Borgers, Benjamin Fitzpatrick of Lakewood, CO

March 5, 2019

As a result of an investigation of alleged violations of the codes of professional codes of the AICPA and the Colorado Society of CPAs, Mr. Borgers, with the firm BF Borgers, CPA, PC, entered into a settlement agreement under the Joint Ethics Enforcement Program, effective November 2, 2018.

Information came to the attention of the Ethics Charging Authority (ECA) (AICPA Professional Ethics Executive Committee and Colorado Society of CPAs Professional Ethics Committee) alleging a potential disciplinary matter with respect to Mr. Borgers’ performance of professional services on the audit of an employee benefit plan as of and for the year ended December 31, 2015.

The ECA has reviewed the findings of the U.S. Department of Labor’s Employee Benefit Security Administration and ’ responses to such findings as well as other relevant documents   submitted to support response, including certain work papers, financial statements, relevant emails and other correspondence.

Based on this information, there appears to be prima facie evidence of by of the AICPA ’ as follows:

1.300.001 General Standards .01a. Professional Competence Rule 

The auditor undertook an engagement that he could not complete in accordance with professional standards.

1.300.001 General Standards .01b Due Professional Care Rule 

1.    The original and revised auditor’s report does not refer to the correct footnote for the limited-scope certification.

2.    The auditor failed to exercise due professional care as the financial statements disclose the plan does not have a determination letter; however, the checklist for tax considerations workpaper notes otherwise and determination letters were noted in the audit package.

1.310.001 Compliance with Standards Rule

1.    The original financial statements refer to the independent accountant’s report instead of the independent auditor’s report. (AU-C 700)

2.    The auditors’ report for the original and revised financial statements is not presented in accordance with the Clarity Standards. (AU-C 700)

3.    The auditor failed to document the terms of the engagement as the engagement letter was not signed by the plan sponsor and there was no other documentation as to with whom the engagement was discussed, when the discussion occurred, and significant points discussed. (AU-C 210)

4.    The auditor failed to obtain an understanding of the entity and its environment and assess the risk of material misstatement. (AU-C 315)

5.    The auditor failed to adequately assess the SOC 1 reports. (AU-C 402)

6.    The auditor initially failed to obtain a proper limited-scope certification. (AU-C 500)

7.    The auditor failed to obtain sufficient and appropriate audit evidence to express an opinion on the financial statements regarding: (AU-C 500)

a.    contributions received and receivable;

b.    benefit payments; and

c.    participant data and participant accounts.

8.    The auditor failed to audit opening balances. (AU-C 510)

9.    The auditor initially failed to obtain sufficient and appropriate audit evidence to express an opinion on the financial statements regarding notes receivable from participants. (AU-C 500)

10.  The auditor failed to prepare a written audit program that set forth the procedures necessary to accomplish the objectives of the audit regarding notes receivable from participants.  (AU-C 300)

11.  The auditor failed to prepare a written audit program that sets forth the procedures necessary to accomplish the objectives of the audit in the area of planning.  (AU-C 300)

1.320.001 Accounting Principles Rule 

1.    The footnotes in the revised financial statements were not comparative. (FASB ASC 205-10-45-4)

2.    The original and revised financial statements failed to disclose the accounting policy for investment valuation and income recognition.  (FASB ASC 962 and 235)

3.    The fair value disclosure in the original and revised financial statements contained inconsistencies with the Form 5500 and the statement of net assets available for benefits and did not make all disclosures required by FASB ASC 820.

4.    The original and revised financial statements failed to disclose related party and party-in-interest transactions.  (FASB ASC 850-10-50-1)

5.    The original and revised financial statements failed to disclose the date through which subsequent events were evaluated. (FASB ASC 855-10-50)

1.400.050 Governmental Bodies, Commissions, or Other Regulatory Agencies 

1.    The original and revised financial statements failed to present the required supplemental schedule of assets (held at end of year). (29 CFR 2520.103-10)

2.    The original statement of net assets available for benefits was not comparative.  (29 CFR 2520-103.10)

3.    The revised statement of net assets available for benefits for 2014 was unaudited; however, ERISA requires the prior year to be compiled or reviewed at a minimum. (29 CFR 2520.103.1(b)(5)(iii))

4.    The original and revised financial statements improperly included contributions and benefits paid as covered by the limited-scope certification. (29 CFR 2520-103.8)

Agreement:

In consideration of the ECA forgoing further investigation of ’ conduct as described above, and in consideration of the ECA forgoing any further proceedings in the matter, agreed as follows:

a.    To waive rights to further investigation of this matter in accordance with the Joint Ethics Enforcement Program (JEEP) Manual of Procedures.

b.    To waive rights to a hearing under AICPA bylaws section 7.4. bylaws Article III, Section 5(b).

c.    To neither admit nor deny the above specified charges.

d.    To the AICPA .

e.    To comply immediately with professional standards applicable to the professional services performs and to submit evidence of such compliance.

f.     To complete the following continuing professional education (CPE) within months of the effective date of this agreement and provide evidence of such completion (e.g., attendance sheets, course completion certificates, etc.).

Audits of 401(k) Plans —12.0 hours
Auditing Defined Contribution Retirement Plans—10.0 hours
GAAS: A Comprehensive Review for Auditors—11.5 hours
Audit Workpapers: Documenting Fieldwork— 4.0 hours
Internal Control and Risk Assessment: Key Factors in a Successful Audit— 8.0 hours
Total—45.5 hours

g.    To comply with directive e., above, agrees to hire an outside party, acceptable to the ECA to perform a pre-issuance review of the reports, financial statements, and working papers on two engagements performed by in the year from the date the reviewer has been approved by the ECA. In addition, must undergo a pre-issuance review on non- audit performed by that year. must submit the names of the chosen reviewers to the ECA for approval no later than 30 days after the effective date of this agreement. Also, no later than 30 days after the effective date of this agreement, must submit a list to the ECA of the audit engagements on which expects to issue reports in the upcoming 12 months from which the non- audit subject to pre-issuance review will be selected. The following information should be included regarding the engagements listed:

  • anticipated number of total hours to be spent on the engagement;
  • level of professional services to be rendered;
  • role and anticipated hours on each engagement;
  • type of organization; and
  • whether it will be an initial engagement.

He agrees to permit the outside party to report quarterly to the ECA on progress in complying with this agreement as stated herein to comply with professional standards. The report should include:

  • the reviewer’s comments in detail for each engagement (a report that omits such detail will be unacceptable);
  • description of the nature of the entity reviewed;
  • the entity’s year end; and
  • the date of the review.

The first report is due 120 days after the reviewer has been approved by the ECA with subsequent reports due every 90 days thereafter. If none of the engagements selected for pre-issuance review were performed during a reporting period, agrees to inform the ECA of such. agrees to have this pre-issuance review performed at expense. The ECA has the right to extend the period of time and number of engagements subject to pre-issuance review if there are deficiencies.

agrees to inform the ECA of any changes in the composition of practice, changes in role or if has not performed any audits during the period is subject to the pre-issuance reviews. If practice changes and is no longer involved with audits, no longer acts in a supervisory capacity on such engagements or has not performed such engagements during the above specified period, must inform the ECA of this change and the ECA may require that attest every six months for three years as to the nature of practice. If, during the three-year attestation period, returns to performing such engagements, must inform the ECA of this change and undergo the required pre-issuance reviews.

h.    To further comply with directive e., above, submit, months after completion of the , a list of the highest level (audits, reviews, and compilations with note disclosures) of engagements that performed in the month period following the date completed the . The following information should be included regarding the engagements listed:

  • total hours spent on each engagement;
  • role and hours on each engagement;
  • level of professional services rendered;
  • type of report issued;
  • type of organization; and
  • whether it was an initial engagement.

The ECA will select one of these engagements for review. will be informed of this selection and will be asked to submit information to include a copy of report, the financial statements, and working papers related to that engagement for review by the ECA. The ECA may extend the period to select an engagement to ensure a suitable selection is available. A peer review undergone by firm would not exempt from this requirement.

He agrees to inform the ECA of any changes in the composition of practice, changes in role or if has not performed any audits, reviews, and compilations with note disclosures, until a suitable work product is selected for review. If practice changes and is no longer involved with audits, reviews, and compilations with note disclosures, no longer acts in a supervisory capacity on such engagements or has not performed such engagements during the above specified period, must inform the ECA of this change and the ECA may require that attest every six months for three years as to the nature of practice. If, during the three-year attestation period, returns to performing such engagements, must inform the ECA of this change and the ECA will select a suitable work product for review.

After an initial review of such report, financial statements, and working papers, the ECA may decide has substantially complied with professional standards and close this matter. Or, the ECA may decide that an ethics investigation of the engagement submitted is warranted. If, at the conclusion of the investigation, the ECA finds that professional standards have in fact been violated, the ECA may refer the matter to the AICPA Joint Trial Board for a hearing or take such other action as it deems appropriate.

i.      To submit, within 30-days after has signed this agreement, evidence that firm has submitted an application to join the Audit Quality Center. Upon membership in that Center, agrees that firm will comply with the directives of that Center.

j.       This prohibition will remain in effect until the ECA determines that the work product submitted to comply with directive , above, substantially complies with professional standards. This prohibition will be communicated to peer review oversight agency.

k.    To be prohibited from serving as a member of any ethics or peer review committee of the AICPA until has completed all directives in this letter. This prohibition will be communicated to those responsible for appointments to such committees. In addition, if applies to join any other committee of the AICPA , must inform those responsible for such appointments of the results of this ethics investigation. This prohibition shall remain in effect until the ECA determines that the work product submitted to comply with directive ., above, substantially complies with professional standards.

l.      To be prohibited from teaching continuing professional education courses approved by the AICPA or the state CPA societies in accounting, auditing and employee benefit plans until has completed all directives in this letter. This prohibition will be communicated to those responsible for engaging CPE instructors at the AICPA . This prohibition shall remain in effect until the ECA determines that the work product submitted to comply with directive , above substantially complies with professional standards.

m.   That the ECA shall provide a copy of this settlement agreement to the AICPA’s Peer Review Division staff, peer review administering entities and firm’s peer reviewer.

n.    That the ECA shall publish name, the name of firm, the charges, and the terms of this settlement agreement.

o.    That the ECA shall monitor compliance with the terms of this settlement agreement and initiate an investigation where the ECA finds there has been noncompliance.