The U.S. Securities and Exchange Commission (SEC) has sanctioned audit firm BF Borgers CPA PC and its owner, Ben Borgers, for allegedly falsifying audit work.
The SEC alleged Borgers and his firm routinely failed to comply with audit standards in its reviews of more than 1,500 financial filings, and falsely represented that its audit work did meet those standards to both clients and in regulatory filings.
To settle the allegations, the firm agreed to pay a US$12-million penalty, and Borgers himself agreed to a US$2-million penalty. They also both agreed to permanent suspensions from appearing before the SEC as accountants, effective immediately.
“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 release.
“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,” he said.
Among other things, the SEC found that Borgers failed to adequately supervise and review the work of the teams performing its audits, didn’t properly prepare and maintain audit documentation, and that its staff copied workpapers from previous engagements and passed them off as new.
“As a result, the order finds, BF Borgers’s workpapers falsely documented work that had not been performed,” the SEC said.
Borgers and the firm both consented to the SEC’s order without admitting or denying the regulator’s findings.
In a statement, the SEC called on issuers that used BF Borgers to audit their financial statements to ensure they are complying with their own regulatory disclosure and reporting obligations in light of the regulator’s findings.