The recent prosecution of BF Borgers CPA PC and its owner, Ben Borgers, by CPA Ontario reveals the critical importance of adhering to the United States and Canadian state and provincial licensing requirements for accounting firms. BF Borgers and its owner were penalized for performing an audit in Ontario, Canada, without proper registration and licensing, leading to fines and probation and highlighting broader regulatory issues.

Case Summary

CPA Firm Requirements

Registration and Licensing: Each U.S. state has its own Board of Accountancy, which imposes unique licensing requirements for audit firms. Similarly, in Canada, in addition to registration with the Canadian Public Accountability Board, each Canadian provincial regulatory body has licensing and registration prerequisites for the provision of audit services by audit firms and individuals. Although BF Borgers CPA PC was licensed by the PCAOB at the federal level in the U.S. and with the CPAB, it failed to meet the provincial requirements in Ontario. It did not possess the necessary provincial license to operate in the Canadian jurisdiction. Audit firms must register with the required province in Canada and the appropriate State Board of Accountancy in the U.S. and obtain public accounting firm licenses, where necessary.

Peer Review: Mandatory for audit firms performing attest services; peer reviews ensure compliance with professional standards.

Firm Mobility and Reciprocity: Firms must verify and comply with mobility rules in each state or province.

Continuing Professional Education (CPE): Firms must ensure their CPAs meet CPE requirements.

Compliance with Professional Standards: Adherence to AICPA and state standards is crucial.

PCAOB Registration: Not a Blanket License

PCAOB registration, necessary for auditing public companies, does not grant CPA firms the freedom to operate across all states in the U.S. without obtaining additional state-specific licenses. The same rule applies to CPAB registration in Canada. The concept of “firm mobility” is only adopted by a few states in the U.S., making it essential for firms to navigate the regulatory landscape carefully.

Foreign Firms and Regulatory Compliance

Foreign accounting firms entering the U.S. market must be particularly cautious about these regulatory nuances. The decentralized system of professional regulation in the U.S. requires firms to adhere to state-specific requirements in addition to federal registrations like those with the PCAOB.

Conclusion

The Borgers case illustrates the importance of understanding and complying with federal and state regulations for foreign audit firms. Failure to do so can result in severe penalties and reputational damage.

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