TheCorporateCounsel.net

As John shared in early May, the Division of Enforcement recently announced enforcement proceedings against the BF Borgers CPA PC accounting firm and its sole partner that included a permanent suspension of the firm and its owner. That suspension has significant and unfortunate, to say the least, implications for the firm’s public company audit clients.

Yesterday evening, the SEC announced an exemptive order providing an extension to certain companies affected by the suspension. The order provides that, for any reporting company that notified the Commission between May 3 and May 16 pursuant to Rule 12b-25 of its inability to timely file a quarterly or transition report on Form 10-Q due to the BF Borgers suspension order, the Form 10-Q will be deemed to be filed on its prescribed due date as long as it is filed no later than the 30th calendar day (instead of the 5th calendar day) following the due date.

While it may not be a familiar name, BF Borgers has been a fairly significant player for small-cap issuers — ranking 8th in overall market share for public company audits last year & 6th in market share for non-SPAC initial public offerings. The order recognized that these impacted companies need to hire new, qualified, independent, PCAOB-registered public accountants and that any replacement firm will have to review the included financial information and potentially re-review comparable interim financial information, which may be practically impossible with the limited extension permitted by Rule 12b-25.

– Meredith Ervine