Trump Media & Technology Group Corp., which runs the former president's Truth Social service, appointed Semple, Marchal & Cooper LLP, as its new auditing firm after the Securities and Exchange Commission permanently suspended its former auditor, BF Borgers, for fraudulent filings.
The appointment took effect May 4, a day after the SEC effectively shut down BF Borgers, accusing the small Loveland, Colorado-based firm of massive fraud involving 1,500 filings and fining the firm and its owner Benjamin Borgers a total of $14 million. Prior to the shutdown, BF Borgers had grown rapidly in the number of new SEC audit clients it took on, dominating the rankings in 2021, according to Ideagen Audit Analytics.
However, in its most recent PCAOB inspection report, all 11 of the audits reviewed in 2022 were included in Part I.A of the report due to the significance of the deficiencies identified. Among its clients was Trump Media & Technology Group Corp., which runs Truth Social and recently went public by merging with Digital World Acquisition Corp., a special purpose acquisition company. Many of its clients were small companies traded over-the-counter, and while it doubled the number of clients it served between 2019 and 2021, it didn't add extra staff and assigned 147 audits to a single auditor.
Donald Trump speaks in Vandalia, Ohio
Joshua A. Bickel/Bloomberg
Semple, Marchal & Cooper, LLP is also relatively small, with only seven people listed on its website. The Phoenix-based firm had only four SEC issuer audit clients in 2021, according to the Public Company Accounting Oversight Board's most recent inspection report. The Public Company Accounting Oversight Board inspected three of those audits and found only one relatively minor deficiency, in which the firm did not make any of the required communications to the issuer's audit committee, or the equivalent, regarding the conduct of its audit.
Trump Media said the selection of a new auditing firm would probably delay its quarterly report.
"The appointment of SMC was made after a detailed evaluation process and has been approved by the Company's Audit Committee," said Trump's Sarasota, Florida-based company. "TMTG anticipates seeking a limited extension of the deadline for its upcoming 10-Q by filing a Form 12b-25 no later than one business day after the original due date for such report."
Trump spent Tuesday in a New York courtroom during his trial over improper reporting of alleged hush money payments to adult film actress Stormy Daniels, who testified today in the case.
Trump Media and Semple, Marchal & Cooper LLP did not immediately respond to requests for comment.
The American Institute of CPAs is still concerned about the Public Company Accounting Oversight Board's new firm and engagement metrics standard, despite some modifications from the original proposal.
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