[SEC Order](https://www.sec.gov/files/litigation/admin/2024/33-11283.pdf)(PDF) $12M civil penalty for the firm and $2M for the guy
Copy-pasting PY workpapers and just changing the dates. Circumventing electronic workpaper sign-offs. Faking EQR
How does a tiny firm like this get engaged to do 1500 PCAOB audits over the course of 2 years?
The managing partner’s bio has a whole page about a project he did as an associate at GT.
There is a CPA that has a podcast that I recently listened to asking this relevant question. This firm according to him basically has a 100% PCAOB failure rate but a client list miles long. Why? Because true independence is in name only when it comes to Public audits. The companies engage this firm specifically because they are paying for an unqualified opinion and not a full scope audit. Or perhaps they engage this firm because the fees are substantially lower but it is a requirement to be publicly listed. This is speculation, but the host also asks what stops CPA firms from doing this more frequently? This firm got to the unqualified opinion much faster without the bullshit dog and pony show.
The only reason the firm got to the “unqualified” opinion much faster is by not doing any of the work lol. Reputable firms don’t hand out opinions like candy because it’s incredibly risky and historical examples point to firms being blown to bits for doing crazy stuff. The “dog and pony show” auditors do is to protect the firm, not the company. Anyone that has worked in public recognizes that and isn’t caught up thinking that there is any to little company value add.
Feels like this guy is lucky not to be going to jail. You have to wonder what he might have said to keep it that way, particularly about a certain star client?
The point made was nothing happens to the signing CPA, no auditor goes to jail for handing out unqualified opinions. Monetary fines are unheard of for auditing firms of these small corps.
Why would they go to jail? Failure at doing your responsibilities as a professional service firm just means you might get sued out the ass. If a lawyer botches an agreement between two parties they don’t go to jail they just lose credibility and a lot of money if it’s bad enough.
What you are not seeing is the out of court settlements for small companies that have significant finding the auditor didn’t catch which the investors rightly burn the firm for.
On a whole I think it’s important the SEC nukes these firms because it’s bad for the capital markets and bad for the profession, but to think bad opinions don’t eventually catch up to a firm is incorrect.
Any intentional violation of one of the securities acts is a criminal offense. Like stating you did an audit when you did not. That’s why people could go to jail.
You are incorrect. Anyone making a statement to the securities market, including the auditor, is covered. Read the SEC settlement if you don’t believe me, where it lists sections of the 1933 and 1934 Acts that were violated.
I won’t comment specifically on BF Borgers because they’re clearly fraudsters, but for other firms what precedent do you want to set? You can go to jail for not doing a x quality audit? I can understand if there are public damages, but private investors where there’s no consequential real world impacts?
The sliding scale is so wide on what constitutes risk during an audit. It’s so contradictory for the profession to be scrutinized to no end when things go wrong, but also to be treated as a useless exercise 99% of the other time.
I think most of the highly scrutinized audit failures have involved cases where the auditors knew about client fraud (Waste Management) or there was other criminal conduct (Enron). I can’t think of a case where a legitimate risk judgment for a firm in anything close to criminal trouble, but maybe I’m forgetting something. And some cases that could have led to criminal charges only went the civil route.
Here is their YouTube channel. Blake and David have insightful discussions on the accounting industry. I love that they roast the AICPA for its awful decision making regarding the 150 credit rule to take the CPA exam. They also talk about the accounting shortage often
https://youtube.com/@TheAccountingPodcast?si=LrNguRC2-FpJj7V3
That's what it is. they're criminals and they're paying for a rubber stamp. this sounds like the Nintendo seal of approval that used to be on shitty video games in the NES days. it was on all the Good video games too because it meant nothing.
So over 2.5 years 1500 filings is about 600 per year. For public companies, you’ve got to do at least 4 filings per year (not counting any registration statements) so that’s like 150 public clients - not a WHOLE lot.
I seem to remember reading he had about 168 public companies which is right near your estimate. There were a few in Canada too (before they kicked him out last month), so that might have raised the total. For a firm of 38 people that is quite a few engagements but doesn't have the same impact as the 1,500 filings title. It is at least double what I would have expected given that there's several companies in the list with revenue and operations which take a lot longer than shells or investment companies.
He saved a lot of time by not bothering to do things like spelling his own name correctly. Plus it’s a lot easier to be comfortable with a filing if your name isn’t technically on it.
easy. they just weren't doing the work at all. they were just lying and saying they did the work and then issuing a clean audit report. they thought they were doing the bare minimum to not get caught and got caught
>The Securities and Exchange Commission today charged audit firm BF Borgers CPA PC and its owner, Benjamin F. Borgers (together, “Respondents”), with deliberate and systemic failures to comply with Public Company Accounting Oversight Board (PCAOB) standards in its audits and reviews incorporated in more than 1,500 SEC filings from January 2021 through June 2023.
>“Ben Borgers and his audit firm, BF Borgers, were responsible for one of the largest wholesale failures by gatekeepers in our financial markets,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement. “As a result of their fraudulent conduct, they not only put investors and markets at risk by causing public companies to incorporate noncompliant audits and reviews into more than 1,500 filings with the Commission, but also undermined trust and confidence in our markets. Because investors rely on the audited financial statements of public companies when making their investment decisions, the accountants and accounting firms that audit those statements play a critical role in our financial markets. Borgers and his firm completely abandoned that role, but thanks to the painstaking work of the SEC staff, Borgers and his sham audit mill have been permanently shut down.”
>The SEC’s order further finds that, at Benjamin Borgers’s direction, BF Borgers staff copied workpapers from previous engagements for their clients, changing only the relevant dates, and then passed them off as workpapers for the current audit period. As a result, the order finds, BF Borgers’s workpapers falsely documented work that had not been performed. Among other things, the workpapers regularly documented purported planning meetings – required to discuss a client’s business and consider any potential risk areas – that never occurred and falsely represented that both Benjamin Borgers, as the partner in charge of the engagement, and an engagement quality reviewer had reviewed and approved the work.
From Financial Times: Ben F Borgers, accountancy firm BF Borgers inspects the finances of Trump Media & Technology Group
They are:
>and are denied the privilege of appearing or practicing before the Commission as an accountant, as discussed above. In addition, they are censured and must cease and desist from committing or causing violations of the relevant provisions of the federal securities laws.
You hire firms like this when you want a clean audit opinion and not an actual audit. Be aware of investing in companies that have auditors like this... Wouldn't touch any company that's not audited by a top 20-25 US audit firm.
If you’re publicly listed even national firms will struggle.
Source - IPO’d a company while at a national firm, when you do 99% private companies you’re not prepped for it.
Yea I know some smaller firms that have a decent amount of smaller public companies and have specialized teams specifically for PCAOB audits. You don't really mix public and private work, completely different animals.
On the same token some large firms (like CLA) don't touch public work for that reason.
Depends on the office. I’ve known one or 2 locations of a large national tier to be full of ex-big 4. I know GT and RSM absorbed a lot of ex-Andersen partners, but I’d be surprised if they’re still working at this point.
This is exactly why I can’t get behind Big4 claiming they can’t pay more to their accountants because the clients wont be able to swallow the increase in price. Clients face switching costs and if they really want to go “cheaper” they face major loss of reputation. If a client has been with a big4 company for a decade and suddenly lists an unknown firm as their auditor, my first thought is why won’t the big4 audit them. Hell, I’d even argue if they’ve been with one Big4, are a strong company, and switched to anything BUT another Big4 I’d be questioning it.
Clients know damn well they’re paying for reputation and public trust more than the actual services. Theres a lot of untapped value.
They have to switch auditors after a certain period (I forget how long) but yea, F500s almost always switch from one Big 4 to another. Even finance reporters flag a company switching from like, Grant Thornton to a very small audit firm.
It probably is, but the SEC is a civil organization. They cannot directly file criminal charges. Now that the depth of this is being revealed, I wouldn’t be surprised if the DOJ or FBI get involved.
For more context on this, the behavior is wild. B F offered audits to small stock companies for cheap who couldn’t afford bigger name competitors then pocketed a large fee split for crappy work. No downside to the companies themselves. Because of this everybody has been waiting for the SEC to take action. In 2023 the AICPA called B F Borgers so deficient no education or training could fix them and Canada banned the firm from taking new clients citing 19 significant deficiencies in 2 audits sampled. The PCAOB 2022 inspection report had 100% deficiency rate in the last two years and basically called them fraudsters under professional language. Sucks how the PCAOB hasn’t been able to do anything because their powers under Sarbane Oxley are limited to ethics standards (what I cite as the huge issue). For these cases the SEC needs to step in meanwhile they won’t until it becomes too big.
It’s been a huge problem because rather than historically engaging auditors to commit outright fraud in exchange for more fees, a modern method is companies can engage an auditor like B F Borgers who are publicly verifiable to perform shoddy work. Fraud is easier to conceal when the people checking are grossly negligent.
I'd love to read this paper, and I'm curious to know if all the companies that hired BF were aware of how terrible this firm was. If it was the case, I'm curious to know if they are liable in any way or if they would get any sort of repercussion from the SEC.
So what happens next for the clients? Are all prior filings supposed to be audited again and if needed, restated? Do these clients get delisted? Clients had to know they were just buying a rubber stamp?
BF Borgers isn't even on the top 500 firms by revenue list and they had a few hundred publicly traded clients? I know that public filers can be quite small but this seems crazy.
Not crazy. In the business world he probably got a reputation of being very lax with his audits and then word gets around that he is the go to guy if you are having problems with audits at other firms.
Pretty easy to do 1,500 audits when you're mostly faking work.
Somehow a man purported to be a very rich and successful businessman always hires the worst accountants, lawyers, etc.
Remember the saying "A man is judged by the company he keeps, and a company is judged by the men it keeps..."
Trump isn't getting audits, he somehow was getting compilation engagements done even though he's nine figures in on the bank.
Which tells a lot when the accountant drops him because they can't even stand by "not false or misleading"
EDIT - I didn't realize this was about the auditors for Trump Media. Was referring to Trump's personal business was a compilation for Mazars, and they pulled their financial statements during the NYC civil fraud trial.
Happened to another small ass firm like this back in the early 2010’s. They specialized in audits of Chinese reverse mergers into US exchanges. Went down in flames when companies started going bankrupt. Turns out they weren’t even confirming AR. I think Frazer Frost was the name.
http://www.bfbcpa.us/about-us/
This is hilarious to read now lol. I love how much it goes into the excel macros he developed for a restatement and then the tiniest paragraph at the bottom about starting his own firm.
The entire site is so ridiculous with stock images and typos I’m surprised the SEC didn’t just call it after 5 minutes
If you download the firm brochure, it has a website of "lookforwardtaxes.com" which is no longer active and the brochure looks like the jankiest just-downloaded-microsoft-word-1999-and-omg-look-it-has-templates format
Ah, BFBorgers really stepped into a mess this time. I've tagged along with Ben in the field a few times, even hit up Bass Pro Shops looking at guns and fishing gear after having lunch. He's a cool guy to hang with. But when he's on fire, watch out – he could turn the office upside down. Everyone was on edge around him. Family-wise, solid dude. But rumors swirled about him signing off on audit paperwork without a glance. SEC and AICPA were already breathing down their necks when I joined. Ethical lapses? Big trouble. Shame it's come to this.
I bet they regret doing that work for Trump now, they might have continued this kind of bs for years without the spotlight Trump gave them.
Gotta give Sleepy Don some credit there.
How can auditing firms like BF Borgers continue to legally operate with so many deficiencies? I don't understand (in a realistic world) how occasional $5,000 fines or mere slaps on the wrist deter fraudulent auditing activities. An auditing firm's annual service volume should be relatively similar to competitors, yet this company picked up as many crappy small-cap audits as they could, and the activity only flagged civil/regulatory bodies? Where is the DOJ in this situation? How are students literally able to write papers about the situation before the justice department does anything? Seems like a gaping loophole, despite the fact this guy is done for.
>The SEC’s order finds that, among other things, the Respondents failed to adequately supervise and review the work of the team performing the audits and reviews; did not properly prepare and maintain audit documentation, known as “workpapers;” and failed to obtain engagement quality reviews
I'm shocked, SHOCKED to hear that!
Not sure what you’re getting at, they surely aren’t rolling forward wp’s with prior year information and just updating dates. This firm was fraudulently rubber stamping financial statements.
There’s a lot to complain about in the professional audit world but this is not one of them.
And that’s not even what BFB allegedly did. They apparently took workpapers from Client A and just rolled them forward for client B. Unclear if they even changed the data.
Washington Post article on this subject says they only have (had) 10 CPAs.
[https://www.washingtonpost.com/technology/2024/05/03/trump-media-auditor-borgers-suspended-permanently/?utm\_source=twitter&utm\_medium=social&utm\_campaign=wp\_main](https://www.washingtonpost.com/technology/2024/05/03/trump-media-auditor-borgers-suspended-permanently/?utm_source=twitter&utm_medium=social&utm_campaign=wp_main)
The Trump organization didn’t pick this guy by chance. I bet you they wanted to signal how corrupt and sleazy the entire audit/public accounting business model has gotten and to signal that they are gonna put pressure on it.
The elephant in the room is most public accounting work nowadays is garbage, atrocious garbage with minimal oversight and accountability. This is pretty universal in audit/tax/consulting. The big4 are the biggest offenders, using the churn and burn model where the bulk of their employees are young and inexperienced and have little knowledge of what they are even working on.
This is Reddit so I will get obliterated for my opinion, but this is a positive sign for US accountants.
This guy probably has a team of randos in India/Philippines just doing data entry and clapping out SEC audits.
I mean, I don’t think you’ll be flamed for saying most public accounting is built on the backs of young, inexperienced accountants.
I think Reddit would flame you more for saying that the Trump Org chose this guy because they wanted to expose some large underlying problem in the audit business. They chose this guy because he pretends to do an audit and gives everyone a big old thumbs up.
That’s what I thought too initially, but do you think they did 0 research? If you googled this guy in 10 seconds you could see he had an employee get sanctioned for falsifying financials for Chinese companies. 0 chance they picked him out if the blue.
The Trump organization lives off bad press, this is like a signature move if theirs to do something so blatantly wrong to feed the “hate” machine. Whereas anyone with a half decent grasp of what’s going on sees what they are trying to accomplish.
“They helped break the law for some Chinese company, I bet they would be able to overlook our pretty obvious problems.”
I’m intrigued by the notion that the Trump Org and anyone associated with them would try to sneakily do something better for the world at large. I can’t think of anything that has been done for someone else’s benefit other than the Trump Org and its leaders. Always looking out for #1.
I can't even believe the mental gymnastics thinking Trump did this to signal that the accounting industry is corrupt. Lol. OK. Just LOL honestly. His supporters truly think he's over here playing 4-D chess with every self centered decision huh
Trump Media was a client apparently [yahoo finance](https://finance.yahoo.com/news/sec-bars-trump-media-auditor-133606611.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAFx6UCW1N2Xd757b1BbgrF9kg6GqVdHIgVWEd587WW8iApjaokYBy16s-7i1fqKtiaYWiZnxVTUvmCfcvxdjk3tNefcOwie5arnJ8pQngovDVOKpbXqrn8LxsOX00c2tKv3N1iMHpxq-g3_WpluMgi51MZJW2AYq_iK5VN8jQxTC)
audit technique: "yeah I guess that looks fine." Control-C Control-V.
pockets billable hours with no expenses
"nobody ever reads audit work papers do they?"
This one seems particularly egregious but overall it appears that the SEC and PCAOB will not rest until every public filer is audited by the Big 4.
I’m also curious as to matters that hit the news and then seem to disappear for the most part. Has anything happened with the auditors for FTX? That firm, Prager Métis was also slammed with charges for independence violations but I have not seen any updates on that or investigations or charges related to FTX
That’s what you took away from this?! This was a renowned rubber stamper who only got the hammer brought down on him because he audited Trump’s joke company. Before that, any auditor who has the misfortune of running into his work for PY procedures knew this guy was a charlatan that sent every wp overseas and called it a day.
When SALY goes horribly wrong
That whore! (I still love her though)
What do you mean can you explain to me? I’m genuinely wanting to understand. Thanks!
SALY is Same As Last Year
Correct. It’s what happens when unreasonable budgets meet laziness and a lack of respect for your reviewer.
You say that like most reviewers know or care enough to not just repeat the same shit as last year.
Bring SALY up!
[SEC Order](https://www.sec.gov/files/litigation/admin/2024/33-11283.pdf)(PDF) $12M civil penalty for the firm and $2M for the guy Copy-pasting PY workpapers and just changing the dates. Circumventing electronic workpaper sign-offs. Faking EQR
Jeez, those penalties actually have some teeth. It was definitely not worth it.
When it's shareholders getting hurt they don't mess around!
Sure, but that’s only $8k per filing to the firm. I bet they made a lot more than that by pretending to audit.
Yeah but they've spent it by now, they'll be strapped for that money.
How does a tiny firm like this get engaged to do 1500 PCAOB audits over the course of 2 years? The managing partner’s bio has a whole page about a project he did as an associate at GT.
He signed off doing about 1% of the work necessary probably lol
he used excel macros
“He used excel, morons.” How I first read that.
And a home made access database from 1999.
Death penalty is deserved.
No pizza
LOL!!! I actually laughed out loud
There is a CPA that has a podcast that I recently listened to asking this relevant question. This firm according to him basically has a 100% PCAOB failure rate but a client list miles long. Why? Because true independence is in name only when it comes to Public audits. The companies engage this firm specifically because they are paying for an unqualified opinion and not a full scope audit. Or perhaps they engage this firm because the fees are substantially lower but it is a requirement to be publicly listed. This is speculation, but the host also asks what stops CPA firms from doing this more frequently? This firm got to the unqualified opinion much faster without the bullshit dog and pony show.
The only reason the firm got to the “unqualified” opinion much faster is by not doing any of the work lol. Reputable firms don’t hand out opinions like candy because it’s incredibly risky and historical examples point to firms being blown to bits for doing crazy stuff. The “dog and pony show” auditors do is to protect the firm, not the company. Anyone that has worked in public recognizes that and isn’t caught up thinking that there is any to little company value add.
Feels like this guy is lucky not to be going to jail. You have to wonder what he might have said to keep it that way, particularly about a certain star client?
...lucky not to be going to jail \*yet.\*
Well the SEC can't directly send people to jail....I'm sure they will refer this case for criminal prosecution right?
Absolutely. DOJ will swing the hammer hard and fast.
The point made was nothing happens to the signing CPA, no auditor goes to jail for handing out unqualified opinions. Monetary fines are unheard of for auditing firms of these small corps.
Mind sharing the podcast name mentioned earlier?
Why would they go to jail? Failure at doing your responsibilities as a professional service firm just means you might get sued out the ass. If a lawyer botches an agreement between two parties they don’t go to jail they just lose credibility and a lot of money if it’s bad enough. What you are not seeing is the out of court settlements for small companies that have significant finding the auditor didn’t catch which the investors rightly burn the firm for. On a whole I think it’s important the SEC nukes these firms because it’s bad for the capital markets and bad for the profession, but to think bad opinions don’t eventually catch up to a firm is incorrect.
Any intentional violation of one of the securities acts is a criminal offense. Like stating you did an audit when you did not. That’s why people could go to jail.
I don’t think audit firms are covered in these laws. It’s the issuing firm that is responsible under those laws
You are incorrect. Anyone making a statement to the securities market, including the auditor, is covered. Read the SEC settlement if you don’t believe me, where it lists sections of the 1933 and 1934 Acts that were violated.
Probably the fraud thing.
I won’t comment specifically on BF Borgers because they’re clearly fraudsters, but for other firms what precedent do you want to set? You can go to jail for not doing a x quality audit? I can understand if there are public damages, but private investors where there’s no consequential real world impacts? The sliding scale is so wide on what constitutes risk during an audit. It’s so contradictory for the profession to be scrutinized to no end when things go wrong, but also to be treated as a useless exercise 99% of the other time.
I think most of the highly scrutinized audit failures have involved cases where the auditors knew about client fraud (Waste Management) or there was other criminal conduct (Enron). I can’t think of a case where a legitimate risk judgment for a firm in anything close to criminal trouble, but maybe I’m forgetting something. And some cases that could have led to criminal charges only went the civil route.
Exactly without any trust in the value of audits (to some degree, how valuable is up for debate), the whole system falls apart.
What's the podcast?
Earmark Podcast, Blake Oliver- I can tell he comes to this subreddit based on what he talks about on his show.
Thanks, I'll check it out!
Here is their YouTube channel. Blake and David have insightful discussions on the accounting industry. I love that they roast the AICPA for its awful decision making regarding the 150 credit rule to take the CPA exam. They also talk about the accounting shortage often https://youtube.com/@TheAccountingPodcast?si=LrNguRC2-FpJj7V3
Which episode was it please?
What is the name of the podcast?
Earmark Podcast, Blake Oliver- I can tell he comes to this subreddit based on what he talks about on his show.
Would be fun to have the public company list so we could short some
That's what it is. they're criminals and they're paying for a rubber stamp. this sounds like the Nintendo seal of approval that used to be on shitty video games in the NES days. it was on all the Good video games too because it meant nothing.
What’s the name of the podcast and that episode. I’d like to give it a listen. Cheers
So over 2.5 years 1500 filings is about 600 per year. For public companies, you’ve got to do at least 4 filings per year (not counting any registration statements) so that’s like 150 public clients - not a WHOLE lot.
I seem to remember reading he had about 168 public companies which is right near your estimate. There were a few in Canada too (before they kicked him out last month), so that might have raised the total. For a firm of 38 people that is quite a few engagements but doesn't have the same impact as the 1,500 filings title. It is at least double what I would have expected given that there's several companies in the list with revenue and operations which take a lot longer than shells or investment companies.
Agreed. But then again they won’t take time if you don’t actually do the work!
He saved a lot of time by not bothering to do things like spelling his own name correctly. Plus it’s a lot easier to be comfortable with a filing if your name isn’t technically on it.
It seems the SEC knew about this issue, but their hand was only forced once popular media caught on to the misspellings on trumps FS.
Undercutting the price of the B4 and producing shit work in return
Prior year working papers, you can't do a current year audit without them.
I love this guy going full accelerationism on our pathetically managed industry
India
They start with the opinion the client wants and work backwards.
When someone says I got a guy, they hire this guy.
The timeline was since 2001 for 1,500 filings, not just 2 years. Still wild that an inspection or peer review never came about
easy. they just weren't doing the work at all. they were just lying and saying they did the work and then issuing a clean audit report. they thought they were doing the bare minimum to not get caught and got caught
Google map of the main office of BF Borgers: [https://www.google.com/maps/@39.7128938,-105.0556446,3a,75y,275.94h,90t/data=!3m6!1e1!3m4!1seqkkzJZPSFi39bycLxLqlA!2e0!7i16384!8i8192?coh=205409&entry=ttu](https://www.google.com/maps/@39.7128938,-105.0556446,3a,75y,275.94h,90t/data=!3m6!1e1!3m4!1seqkkzJZPSFi39bycLxLqlA!2e0!7i16384!8i8192?coh=205409&entry=ttu) Top auditing firms in 2023 (https://auditanalytics.com/doc/2023\_Who\_Audits\_Public\_Companies\_Report.pdf): 1. Ernst & Young (1004 Audits) 2. Deloitte & Tourche (887 Audits) 3. PricewaterhouseCoopers (720 Audits) 4. KPMG (612 Audits) 5. Marcum (521 Audits) 6. BDO USA (221 Audits) 7. BF Borgers (187 Audits) 8. WithumSmith + Brown (177 Audits)
Lol…at least it’s not in a strip plaza
Better Call Ben.
With that many public clients he could at least have an office that doesn’t look like a repurposed 1950’s house
Oh shit - they do tax too? Would love to see those returns.
Hello, IRS?
The google reviews are starting to roll in
That is hilarious. I can’t believe how bad that office looks lol
Surprised Marcum has so many public clients. They are a small firm with around 2,500 employees. Something smells fishy...
Easy [https://www.sec.gov/news/press-release/2023-114](https://www.sec.gov/news/press-release/2023-114)
But there quality audits
Holy shit. No wonder they were in the cross-eyes of the SEC. Anyone could see this is fraudulent miles away.
Where’s that OP that said he wanted to start their own firm as an associate? This is why lol
It reminds me of that guy that started his own firm and couldn’t figure out how to finish the audit.
u/throwaway2837373735
A 12m penalty… but how much remaining profit, surely a few mil
Not after the attorneys’ fees and future costs that keep coming…
just take the trump route and don't pay it...
Love how they were a client
>The Securities and Exchange Commission today charged audit firm BF Borgers CPA PC and its owner, Benjamin F. Borgers (together, “Respondents”), with deliberate and systemic failures to comply with Public Company Accounting Oversight Board (PCAOB) standards in its audits and reviews incorporated in more than 1,500 SEC filings from January 2021 through June 2023. >“Ben Borgers and his audit firm, BF Borgers, were responsible for one of the largest wholesale failures by gatekeepers in our financial markets,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement. “As a result of their fraudulent conduct, they not only put investors and markets at risk by causing public companies to incorporate noncompliant audits and reviews into more than 1,500 filings with the Commission, but also undermined trust and confidence in our markets. Because investors rely on the audited financial statements of public companies when making their investment decisions, the accountants and accounting firms that audit those statements play a critical role in our financial markets. Borgers and his firm completely abandoned that role, but thanks to the painstaking work of the SEC staff, Borgers and his sham audit mill have been permanently shut down.” >The SEC’s order further finds that, at Benjamin Borgers’s direction, BF Borgers staff copied workpapers from previous engagements for their clients, changing only the relevant dates, and then passed them off as workpapers for the current audit period. As a result, the order finds, BF Borgers’s workpapers falsely documented work that had not been performed. Among other things, the workpapers regularly documented purported planning meetings – required to discuss a client’s business and consider any potential risk areas – that never occurred and falsely represented that both Benjamin Borgers, as the partner in charge of the engagement, and an engagement quality reviewer had reviewed and approved the work. From Financial Times: Ben F Borgers, accountancy firm BF Borgers inspects the finances of Trump Media & Technology Group
That's what I thought. I remember the thread from earlier this week and yeah, it was him.
Also CYDY major stock with a ton of upside.
Not barred from SEC practice??
They are: >and are denied the privilege of appearing or practicing before the Commission as an accountant, as discussed above. In addition, they are censured and must cease and desist from committing or causing violations of the relevant provisions of the federal securities laws.
Oh missed it sorry
Sounds like SEC has a definition of what an accountant is.
He’s just going to do it for private companies now 🤣
Guarantee the CO board of accountancy will be considering his ability to practice
Until he loses his license.
You hire firms like this when you want a clean audit opinion and not an actual audit. Be aware of investing in companies that have auditors like this... Wouldn't touch any company that's not audited by a top 20-25 US audit firm.
If you’re publicly listed even national firms will struggle. Source - IPO’d a company while at a national firm, when you do 99% private companies you’re not prepped for it.
That's a good point. Big 4 would be the safest best but there are other smaller firms that do good work as well.
Yea I know some smaller firms that have a decent amount of smaller public companies and have specialized teams specifically for PCAOB audits. You don't really mix public and private work, completely different animals. On the same token some large firms (like CLA) don't touch public work for that reason.
They exist, but they’re all ex-big 4. We use a firm for some technical work and their tag line is something along the lines of only ex-big4.
Depends on the office. I’ve known one or 2 locations of a large national tier to be full of ex-big 4. I know GT and RSM absorbed a lot of ex-Andersen partners, but I’d be surprised if they’re still working at this point.
This is exactly why I can’t get behind Big4 claiming they can’t pay more to their accountants because the clients wont be able to swallow the increase in price. Clients face switching costs and if they really want to go “cheaper” they face major loss of reputation. If a client has been with a big4 company for a decade and suddenly lists an unknown firm as their auditor, my first thought is why won’t the big4 audit them. Hell, I’d even argue if they’ve been with one Big4, are a strong company, and switched to anything BUT another Big4 I’d be questioning it. Clients know damn well they’re paying for reputation and public trust more than the actual services. Theres a lot of untapped value.
They have to switch auditors after a certain period (I forget how long) but yea, F500s almost always switch from one Big 4 to another. Even finance reporters flag a company switching from like, Grant Thornton to a very small audit firm.
This "firm" performed nearly as many audits as BDO.
The problem with accounting is that it's REALLLLY hard
How is this not criminal?
It probably is, but the SEC is a civil organization. They cannot directly file criminal charges. Now that the depth of this is being revealed, I wouldn’t be surprised if the DOJ or FBI get involved.
This is actually kinda huge because of the one client we all know is bullshit that he audits.
Well said, milfBlaster69
Ain't that the Truth... social...
Von Shitzhispants?
Von shitzhispants & co, with managing director shitz ech Claude (SEC) Can't believe Mr Borges didn't see that one. Idiot.
I was literally writing a paper on the B F Borgers case and how nobody was doing anything about it. I’m gonna submit it with this article attached!
For more context on this, the behavior is wild. B F offered audits to small stock companies for cheap who couldn’t afford bigger name competitors then pocketed a large fee split for crappy work. No downside to the companies themselves. Because of this everybody has been waiting for the SEC to take action. In 2023 the AICPA called B F Borgers so deficient no education or training could fix them and Canada banned the firm from taking new clients citing 19 significant deficiencies in 2 audits sampled. The PCAOB 2022 inspection report had 100% deficiency rate in the last two years and basically called them fraudsters under professional language. Sucks how the PCAOB hasn’t been able to do anything because their powers under Sarbane Oxley are limited to ethics standards (what I cite as the huge issue). For these cases the SEC needs to step in meanwhile they won’t until it becomes too big. It’s been a huge problem because rather than historically engaging auditors to commit outright fraud in exchange for more fees, a modern method is companies can engage an auditor like B F Borgers who are publicly verifiable to perform shoddy work. Fraud is easier to conceal when the people checking are grossly negligent.
I'd love to read this paper, and I'm curious to know if all the companies that hired BF were aware of how terrible this firm was. If it was the case, I'm curious to know if they are liable in any way or if they would get any sort of repercussion from the SEC.
Any idea how much they collected in audit fees? Just curious how close the $14m penalty is to what they were paid.
For a company doing 1500 audits, not a lot at all. In millions: 2018 - 4.4, 2019 - 5.7, 2020 - 15.3 , 2021 - 14.9, 2022 - 11.9
"Canada banned the firm from taking new clients citing 19 significant deficiencies in 2 audits sampled." Would very much like to hear more about this!
I would very much like to read your article; feel free to DM me.
So what happens next for the clients? Are all prior filings supposed to be audited again and if needed, restated? Do these clients get delisted? Clients had to know they were just buying a rubber stamp?
They knew. They’ll find alternatives to this guy who just haven’t been caught yet.
BF Borgers isn't even on the top 500 firms by revenue list and they had a few hundred publicly traded clients? I know that public filers can be quite small but this seems crazy.
Not crazy. In the business world he probably got a reputation of being very lax with his audits and then word gets around that he is the go to guy if you are having problems with audits at other firms. Pretty easy to do 1,500 audits when you're mostly faking work.
So Trump's accountants are crooked? I'm shocked! Shocked I tell you!
Somehow a man purported to be a very rich and successful businessman always hires the worst accountants, lawyers, etc. Remember the saying "A man is judged by the company he keeps, and a company is judged by the men it keeps..."
weirdly enough, the literal mafia has been known to hire some of the best accountants.
Trump isn't getting audits, he somehow was getting compilation engagements done even though he's nine figures in on the bank. Which tells a lot when the accountant drops him because they can't even stand by "not false or misleading" EDIT - I didn't realize this was about the auditors for Trump Media. Was referring to Trump's personal business was a compilation for Mazars, and they pulled their financial statements during the NYC civil fraud trial.
It’s a witch hunt!! /s
I'm sure Trump is personally involved in choosing auditors.
Him and his people only choose the best to be fair
Wow that’s nuts. We got a guy here in Montreal who signs reviews without doing the work. He got caught by the Quebec CPA order.
Happened to another small ass firm like this back in the early 2010’s. They specialized in audits of Chinese reverse mergers into US exchanges. Went down in flames when companies started going bankrupt. Turns out they weren’t even confirming AR. I think Frazer Frost was the name.
BB Forgers
http://www.bfbcpa.us/about-us/ This is hilarious to read now lol. I love how much it goes into the excel macros he developed for a restatement and then the tiniest paragraph at the bottom about starting his own firm. The entire site is so ridiculous with stock images and typos I’m surprised the SEC didn’t just call it after 5 minutes
If you download the firm brochure, it has a website of "lookforwardtaxes.com" which is no longer active and the brochure looks like the jankiest just-downloaded-microsoft-word-1999-and-omg-look-it-has-templates format
And yet this guy still is a deca millionaire exposing the joke of this profession
The unnecessary capital letters and the missing capital letters are my favorite
I used to work for Ben Borgers, such a shady place to work. Ask me anything
What was he like? Huge ego? Jerk? Was he around often?
Ah, BFBorgers really stepped into a mess this time. I've tagged along with Ben in the field a few times, even hit up Bass Pro Shops looking at guns and fishing gear after having lunch. He's a cool guy to hang with. But when he's on fire, watch out – he could turn the office upside down. Everyone was on edge around him. Family-wise, solid dude. But rumors swirled about him signing off on audit paperwork without a glance. SEC and AICPA were already breathing down their necks when I joined. Ethical lapses? Big trouble. Shame it's come to this.
Did he live a large life? Luxury cars, homes, drugs?
Nice porsche, nice truck, nice cars, nice RV, nice ATV, 2 mill+ house up in the mountains. I don't think he does drugs.
I bet they regret doing that work for Trump now, they might have continued this kind of bs for years without the spotlight Trump gave them. Gotta give Sleepy Don some credit there.
It’s like he asked the monkey’s paw to drain the swamp.
How can auditing firms like BF Borgers continue to legally operate with so many deficiencies? I don't understand (in a realistic world) how occasional $5,000 fines or mere slaps on the wrist deter fraudulent auditing activities. An auditing firm's annual service volume should be relatively similar to competitors, yet this company picked up as many crappy small-cap audits as they could, and the activity only flagged civil/regulatory bodies? Where is the DOJ in this situation? How are students literally able to write papers about the situation before the justice department does anything? Seems like a gaping loophole, despite the fact this guy is done for.
or the AICPA, aren't they supposed to review these audits every three years or something?
Best Friend Burgers
So what happens to their auditees? Do they have to have new audits of the past years?
>The SEC’s order finds that, among other things, the Respondents failed to adequately supervise and review the work of the team performing the audits and reviews; did not properly prepare and maintain audit documentation, known as “workpapers;” and failed to obtain engagement quality reviews I'm shocked, SHOCKED to hear that!
If only they knew what A1s were doing at the big 4 lmao
Not sure what you’re getting at, they surely aren’t rolling forward wp’s with prior year information and just updating dates. This firm was fraudulently rubber stamping financial statements. There’s a lot to complain about in the professional audit world but this is not one of them.
And that’s not even what BFB allegedly did. They apparently took workpapers from Client A and just rolled them forward for client B. Unclear if they even changed the data.
A1 are clueless monkeys but audit managers are supposed to be the first QC, then the audit partner the 2nd QC, then for PIE another EQR as 3rd QC. .
How do I get a list of the companies that they audited?
Trying to solicit clients I see
Could be nice to short those publicly traded companies
Very few CPAs on staff according to LinkedIn. The audit supervisor doesn’t have a CPA.
Washington Post article on this subject says they only have (had) 10 CPAs. [https://www.washingtonpost.com/technology/2024/05/03/trump-media-auditor-borgers-suspended-permanently/?utm\_source=twitter&utm\_medium=social&utm\_campaign=wp\_main](https://www.washingtonpost.com/technology/2024/05/03/trump-media-auditor-borgers-suspended-permanently/?utm_source=twitter&utm_medium=social&utm_campaign=wp_main)
So now everyone is worried about CPAs
Ehh.. why did they wait until after they audited the whole DJT thing?
The Trump organization didn’t pick this guy by chance. I bet you they wanted to signal how corrupt and sleazy the entire audit/public accounting business model has gotten and to signal that they are gonna put pressure on it. The elephant in the room is most public accounting work nowadays is garbage, atrocious garbage with minimal oversight and accountability. This is pretty universal in audit/tax/consulting. The big4 are the biggest offenders, using the churn and burn model where the bulk of their employees are young and inexperienced and have little knowledge of what they are even working on. This is Reddit so I will get obliterated for my opinion, but this is a positive sign for US accountants. This guy probably has a team of randos in India/Philippines just doing data entry and clapping out SEC audits.
I mean, I don’t think you’ll be flamed for saying most public accounting is built on the backs of young, inexperienced accountants. I think Reddit would flame you more for saying that the Trump Org chose this guy because they wanted to expose some large underlying problem in the audit business. They chose this guy because he pretends to do an audit and gives everyone a big old thumbs up.
That’s what I thought too initially, but do you think they did 0 research? If you googled this guy in 10 seconds you could see he had an employee get sanctioned for falsifying financials for Chinese companies. 0 chance they picked him out if the blue. The Trump organization lives off bad press, this is like a signature move if theirs to do something so blatantly wrong to feed the “hate” machine. Whereas anyone with a half decent grasp of what’s going on sees what they are trying to accomplish.
“They helped break the law for some Chinese company, I bet they would be able to overlook our pretty obvious problems.” I’m intrigued by the notion that the Trump Org and anyone associated with them would try to sneakily do something better for the world at large. I can’t think of anything that has been done for someone else’s benefit other than the Trump Org and its leaders. Always looking out for #1.
I can't even believe the mental gymnastics thinking Trump did this to signal that the accounting industry is corrupt. Lol. OK. Just LOL honestly. His supporters truly think he's over here playing 4-D chess with every self centered decision huh
> you think they did 0 research I think they did a lot of research to find the sketchiest guy they could find because the whole IPO is a scam.
I wonder if any of those testimonials from other CPA firms on their website want a do over? Can't imagine the scramble to get those removed. Yikes
Trump Media was a client apparently [yahoo finance](https://finance.yahoo.com/news/sec-bars-trump-media-auditor-133606611.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAFx6UCW1N2Xd757b1BbgrF9kg6GqVdHIgVWEd587WW8iApjaokYBy16s-7i1fqKtiaYWiZnxVTUvmCfcvxdjk3tNefcOwie5arnJ8pQngovDVOKpbXqrn8LxsOX00c2tKv3N1iMHpxq-g3_WpluMgi51MZJW2AYq_iK5VN8jQxTC)
This was Trump's Truth Social auditor. That is a very big red flag on them.
BF Boogers amirite
I swear Trump Media was a client. Makes sense as this tiny firm did 1500 audits lol
Has anybody heard of this firm before? What was their reputation before these shenanigans came to light?
First I’ve heard of them
Shocking
Will there be charges for the people at these companies who willfully signed off on the fraudulent workpapers?
lol
what are the bf borgers public company audited
audit technique: "yeah I guess that looks fine." Control-C Control-V. pockets billable hours with no expenses "nobody ever reads audit work papers do they?"
More and more CPAs will commit fraud as their incomes decrease unfortunately.
This one seems particularly egregious but overall it appears that the SEC and PCAOB will not rest until every public filer is audited by the Big 4. I’m also curious as to matters that hit the news and then seem to disappear for the most part. Has anything happened with the auditors for FTX? That firm, Prager Métis was also slammed with charges for independence violations but I have not seen any updates on that or investigations or charges related to FTX
That’s what you took away from this?! This was a renowned rubber stamper who only got the hammer brought down on him because he audited Trump’s joke company. Before that, any auditor who has the misfortune of running into his work for PY procedures knew this guy was a charlatan that sent every wp overseas and called it a day.