That’s the headline of a Financial Times article just published online, reporting that BF Borgers, the auditor for Trump’s Truth Social as well as for DJT, has been permanently shut down. This is the SEC press release, which contains the following paragraph:
“The SEC’s order finds that, among other things, the Respondents failed to adequately supervise and review the work of the team performing the audits and reviews; did not properly prepare and maintain audit documentation, known as “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 369 BF Borgers clients whose public filings from January 2021 through June 2023 incorporated BF Borgers’s audits and reviews, at least 75 percent of the filings incorporated BF Borgers’s audits and reviews that did not comply with PCAOB standards”. (PCAOB = Public Company Accounting Oversight Board)
DJT dropped by about 10% when this news was released, but has recovered about half that as I’m writing this.
To my non-CPA eyes, the gist of the SEC complaint is that Borgers didn’t do much poking around in client companies to verify if their financial records showed the true state of affairs.
My thoughts:
–who would pick an auditor with this sort of reputation? Borgers was the Truth Social auditor and was also hired six weeks ago to be the auditor for DJT, formed by the late-March merger of spac DWAC with Truth Social
–what will the new auditor find? My guess is that Truth Social is such a new, and simple, business that the raw numbers are basically correct. My worry, if I were a shareholder, would be–not only for Truth Social but also for DJT–potential non-disclosure of related-party transactions
–who will the new auditor be? It will be interesting to see if there’ll be a rush of firms jockeying for the job.