Stran & Company, Quincy, Massachusetts, a publicly traded promo products distributor, has postponed the reporting of its first-quarter 2024 financial results after the auditing firm it uses ran afoul of the Securities and Exchange Commission (SEC).
Stran was slated to report the quarterly results on Wednesday, May 15. However, the financials must now be reviewed and approved by another auditor in the wake of an early May settlement between the SEC and Colorado-headquartered accounting firm BF Borgers.
As a publicly traded company, Stran must have its quarterly and annual financials reviewed by an independent firm that is regulated by the Public Company Accounting Oversight Board (PCAOB). BF Borgers is the auditor that Stran and many others used.
On May 3, the SEC announced that BF Borgers had engaged in “deliberate and systemic failures” to comply with PCAOB standards in audits and reviews incorporated in 1,500 SEC filings between January 2021 and June 2023. Among other allegations, the SEC said the firm lied to clients that the firm’s work complied with PCAOB standards. Trump Media and Technology Group, the owner of social networking site Truth Social, was among BF Borgers’ clients. Trump Media, which fired the auditor following the SEC charges, delayed its quarterly filing, too.
To settle with the SEC, BF Borgers agreed to pay a $12 million civil penalty, and owner Benjamin Borgers agreed to pay a $2 million civil penalty. The firm and Benjamin Borgers also agreed to permanent suspensions from appearing and practicing before the commission as accountants, effective immediately. It’s this suspension that affected Stran.
“The allegations against BF Borgers required us to immediately dismiss the firm, and the short notice has consequently caused a delay in the reporting of our financials,” said Stran CEO Andy Shape, a member of Counselor’s Power 50 list of promo’s most influential people. “We have been in active discussions with new firms and hope to announce our new auditor in the near future that will help us to report our financials as soon as possible.”
Shape noted that Stran and other clients are not accused of any wrongdoing. “The allegations are only against the auditor,” Shape said. “Stran is confident in the reliability of its historical financials as well as its existing financial controls and procedures.”
Shape shared that Stran has worked with a separate independent certified public accounting firm since before going public in late 2021. “That firm helps to prepare our financials prior to being submitted to an auditor and the SEC, so essentially we have two independent firms monitoring and reviewing our financial reporting,” he added.
A quarterly record in sales in Q4 of 2023 helped propel Stran to its best-ever annual sales total last year. And, after sustaining a loss in its first full year as a publicly traded company in 2022, the Quincy, MA-based firm nudged out an after-tax profit in 2023.
Based on reported 2022 North American promotional product revenue of $64.3 million, Stran & Co. ranked 34th on Counselor’s most recent list of the largest distributors in the industry.
