Canadian audit watchdog CPAB bans American accounting firm BF Borgers
The Canadian Public Accountability Board closed 2023 as it had begun — with an enforcement action against an American public accounting firm
TORONTO, Jan. 12, 2024 – The Canadian Public Accountability Board has banned another American accounting firm from accepting new audit clients in Canada. BF Borgers CPA PC is based in Lakewood, Colorado. According to the CPAB enforcement action, Borgers does not have offices within Canada but was, “at all relevant times, registered with CPAB.” The firm had the distinction, based on data provided to Canadian Accountant by Audit Analytics, of acquiring the highest number of new engagements in Canada in 2022.
Under new transparency rules implemented by CPAB in 2023, Borgers is the second American accounting firm to have its ban publicly disclosed by the audit watchdog. In January 2023, CPAB similarly censured Marcum LLP, a public accounting firm based in New York, when CPAB began to publicly disclose its enforcement actions. As reported by Canadian Accountant, Marcum agreed in September 2023 to pay $1.2 million to the Ontario government and the Chartered Professional Accountants of Ontario.
In addition to the ban, which includes public companies and any “existing private company audit client seeking to become a reporting issuer through initial public offering, reverse takeover,” the firm is prohibited from assigning an unidentified “Partner A” to Canadian engagements, unless the accountant is “properly licensed to provide public accounting services” by one of the profession’s provincial regulators. The firm must also undergo extensive oversight and measures to improve its audit quality.
Borgers benefited from a Canadian accounting merger
In August 2022, homegrown national accounting firm MNP added three partners from an accounting firm called Harbourside LLP, which was based in Vancouver, and the firm permanently closed. Eight former Harbourside clients stayed with the founding partners of Harbourside, Con Buckley and Geoff Dodds, who opened Buckley Dodds LLP.
Another eight Harbourside clients, however, were picked up by Borgers, contributing to 21 new audit engagements, the most of any mid-tier firm that year in Canada. Just one Canadian client of BF Borgers was traded on the Toronto Stock Exchange, with the rest trading on venture exchanges. Several of its audit clients include cannabis companies such as Vext Science and High Fusion with operations or listings on both sides of the border.
According to Accounting Today, the firm also topped the rankings of new Securities and Exchange Commission audit engagements in 2021. In May 2022, the US Public Company Accounting Oversight Board sanctioned a former BF Borgers audit director for violating PCAOB rules in relations to the audits of companies with connections to China.
Borgers enforcement action differs from Marcum censure
In September 2023, CPA Ontario, the regulatory body responsible for the licensing and oversight of chartered professional accountants and accounting firms in Ontario, announced that it had reached a settlement offer with Marcum LLP. The settlement resolved allegations of “multiple instances of partners at US-based Marcum LLP engaging in public accounting work in Ontario, including performing audits of reporting issuers, without being members of CPA Ontario or holding Public Accounting Licenses in Ontario.”
The Marcum and Borgers enforcement orders are similar but different. Marcum violated 10 rules of Canadian Auditing Standards while Borgers violated 15. Marcum “was not registered or licensed by the relevant provincial CPA body to perform audits of the financial statements in the respective jurisdiction.” Borgers, on the other hand, “failed to properly consider the Canadian provincial licensing requirements during the Firm’s client acceptance procedures.”
Colin Ellis is a contributing editor to Canadian Accountant.