DeFi Technologies Announces Auditor Change Amidst Regulatory Scrutiny

DeFi Technologies Inc. (NEO: DEFI) revealed a significant shift in its auditing landscape. The company has officially transitioned from BF Borgers CPA PC to HDCPA Professional Corporation to provide auditing services for its financials.

However, the announcement made on Monday pertained to the change that was already made effective three weeks ago. The decision to change auditors follows the voluntary resignation of the BF Borgers, which took effect on the same date, December 20, 2023. The board of directors swiftly appointed the successor auditor, whose tenure will extend until the next annual general meeting of the company.

Despite the abrupt change, the company emphasizes that the former auditor’s departure was not influenced by any reservations or modified opinions in their reports for the most recently completed financial year or subsequent periods. Both the board of directors and the audit committee greenlit the resignation of the BF Borgers and the subsequent appointment of the HDCPA Professional.

Auditor trouble?

However, a cloud of regulatory scrutiny looms over BF Borgers. On December 7, 2023, the Canadian Public Accountability Board (CPAB) issued an enforcement report, citing findings from an engagement report dated October 12, 2023. This report pertained to the audit of DeFi Technologies’ financial statements for the fiscal year ended December 31, 2022.

The enforcement report detailed multiple significant inspection findings, each constituting a separate violation event as per CPAB rules. An undisclosed partner within BF Borgers’ team is now prohibited from participating in audits of financial statements for reporting issuers in certain Canadian jurisdictions due to licensing issues.

The former auditor’s departure was influenced by these enforcement actions, prompting a remediation plan for the audit of the 2022 statements. The company said it is diligently cooperating, providing necessary information to address CPAB’s concerns, including third-party confirmations and management forecasts.

As a result of the CPAB report, an “unresolved issue” and a “reportable event” per National Instrument 51-102, the company’s audit committee engaged in discussions with BF Borgers. They have authorized the former auditor to respond comprehensively to inquiries by their successor regarding the CPAB report, enforcement report, and the ongoing remediation plan.

HDCPA Professional, in turn, has initiated a “consultation” under NI 51-102, considering additional procedures on year-end 2022 balances and transactions. The extent of their independent auditor’s report may be modified if the remediation plan is not completed in a timely manner.

Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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