Collapse of BF Borgers unleashes flood of new SEC audit clients

The six audit firms that topped the charts of new Securities and Exchange Commission clients in the second quarter of 2024 all had something in common: new engagements that used to be audited by BF Borgers.

The permanent suspension of the firm in May by the SEC over systemic failures to comply with audit standards unleashed a flood of companies looking for new auditors, and that, in turn, meant big gains for a number of smaller auditors.

Bush & Gillespie, for instance, led Q2 with 17 new client engagements, of which 14 came from BF Borgers, while all 14 of Michael Gillespie & Associates new clients came from the defunct firm. (See "Net engagement leaders.")

A total of 125 new engagements in Q2 involved clients cast adrift in the wake of BF Borgers' collapse — entirely explaining the quarter's unusual spike in activity, with 330 clients onboarded, a major jump from the 209 in Q1.

Among larger firms, the BF Borgers mess had less of an impact; Forvis Mazars led the league tables with 12 new and 11 net, but those were paper gains brought over from Mazars in the two firms' combination. (See "Q2 2024 client gains & losses.") Deloitte brought slightly more new clients, with 13, but only netted eight.

Clients by filing status, and more

In terms of clients by filing status, PricewaterhouseCoopers led among new large accelerated filers, with five, while Grant Thornton led among accelerated filers and smaller reporting companies. (See "Audit leaders") Meanwhile the chief beneficiaries of Borgers' fall topped the table for non-accelerated filers and smaller reporting companies.

PricewaterhouseCoopers only netted two new clients in the second quarter, but its nine new engagements helped it top the league tables for new market capitalization audited and new audit fees. (See "New client leaders.") Semiconductor manufacturer and designer Global Foundries Inc. led the way with $32.1 billion of market cap; it also provided $5.6 million in audit fees, but specialty pharmaceuticals manufacturer Mallinckrodt contributed the most there, with $11.5 million.

Deloitte came second in both new market cap and new audit fees, with contributions widely spread among its 13 new engagements.

Ernst & Young, meanwhile, took the lead in new assets audited, thanks almost entirely to the $38.5 billion from Banc of California; PwC came second, with Global Foundries contributing $18 billion in assets.

Data for the quarterly rankings are provided by Ideagen Audit Analytics, a premium online intelligence service delivering audit, regulatory and disclosure analysis. Reach them at (508) 476-7007, info@auditanalytics.com or www.auditanalytics.com.