The Securities and Exchange Commission charged BF Borgers CPA PC, a fast-rising auditing firm based in Lakewood, Colorado, on Friday with deliberate, systemic failures to comply with Public Company Accounting Oversight Board standards for audits and reviews on more than 1,500 SEC filings from January 2021 through June 2023, while permanently suspending the firm.
The firm agreed to pay a $12 million civil penalty, and its owner Benjamin Borgers agreed to pay a $2 million civil penalty to the SEC.
The SEC also charged the firm and its owner with 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 standards; and falsely stating in audit reports included in more than 500 public company SEC filings that the firm's audits complied with standards.
Both the firm and Borgers himself also agreed to permanent suspensions from appearing and practicing before the commission as accountants, effective immediately. Borgers did not immediately respond to requests for comment.
A relatively small firm, BF Borgers quickly climbed the rankings in recent years in terms of the number of new SEC audit clients it took on,
"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 Grewal, director of the SEC's Division of Enforcement, in a statement Friday. "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 found that BF Borgers failed to adequately supervise and review the work of the team performing the audits and reviews; did not properly prepare and maintain audit workpapers; and failed to obtain engagement quality reviews, without which an audit firm may not issue an audit report. According to the SEC's order, of BF Borgers's 369 clients whose public filings from January 2021 through June 2023 incorporated the firm's audits and reviews, at least 75% of the filings did not comply with PCAOB standards.
The SEC also found that, at Benjamin Borgers' 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. That meant the workpapers falsely documented work that hadn't been performed.
Among other problems, 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.
The SEC's order found that Borgers 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, under which they were ordered to pay civil penalties and were denied the privilege of appearing or practicing before the SEC as an accountant. In addition, the commission censured Borgers and his firm and said they would have to cease and desist from committing or causing violations of the relevant provisions of the federal securities laws.
In its yearly
