8-K: Spectral Capital Corporation Changes Accounting Firms Following SEC Order

Spectral Capital Corporation has dismissed BF Borgers CPA PC as its independent auditor and engaged Michael Gillespie & Associates, following an SEC order against BF Borgers.

Summary

• Spectral Capital Corporation dismissed BF Borgers CPA PC as their independent registered public accounting firm effective May 4, 2024.
• The company engaged Michael Gillespie & Associates as their new independent registered public accounting firm on May 9, 2024.
• The decision to change accounting firms was recommended and approved by the Board of Directors.
• BF Borgers' audit reports for the fiscal years ended December 31, 2023 and 2022 did not contain any adverse opinions, disclaimers, or qualifications.
• There were no disagreements between Spectral Capital and BF Borgers on accounting principles, financial statement disclosure, or auditing scope.
• The SEC has advised that BF Borgers is not currently permitted to appear or practice before the SEC due to an order issued on May 3, 2024.

Sentiment

Score: 3

Explanation: The document indicates a negative event due to the SEC order against the previous auditor, which raises concerns about past financial statements and future compliance.

Positives

• The company acted swiftly to replace their auditor following the SEC order.
• The previous auditor's reports did not contain any adverse opinions or qualifications.
• There were no disagreements with the previous auditor on accounting or auditing matters.

Negatives

• The company had to change auditors due to an SEC order against their previous auditor.
• The SEC order against BF Borgers may raise concerns about the reliability of past audits.

Risks

• The SEC order against BF Borgers could lead to increased scrutiny of Spectral Capital's past financial statements.
• The change in auditors may cause a delay in the filing of future financial reports.
• The company may face additional costs associated with the change in auditors.

Management Comments

• The decision to change independent registered public accounting firms was made with the recommendation and approval of the Board of Directors of the Company.

Industry Context

The change in auditors highlights the importance of regulatory compliance and the potential impact of SEC actions on companies and their service providers. It is not uncommon for companies to change auditors, but the circumstances surrounding this change are unusual due to the SEC order.

Comparison to Industry Standards

• The dismissal of an auditor due to an SEC order is not a typical event and is not comparable to standard auditor changes.
• Most companies change auditors due to performance, cost, or strategic reasons, not due to regulatory issues with the auditor.
• The situation is more akin to companies that have had to restate financials due to auditor issues, which is a negative signal to the market.

Legal Proceedings

• The U.S. Securities and Exchange Commission (the SEC) has advised that, in lieu of obtaining a letter from BF Borgers stating whether or not it agrees with the statements herein, the Company may indicate that BF Borgers is not currently permitted to appear or practice before the SEC for reasons described in the SECs Order Instituting Public Administrative and Cease-and-Desist Proceedings Pursuant to Section 8A of the Securities Act of 1933, Sections 4C and 21C of the Securities Exchange Act of 1934 and Rule 102(e) of the Commissions Rules of Practice, Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order, dated May 3, 2024.

Stakeholder Impact

• Shareholders may be concerned about the reliability of past financial statements due to the SEC order against the previous auditor.
• The company may face increased scrutiny from regulators and investors.
• Employees may experience uncertainty due to the change in auditors.

Key Dates

Keywords

auditor, accounting, SEC, BF Borgers, Michael Gillespie & Associates, financial statements, audit, compliance