Please ensure Javascript is enabled for purposes of website accessibility

Withum Noped Out of Trump Media So Fast

man running, glass building

Over the past week or so, various media outlets have been picking on Trump Media auditor BF Borgers and their 100% PCAOB deficiency rate. See:

Trump Media’s accounting firm has a 100% deficiency rate from U.S. audit watchdog and counts Lingerie Fighting Championships as a client [Fortune]

OK, actually that’s the only funny headline we’ve seen. And this one from FT is most informative:

The accounting firm picked to audit Donald Trump’s social media venture has had repeated run-ins with regulators and faced criticism for its failure to live up to professional standards in the US and Canada, according to a review of public filings.

BF Borgers has become one of the most prolific auditors of US public companies just 15 years after its foundation, and regulators have warned that it has taken on new clients faster than it can manage.

The Colorado firm, set up in 2009 by former IT consultant and Jeep enthusiast Ben Borgers, was thrust into the spotlight this week when its audit report on Trump Media & Technology Group flagged that the newly listed social media group could run out of money within a year.

This one Quartz posted yesterday — Trump Media’s audit firm sees its business practices come under scrutiny — discusses how Borgers, a firm headquartered in Denver, was banned by the Canadian Public Accountability Board (or as we refer to them here, “polite PCAOB with funny accents”), the second such American firm to get shooed away by the CPAB (the first was Marcum because of course it was).

In its enforcement action [PDF], the CPAB said the files of two issuers (clients) contained 19 significant inspection findings, each of which constitute a separate Violation Event. In addition, Borgers failed to properly consider the Canadian provincial licensing requirements during the firm’s client acceptance procedures. So they’re shunned from Canada now.

Borgers is among the top ten busiest audit firms according to the most recent Ideagen Audit Analytics audit market share data. Including SPACs, they have 173 SEC clients which puts them just under BDO with 182 and above RSM with 129. In its 2021 inspection report [PDF], the PCAOB said Borgers “significantly increased its number of issuer audit clients from 80 in 2019 to 168 at the outset of the 2021 inspection (or by 110%)” and added:

In accepting these new clients, the firm did not take into account the level of proficiency required for the firm’s partners in the circumstances as well as competing time demands on the partners assigned to lead and execute the audits and perform the engagement quality reviews for all of its issuer audits. For example, during the year, there was one engagement partner who was responsible for 147 issuer audits. Further, there was one engagement quality reviewer who was responsible for 103 issuer audits and another who was responsible for 74 issuer audits.

But we’re not here to talk about Borgers. We’re here to talk about Withum because according to fresh reporting from Financial Times and their little birdies, Withum almost got stuck with this client — and all the sassy headlines that come with — instead:

Donald Trump’s social media company scrambled to find a new auditor after its first pick resigned after just a few months on the job, according to people familiar with the matter.

Trump Media & Technology Group engaged WithumSmith+Brown to check its financial statements shortly after the company was founded in 2021, but by the end of the year the accounting firm had decided it did not want to be associated with a business venture by the former US president, these people said.

Longtime Trump Organization accountants Mazars broke up with the former president’s company just days before Valentine’s Day 2022 and said in their breakup letter “the Statements of Financial Condition for Donald J. Trump for the years ending June 30, 2011 – June 30, 2020, should no longer be relied upon.” So it seems Withum dipped out just in time.

Can we include this bit from the FT article? Because LOL.

In a previously unreported development, BF Borgers has also been thrown out of the accounting profession’s own inspection programme in the US, a peer review system run by the American Institute of Certified Public Accountants. Reviewers found multiple instances of the firm failing to meet professional standards in its audit work.

“The firm was found to be so seriously deficient in its performance that education and remedial, corrective actions are not adequate,” the AICPA concluded in November.

BF Borgers did not return messages seeking comment. TMTG [Trump Media & Technology Group] said: “Apparently, the Financial Times’ business model is to charge its subscribers $75 per month for the privilege of reading outdated stories touting irrelevant information.”

Somewhere in Princeton, New Jersey rings out the sound of high fives and glasses clinking.

Trump Media’s first auditor quit months after being appointed [FT]