

“We take the view that regardless of its regulatory woes (now receding in the rear-view mirror), SMCI maintains its leadership in the massive, scalable AI data center market for liquid-cooled server racks,” Lynx Equity Strategy analyst KC Rajkumar said. 

“SMCI has a leadership position in the rapidly expanding liquid-cooled GPU server data center market, a position it is unlikely to give up any time soon,” Rajkumar said.

The Treasury Inspector General for Tax Administration has launched a social media campaign to commemorate its 25th anniversary, even as the Senate Finance Committee holds hearings on a replacement for the agency’s long-time inspector general, who died earlier this year.

TIGTA provides independent oversight of the IRS and was created by Congress as part of the IRS Restructuring and Reform Act of 1998. TIGTA has issued more than 3,000 reports — often detailing inefficient practices at the IRS — which it claims have produced $383 billion in benefits from improvements in federal tax operations.

The agency has also referred nearly 32,000 cases of IRS employee misconduct for action and 5,400 cases for criminal prosecution.

Some of this work occurred during economic crises when the IRS was tasked with distributing financial relief to millions of taxpayers. For example, TIGTA assessed IRS implementation of the American Recovery and Reinvestment Act of 2009 and multiple pandemic relief packages.

“Having spent many years in the federal government, I value TIGTA’s important role in many facets of tax administration oversight,” said IRS Commissioner Danny Werfel in a statement. “TIGTA helps ensure our agency is accountable for the work we do.”

TIGTA’s social media campaign will be on LinkedIn and X and feature accomplishments, perspectives, trivia and other facts about TIGTA.

Since its creation, the agency has been led by two presidentially appointed inspectors general. The Senate is now considering the nomination of David Samuel Johnson, of Virginia, who would succeed Inspector General J. Russell George. The latter, appointed 20 years ago, died in January.

CPAs specializing in tax resolution often walk a fine line between advocating for clients and adhering to legal and ethical guidelines. Given the complexities of IRS regulations and the high-stakes nature of tax resolution, ethical dilemmas are common. These situations emphasize the delicate balance CPAs must strike between zealously representing clients and upholding their moral and legal obligations. The AICPA’s Code of Professional Conduct provides a framework for addressing common ethical dilemmas in tax resolution and maintaining integrity.  

Navigating common ethical dilemmas in tax resolution 

One frequent issue in tax resolution involves unreported income. It’s not uncommon for clients to believe that income not reported on a 1099 form is exempt from taxation. For example, some clients may assume that cash income doesn’t count if the IRS isn’t immediately aware of it. As one CPA likes to say, “I don’t look good in stripes, and neither do my clients.” The AICPA’s integrity principle mandates honesty in these situations. Educating clients about their obligations protects them legally and reinforces the public interest principle, which fosters trust between the profession and the public. 

Conflicts of interest: identifying and resolving them ethically

Conflicts of interest are common in tax resolution, particularly when dealing with married couples or business partners. A typical example involves a couple whose spouse owes a significant amount to the IRS while the other has sufficient withholding to cover their liability. This can create a conflict, especially in divorce situations or where assets are shared. The AICPA emphasizes objectivity and independence in these cases, requiring CPAs to disclose any potential conflicts to all parties. In some cases, stepping away may be necessary to avoid compromising independence. 

Clients also are tempted to suggest moving assets to a spouse’s name to avoid IRS scrutiny. One client, for instance, considered selling property and depositing the proceeds in a spouse’s account to avoid reporting it in an offer in compromise. This is a classic case of fraudulent conveyance, and it is the CPA’s duty to explain the severe penalties involved. Upholding due care means understanding these legal ramifications and guiding clients away from potentially harmful actions. 

Transparency and confidentiality: balancing ethical priorities 

Transparency is critical in tax resolution. Clients must understand their options and the potential outcomes of different strategies. Whether negotiating an OIC or setting up a payment plan, CPAs must ensure clients are presented with a realistic picture of what the IRS will likely accept. At the same time, protecting client confidentiality is essential. CPAs with access to sensitive financial information are ethically bound to maintain confidentiality unless disclosure is required by law. 

In one case, a client revealed they had an unreported gold bar and wished to exclude it from IRS submissions. The CPA refused to assist despite the client’s insistence, knowing that concealing assets violates ethical standards. Assisting clients in submitting inaccurate financial information undermines the profession’s integrity and carries severe legal consequences. 

AICPA guidelines and their practical application 

The AICPA’s Code of Professional Conduct is built on six principles: responsibilities, public interest, integrity, objectivity and independence, due care, and scope and nature of services. While these principles apply broadly across the profession, tax resolution requires nuanced application. 

For example, due care requires CPAs to stay informed about IRS regulations and navigate complex tax laws effectively. When advising clients on whether to file jointly or separately for back taxes, CPAs must weigh the impact on both parties, especially in divorce scenarios or where significant assets are involved. Ensuring objectivity in these cases is crucial for providing unbiased advice. 

The long-term benefits of ethical decision-making

Ethical missteps in tax resolution can have far-reaching consequences. Violations of IRS rules or involvement in fraudulent schemes can result in fines, loss of licensure, or even criminal charges. More importantly, ethical breaches damage the trust that clients, the IRS and the public place in CPAs. 

Adhering to ethical standards fosters trust and builds long-term client relationships. Strong reputations with clients and IRS agents often lead to smoother negotiations and better outcomes. Upholding these standards is essential for sustaining a successful, reputable practice. In tax resolution, where the intersection of ethics and advocacy is particularly challenging, CPAs must remain committed to the AICPA’s Code of Professional Conduct. By balancing transparency, managing conflicts of interest, and maintaining the highest standards of integrity, CPAs can help clients resolve tax issues ethically and effectively, safeguarding their own reputations and public trust in the profession.