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Intersecting politics, business, and Aggies!!

2,659 Views | 19 Replies | Last: 6 mo ago by Quinn
Ol Jock 99
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10:16a, 5/6/24
AG
So, the audit firm that performed the SEC audits for Trump Media has been found to have committed massive fraud on their public company audits. The firm apparently did a complete crap job on 75%+ of their clients, putting the investing public (and the companies themselves) at risk. The firm has been shut down and fined $14MM.

Thing that first caught my eye is I had never heard of BF Borgers. But it apparently was the 8th largest auditor of public companies, with 187 public audit clients for 2023. That's a ton; each of these audits require a huge amount of work.

So, who is, or was, BF Borgers? A single office single partner shop in Colorado. Holy crap. I know about 187 CFOs and Boards that need to be fired immediately. That is lunacy. There is no possible way on earth the audits could have been legit...and turns out they weren't.

The second this that caught my eye you ask? On the bio of Ben Borgers, he notes that he is a Fighting Texas Aggie. Checked the Association and sure enough, class of 02. Geez.

Massive Fraud
Top 10 Firms by Public Clients
Howdy Whoop Gig Em Ben 02
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12thMan9
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In reply to Ol Jock 99 • 10:35a, 5/6/24
AG
Damn, there goes a funder for the baseball expansion.
Ronnie '88
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Diggity
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11:21a, 5/6/24
AG
The guy was a student at the Arthur Anderson School of Accounting.

He's just doing what he was taught.
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Ag CPA
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11:31a, 5/6/24
AG
If you try to put the pieces together this is a bazar story. The fact that this guy's little firm had 350 clients, many of them public, is mind boggling so the fact that the SEC is calling it a "sham audit mill" is not surprising. There is no way he had the staffing or expertise to audit public companies, especially SRCs which are inherently more risky.

Not a strong resume coming out of A&M either; not a big issue on its own but would be another red flag for a guy running PCAOB audits.

https://www.bfbcpa.us/about-us/
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OldArmyCT
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12:44p, 5/6/24
AG
8th largest audit firm in the country. Now banned for life. Geesh.
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Buck Compton
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12:45p, 5/6/24
AG
Quote:
PCAOB Inspections: 100% Audit Deficiency Rates

BF Borgers had 100% audit work deficiency rate, according to the 2022 inspection report issued by the PCAOB. The deficiency rate was also 100% for 2021 inspection. In 2019, it was 89%.

The board does not review all audits and selects audits to review largely based on risk assessments. In 2022, the PCAOB reviewed 11 audits, 10 in 2021, and nine in 2019.

In 2022 inspection, the PCAOB said that BF Borgers "did not perform sufficient testing related to a significant account or disclosure or to address an identified risk" in all 11 audits reviewed.
Oof.
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Ol Jock 99
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In reply to OldArmyCT • 12:48p, 5/6/24
AG
OldArmyCT said:
8th largest audit firm in the country. Now banned for life. Geesh.

By public clients. Certainly NOT by number of partners/staff/properly performed audits.
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Aglaw97
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12:54p, 5/6/24
AG
At least as relates to public companies, the fact audit committees signed off on this firm is going to be problematic for them and shows a real lack of judgment.
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Buck Compton
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In reply to Ol Jock 99 • 12:55p, 5/6/24
AG
Ol Jock 99 said:
OldArmyCT said:
8th largest audit firm in the country. Now banned for life. Geesh.

By public clients. Certainly NOT by number of partners/staff/properly performed audits.
Exactly. And look at this list of clients. Not exactly a who's who of sparkling public companies. Seems like most I looked up were pink sheets.

https://rasr.pcaobus.org/Forms/FormSummary.aspx?ID=E54DD82073F334987895485161B02F4F
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Ducks4brkfast
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1:11p, 5/6/24
AG
This was discussed on the Politics Board last week, however Trump Media had only recently hired Borgers.

Quote:
On March 28, 2024, the audit committee of the Board approved the engagement of Borgers as our independent registered public accounting firm to audit our consolidated financial statements effective immediately after the filing of this Report for the fiscal years ended December 31, 2023 and 2022, which consists only of the accounts of Digital World. Borgers served as the independent registered public accounting firm of Private TMTG prior to the Business Combination. Adeptus, the independent registered public accounting firm for Digital World prior to the Business Combination and the current auditor of TMTG, was informed that it will be dismissed as the auditor of TMTG immediately upon the filing of this Report.
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Ag13
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1:16p, 5/6/24
AG
Real unfortunate an Aggie was involved with this.

Amazing this did not come to light sooner given the volume of clients - however taking on a Trump backed SPAC as an audit client made this coming to light virtually assured. Anything Trump does is going to have a massive amount of eyes on every part of it. Mix in the fact that DJT has been one of the most volatile stocks this year, Trump needs hundreds of millions in liquidity, and of course it's an election year. No chance people weren't going to be heavily scrutinizing the financials of this company and naturally that would lean heavily on the auditor.

Real bad look for any company that used them, DJT included. Gives the impression that they were going cheap or had something to hide - or both.
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themissinglink
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2:16p, 5/6/24
AG
So we're 2 for 2 on having the lead audit partner of failed "Top 10" accounting firms (at least in terms of SEC registrants)?
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Charismatic Megafauna
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In reply to Ag CPA • 2:35p, 5/6/24
AG
Ag CPA said:
If you try to put the pieces together this is a bazar story. The fact that this guy's little firm had 350 clients, many of them public, is mind boggling so the fact that the SEC is calling it a "sham audit mill" is not surprising. There is no way he had the staffing or expertise to audit public companies, especially SRCs which are inherently more risky.

I don't know anything about accounting or audits but Ben and i were pretty close when he was getting his firm up and running, we've fallen out of touch in the last 10 years or so just because of life/ family/work, but i consider him a friend. I remember him doing crazy weeks busting his ass (usually alone or with one other guy) doing these things for little fresh ipos in asia and he seemed to have carved himself out a niche doing it. I would be more inclined to believe that he was fleeced by these companies due to being stretched thin, and as noted above nobody cared because everybody knew they were garbage companies to start with, but getting involved with trump media subjected him to extra scrutiny and he's being made an example of. On the other hand a 14M fine suggests admission of wrongdoing so maybe he lost his way. Either way it's a shame because he's the kind of dude you could call in the middle of the night to drive 2 hours and come pick you up because your car broke down. Anyway, i just thought a character reference was in order...
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Ol Jock 99
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In reply to Charismatic Megafauna • 3:23p, 5/6/24
AG
He's going to need good friends coming up. I wouldn't offer him any benefit of the doubt; what he did was wrong, full stop. But it is something he can recover from. Hell, David Duncan is currently a CFO.
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Ol Jock 99
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In reply to themissinglink • 3:24p, 5/6/24
AG
themissinglink said:
So we're 2 for 2 on having the lead audit partner of failed "Top 10" accounting firms (at least in terms of SEC registrants)?
Thank is correct sir! (The aforementioned David Duncan was the lead partner on Enron)
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Quinn
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In reply to themissinglink • 10:19a, 5/7/24
AG
themissinglink said:
So we're 2 for 2 on having the lead audit partner of failed "Top 10" accounting firms (at least in terms of SEC registrants)?
Don't forget about the tax side of things and the Tax Masters fraud!

https://abcnews.go.com/Blotter/taxmasters-patrick-cox-hit-200-judgment/story?id=16040652

This guy came and spoke to one of my classes when I was in the PPA. He was a sweaty mess.
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ATM9000
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In reply to Ag13 • 1:18p, 5/7/24
AG
Ag13 said:
Real unfortunate an Aggie was involved with this.

Amazing this did not come to light sooner given the volume of clients - however taking on a Trump backed SPAC as an audit client made this coming to light virtually assured. Anything Trump does is going to have a massive amount of eyes on every part of it. Mix in the fact that DJT has been one of the most volatile stocks this year, Trump needs hundreds of millions in liquidity, and of course it's an election year. No chance people weren't going to be heavily scrutinizing the financials of this company and naturally that would lean heavily on the auditor.

Real bad look for any company that used them, DJT included. Gives the impression that they were going cheap or had something to hide - or both.

If this firm actually had a 100% audit deficiency rate as being reported, I'd venture to say this was on its way for Borgers WAY before the Trump SPAC and that had little to do with all of this.

A 100% deficiency rate can only more or less mean the auditor was indeed just collecting a fee to certify whatever bull**** to public investors the companies they were auditing wanted to say.

Anyhow, Google Map his office address and imagine that being the office to a place with 350 different audit clients if you want to laugh.
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Ag CPA
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In reply to Ag13 • 2:34p, 5/7/24
AG
Ag13 said:
No chance people weren't going to be heavily scrutinizing the financials of this company and naturally that would lean heavily on the auditor.
This company has $4MM in revenues and a $6.5B market cap so I'm guessing that its investors don't understand or care about the actual financials; it's a meme stock.

But yes it is a highly visible stock; guessing that the wheels on this investigation were turning long before the SPAC became involved but that probably didn't help.
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Kenneth_2003
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In reply to Diggity • 7:00a, 5/8/24
AG
Diggity said:
The guy was a student at the Arthur Anderson School of Accounting.

He's just doing what he was taught.
If he's class of '02 then he was interning there his Junior year? Enron and Arthur Anderson collapsed in 2001.
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Quinn
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In reply to Kenneth_2003 • 8:24a, 5/8/24
AG
Kenneth_2003 said:
Diggity said:
The guy was a student at the Arthur Anderson School of Accounting.

He's just doing what he was taught.
If he's class of '02 then he was interning there his Junior year? Enron and Arthur Anderson collapsed in 2001.


He's referring to the fact that that's what the A&M Accounting program was called. In fact, I was surprised to see plaques still up with Arthur Anderson's name on them when I was in Mays around 2010.
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