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Semple, Marchal & Cooper is Trump Media’s New Auditor

Trump Media & Technology Group has reportedly dumped BF Borgers as its external auditor for Phoenix-based Semple, Marchal & Cooper.

After audit firm BF Borgers was found by the Securities and Exchange Commission on Friday to have committed massive fraud and systemic failures in its audits of public companies and was permanently barred by the SEC from practicing as accountants, Borgers’ clients—including Trump Media & Technology Group—were left scrambling to find a new auditor.

However, it didn’t take long for Trump Media, the company behind former President Donald Trump’s Truth Social, to announce its next external auditor. Several media outlets have reported that in an SEC filing on May 3, Trump Media replaced BF Borders with Phoenix-based CPA and consulting firm Semple, Marchal & Cooper.

Trump Media said the decision to change independent registered public accounting firms was made with the recommendation and approval of its audit committee, Quartz reported on Monday.

The SEC didn’t accuse Trump Media of any wrongdoing, nor did it mention the company in its charges against BF Borgers and the firm’s owner, Benjamin Borgers, each fined $12 million and $2 million, respectively, by the U.S. markets regulator.

Founded in 1982, Semple, Marchal & Cooper is a full-service professional firm “dedicated to providing clients with services of the highest quality without compromising our responsibilities to those who rely on our objectivity,” the firm says on its website. Semple, Marchal & Cooper hasn’t publicly commented on taking over auditing duties for Trump Media.

According to the Public Company Accounting Oversight Board’s inspection report database, 11 of Semple, Marchal & Cooper’s public company audits were reviewed by the audit regulator between 2009 and 2021, with inspectors finding errors in only two for a deficiency rate of 18%.

By contrast, BF Borgers had a 100% deficiency rate on audits reviewed by the PCAOB over the regulator’s last two inspections of the firm. From 2012 until 2022, the PCAOB reviewed 42 of BF Borgers’ public company audits and discovered 39 of them had deficiencies, for an error rate of 93%, according to data from its inspection report database.

On his website Radical Compliance, Matt Kelly wrote over the weekend that the permanent suspension of BF Borgers leaves approximately 350 public companies without an auditor. He writes:

Those companies will need to file an 8-K disclosure this coming week telling investors that their audit firm has been suspended; and then find new audit firms to review financial statements from here forward and recheck prior financial statements that Borgers apparently rubber-stamped without a second glance. Considering how tight the audit market is for the smaller public companies that tended to use Borgers, this will be a galactic pain in the asset.

Kelly mentions that smaller audit firms that typically cater to small public companies have been retreating from that market lately, given the CPA shortage, tough regulatory oversight, and complex auditing standards even for small filers. Meanwhile, the Big Four firms are either too expensive for these small companies or won’t bother with them since big filers are where the money is at, he says.

The SEC did provide a reminder to Borgers’ clients about their reporting obligations, which don’t go away just because your audit firm did. Companies can submit an NT filing, which acts as an extension on filing deadlines (the NT stands for “not timely”), but you’ll need to explain why you need the extension and whether the company expects any “significant change in operations” from prior periods.

That’s where things are going to get messy for these companies. Explaining why the late filing is necessary will be easy: their audit firm has been barred from SEC work. But companies won’t be able to predict whether the filing (whenever it arrives) results in a significant change from prior periods until they go through all that bogus Borgers audit work with a fine-tooth comb. Which brings us back to the shortage of CPAs and audit firms willing to do this work.

At the time of the SEC’s sanctions, BF Borgers ranked No. 8 on a list of audit firms with the most publicly traded clients, with just nine fewer clients than the sixth-largest accounting firm in the U.S., BDO USA, according to research firm Ideagen Audit Analytics.