SEC charges audit firm with non compliance of PCAOB accounting standards

The Securities and Exchange Commission (SEC) filed charges against an audit firm for failures to comply with Public Company Accounting Oversight Board (PCAOB) standards.

The SEC charged BF Borgers CPA and its owner, Benjamin F. Borgers, with deliberate and systemic failures to comply with PCAOB standards in its audits and reviews incorporated in more than 1,500 SEC filings from January 2021 through June 2023. Overall, of 369 BF Borgers clients, at least 75 percent of the filings incorporated audits and reviews that did not comply with PCAOB standards.

Further, the respondents were cited for falsely representing to their clients that the firm’s work would comply with PCAOB standards; fabricating audit documentation to make it appear that the firm’s work did comply with PCAOB standards; and falsely stating in various audit reports that the firm’s audits complied with PCAOB standards.

“Ben Borgers and his audit firm, BF Borgers, were responsible for one of the largest wholesale failures by gatekeepers in our financial markets,” Gurbir Grewal, director of the SEC’s Division of Enforcement, saiod. “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 also found that 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; and failed to obtain engagement quality reviews, without which an audit firm may not issue an audit report.

In addition, the SEC alleges 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, BF Borgers’s workpapers falsely documented work that had not been performed.

The SEC’s order finds that the Respondents engaged in improper professional conduct and violated, and caused violations of, the antifraud, recordkeeping, and other provisions of the federal securities laws. Without admitting or denying the SEC’s findings as to each of them, BF Borgers and Benjamin Borgers both consented to an order, effective immediately. Also, BF Borgers agreed to pay a $12 million civil penalty, while Benjamin Borgers agreed to pay a $2 million civil penalty. Further, both respondents agreed to permanent suspensions from appearing and practicing before the Commission as accountants, effective immediately.

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