Category: BDO

Grant Thornton: BDO Suggestion That We Are Pulling Out of Hong Kong Is ‘Disingenuous’

Following up on our post from Wednesday on the movement of 600+ Grant Thornton Hong Kong employees to BDO, we’ve received some correspondence from Grant Thornton International that clarifies the situation.

Turns out, a brief press release – whole thing after the jump – was issued by GTI last month that announced that the firm had given notice (confirming speculation in the comments) to its HK firm to GTFO by March 2011.

In email to Going Concern, GTI spokeswoman Hilary East broke it down for us:

They did not choose to leave, they were told to leave. Success in China is critical to the long term ambitions of G are committed to an integrated approach to the China market, which includes Hong Kong. While many partners in the former Hong Kong firm supported that strategy, their leadership was unable to agree amongst itself and separation became the only option. Grant Thornton China immediately set up a new firm in Hong Kong, led by a group of partners from the original Hong Kong firm with support from the 1500 partners and staff across mainland China.

The new firm that Ms East mentions, presumably is Jingdu Tianhua Hong Kong which we mentioned in our previous post that will adopt the Grant Thornton name “in due course.”

But what about this article in the South China Morning Post that quotes BDO Hong Kong’s CEO as saying, “The opportunity to have a massive admission of so much established accounting talent is rare.” ?

Ms East elaborated for us:

[I]t is disingenous, or possibly wishful thinking, on the part of BDO to suggest that Grant Thornton is pulling out of Hong Kong. Many partners and staff from the former Hong Kong firm have already contacted the new Grant Thornton firm and clients will, of course, decide for themselves whether to move to BDO, which operates in the region as a loose affiliation, or remain with the more integrated, ‘one firm’ approach of Grant Thornton.

If you read the South China article, you won’t see a single mention of GTI giving the Hong Kong firm notice, unless you count the extremely vague and misleading passage:

Grant Thornton chief executive Patrick Rozario, who led the move to BDO, said the team decided to shift because of Grant Thornton International’s directive for the mainland member firm to lead Grant Thornton’s Hong Kong office.

“We consider BDO, which is run independently in Hong Kong and China, respectively, is a model that suits us better,” Rozario said.

No mention of the GTI press release. No mention of the new firm that GTI was setting up. No mention that some staff and partners were considering their options. The headline (and sub-hed) in the article is even ridiculously misleading: “Troubled accounting firm’s staff jump ship Grant Thornton to close as BDO gains full team”.

And why the article even brings up Gabriel Azedo’s disappearance is mystifying. It’s more than hella-stretch to suggest that the trouble caused by him has anything to do with GTI’s or BDO’s moves. Plus hardly anyone (including the Financial Times) gives a damn any more about his whereabouts. The guy has been on the lam for over a year and is probably some accounting Kurtz figure by now.

Grant Thornton International Separates From HK

Accounting News Roundup: Signs of Compromise on Tax Cuts; KPMG Caught in Between IRS, Wells Fargo; BDO Elects New Board Members | 11.05.10

White House signals compromise on tax cuts [Reuters]
A conciliatory White House said on Thursday it was willing to negotiate with Republicans on tax cut extensions, but Senate Republican leader Mitch McConnell took a hard line against compromises with President Barack Obama in a new Congress.

In the first possible policy shift since Democrats suffered heavy election losses two days ago, White House spokesman Robert Gibbs signaled Obama was open to talks on a temporary extension for the wealthy of Bush-era tax cuts that expire at the end of the year.

New York Court Sends “Amazon Tax” Case Back for More Information [Tax Foundation]
[T]he intermediate court of New York handed down its long-awaited “Amazon tax” opinion in Amazon.com, LLC v. New York State Department of Taxation and Finance. New York requires companies with no property or employees in New York to collect New York sales tax if the non-resident company receives revenue from in-state independent affiliates.

Qantas Blames Rolls-Royce for Engine Failure [WSJ]
Qantas Airways Ltd. Chief Executive Alan Joyce on Friday said the design of Rolls-Royce Group Plc engines could have caused a mid-air failure that forced one of its A380 super jumbos to make an emergency landing in Singapore.

“This is an engine issue and the engines were maintained by Rolls-Royce since they have been installed on the aircraft,” Mr. Joyce told reporters at the company’s headquarters in Sydney. “We believe this is most likely a material failure or some kind of design issue.”

BBC strike silences Today and hits TV news [FT]
BBC journalists ignored the pleas of their editor-in-chief on Friday, taking strike action over plans to cut their pension benefits and driving familiar morning news programmes off the air.

The Today programme on Radio 4 was replaced with pre-recorded material, including a documentary on bird life in the Humber estuary, while Radio 5 Live and the BBC’s morning television news were produced with skeleton staff and unfamiliar presenters.

IRS looks into Wells Fargo tax deductions [MST]
A dispute between the Internal Revenue Service and Wells Fargo & Co. that has been quietly taking shape in a Minneapolis federal court could cost the bank hundreds of millions of dollars.

The clash involves “sale-in, lease-out” (SILO) transactions in which a tax-exempt entity transfers tax benefits to a taxpayer like Wells Fargo, in exchange for a fee. The IRS says Wells Fargo has claimed nine-digit losses for tax purposes on such deals, but the government considers them an illegal tax dodge.


BDO USA, LLP Announces Results of Board Elections [BDO]
Brian Eccleston, Scott Hendon, Albert Lopez and Brad Schrupp have each been elected to the firm’s board of directors. These elections, which are for a three-year term, are effective immediately.

“The partnership has shown wise judgment in electing these very deserving individuals and I am confident that the firm will benefit from the insight they will bring to the process,” said Jack Weisbaum, CEO of BDO USA.

Actress’ name is mud in tax man’s eyes [Tax Watchdog/Detroit News]
Jaime Pressly is the actress and she owes $376k.

Exodus Watch: 600+ in Grant Thornton’s Hong Kong Office Move to BDO

What in the name of Stephen Chipman’s dubious accent is going on here? Why would a firm shut down an office in an emerging financiaosing six hundred partners and professionals to one of their rivals?

If you ask BDO’s Hong Kong Chairman and CEO Albert Au Siu-cheung, it has nothing to do with the disappearance of former GT managing partner Gabriel Azedo. It’s simply a once-in-a-lifetime opportunity that found its way into the lap of BDO:


From the South China Morning Post:

“The opportunity to have a massive admission of so much established accounting talent is rare. This will strengthen BDO’s competitiveness in the local accounting industry,” Au said. “This will also create a bigger mid-tier firm allowing listed companies a choice for auditing and professional services in future.”

Au said the recruitment would be completed by the end of this year, and all staff and partners would become part of BDO, while Grant Thornton would cease operation in Hong Kong. Grant Thornton’s clients – including 130 listed companies audited by the firm – had been notified of the change and most agreed to make the switch to BDO, Au said.

Au said lawsuits involving Grant Thornton’s missing boss, former managing partner Gabriel Ricardo Dias-Azedo, were not a factor in the move.

This is a head scratcher for sure. Although this isn’t the first time a major firm has had mysterio issues in H to the K. Last year, Ernst & Young’s office was raided for the firm’s involvement with Akai that ultimately resulted in the firm paying a rumored $400 million to settle the case.

We reached out to PR at Grant Thornton’s International office but since they’ve probably been at the pub for hours already, we’re still awaiting a response.

We did find this announcement from Grant Thornton International which states that the firm has a new “member firm” in HK but nothing about the movement of the 600 professionals:

Grant Thornton has announced the appointment of a new member firm in Hong Kong. The new practice, set up by Grant Thornton China, will begin trading as Jingdu Tianhua Hong Kong but will adopt the name “Grant Thornton” in due course. The new firm will be led by Daniel Lin, an established and highly regarded member of the accounting profession in Hong Kong.

[…]

The new firm plans to have a staff of over 100 people within 12 months. Significantly, it will be fully integrated with Grant Thornton China and be part of a network of 10 offices providing seamless access to 65 partners and over 1,500 professionals across mainland China and Hong Kong.

Ed Nusbaum, chief executive officer of Grant Thornton International explains, “Grant Thornton has long been committed to a strategy of an integrated approach to serving clients across the China market, including Hong Kong. This appointment of Jingdu Tianhua Hong Kong is a vital step in that strategy and our member firms, now over 100 in number, look forward to working with their new colleagues in Hong Kong.”

Okay, so a “vital step” includes the closing of an office the defection of 600 professionals and “130 listed companies” for an office with less than 100 people total? Can anyone – looking straight at you Ed – explain this? Since he’s pretty hard to nail down we’ll take your theories for now.

BDO Officially Resides in the First State

By all accounts, BDO as a firm, has had a decent 2010. There were the typical raises and promotions that were met with a giant “meh” by the BDO faithful.

The firm celebrated its 100th birthday last month, with offices marking the occasion in various ways. And probably most importantly, the Florida Appeals Court ordered a new trial in the Banco Espirito Santo case.


The decision in this case allowed the firm to jump off its deathbed reenergized, allowing Jack Weisbaum to continuing to moonlight as a TV commercial star as well as open a Raleigh, North Carolina office.

The good times continue with the addition of McBride Shopa & Co. including a message from Tom Shopa with a pleasant piano accompaniment in the background.

Jack W. was able to sneak away from a busy commercial shoot to share his feelings on the matter:

“The addition of the partners, professionals and staff formerly with McBride Shopa adds the important Delaware market to BDO’s existing presence in the Philadelphia and the greater Washington, DC area. We are excited about the many growth opportunities that this combination will bring to our clients and our future clients,” said Jack Weisbaum, CEO of BDO USA.

The bright side for BDO is that since the Taxman is likely coming to Delaware, there will be plenty of new business opportunities.

How Are BDO Offices Celebrating the Firm’s 100th Birthday?

We’re merely echoing the question.


Apparently there is some go-karting happening in Charlotte which sounds fun, especially if there was a three beer minimum to get on the track.

Other things we’re envisioning:

• Gents of all body types in the Woodbridge, NJ office coming to work as The Situation (i.e. sans shirt).

• Miami office employees are wearing their homemade “FUCK BANCO ESPIRITO” t-shirts (that could be any office really).

• At HQ in Chicago, CEO Jack Weisbaum reenacting Dos Equis ads only to substitute “Stay thirsty my friends” with “People who know – Know BDO”

What else is going on? Let us know.

PCAOB Is Still Overachieving: Issues Inspection Reports for BDO, Grant Thornton, PwC

Well team, despite the little setback for the PCAOB earlier this week, Team Peek is not discouraged. In fact, they were so motivated by the SEC’s little stunt that they thought they’d churn out three major inspection reports today, just to show everyone that they get to say what’s what with these accounting firms (even if it is in an indecipherable combination of vague and wonky prose).

BDO, Grant Thornton and PwC all got their papers issued today, which leaves just KPMG as the last major U.S. firm to not have their report issued. We’ll give you the quick and dirty on these three but if you want the gory details, you’ll have to read them in depth yourself (some o know). We’ll go in alphabetical order so no one gets bent out of shape.


BDO had eight issuers mentioned in its report. Issues included not testing the underlying data used by a specialist, failure to identify a departure from GAAP before issuing its audit report, loan losses and “[failure] to perform sufficient procedures to evaluate the reasonableness of a significant assumption management used to calculate the gain on the sale of a business,” among others.

PCAOB_2010_BDO_Seidman_LLP

GT only had five issuers listed in their report with problems including two instances of departures from GAAP that weren’t identified before the issue of the audit report, testwork related to fair value determination of illiquid assets and testwork around revenue recognition. Steve Chipman got away from the teleprompter long enough to sign the letter to the PCAOB himself, along with Trent Gazzaway, the National Managing Partner of Audit Services.

PCAOB 2010 Grant Thornton LLP


Nine issuers were noted by the inspectors for P. Dubs. Various issues ranging from inadequate testing of foreign locations, loan loss issues (that’s a given) and fair value (another surprise). PwC’s response made it sound like they actually enjoy the whole inspection process, “We continue to support the PCAOB and we wish to convey our sincere appreciation for the professional efforts of the PCAOB staff.” Wonder if the engagement teams that were inspected feel the same?

PCAOB_2010_PricewaterhouseCoopers_LLP

Compensation and Bonus Watch ’10: Who Knows BDO?

After coming out the near-death experience thanks to the Florida 3rd District Court of Appeal, you’d figure TPTB at BDO would continue shoveling the good news out while they could. On the comp front, a tipster tells us that while there are rumors that raises are bonuses are coming, no one has a clue as to what they’ll be:

Can you run a discussion on BDO compensation increase and bonuses? Raises would be effective 10/1, and currently there have been no formal communications from senior mgmt regarding this topic. In the local offices, there has been word that there will be raises and bonuses, but no numbers have been thrown around.

In other words, if you’ve got the goods BDO peeps, kindly spill it. It’s about time you started talking. If you’re not comfortable voicing yourself, email us and we’ll handle it.

KV Pharmaceutical Will Get to Know BDO

As we’ve mentioned, it’s been a rough summer – hell a rough year – for KV Pharmaceutical. The company paid nearly $26 million to the Justice Department back in February, had massive layoffs in March and their Chairman and CFO back in June.

Last month, KPMG decided it had had all the drama it could handle and resigned as the auditor of the company.

But as the second half of 2010 gets into full swing, KV managed to find a new CFO and now they’ve managed to land a new auditor – BDO.


BPR:

K-V Pharmaceutical Company (NYSE: KVa/KVb) announced today that the Audit Committee of its Board of Directors has engaged BDO USA, LLP (“BDO”) as the Company’s independent registered accounting firm.

The Company and BDO will commence work immediately on the planning, audit and filing of the fiscal year 2010 Form 10-K and will then follow with the review of its quarterly filings for fiscal year 2011. K-V’s fiscal year end is March 31.

Mr. Mark Dow, Chair of the Board’s Audit Committee, stated, “The Audit Committee and the entire Board is pleased to be able to announce the selection of BDO as the Company’s new accounting firm. BDO has extensive knowledge of the pharmaceutical industry and also a previous relationship with K-V, and the Company believes BDO will be able to assess and complete its audit of the Company’s Fiscal Year 2010 financial statements expeditiously. We look forward to working closely with BDO to bring the Company back into compliance with all of its Securities and Exchange Commission filings as quickly as possible.”

Right! Staying compliant! That sounds a bit maj. Not only that but the New York Stock Exchange (sort of of a big deal in their own right) is sick of KV stinking up their big board with their 30-day average stock price hovering under $1.

The company has assured the NYSE that they’re on this stock price problem, “The Company will furnish to the NYSE on or prior to August 10, 2010 a response affirming its intent to cure this deficiency and outlining the steps it is currently taking and plans to undertake in the near term to restore compliance with the NYSE’s continued listing standards.”

Let’s just say BDO has their work cut out. KV has no internal controls to speak of, is having trouble convincing the FDA their products are safe and the SEC and NYSE breathing down their necks. Now maybe this won’t all translate into the auditors’ magic wand but there’s got to other potential clients in the St. Louis area with far less drama.

K-V Pharmaceutical Company Engages BDO USA, LLP as Independent Registered Accountants [PR Newswire]
Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing [SEC]

Jeremy Newman and BDO Will Not Be Taking Part in Your Lowballed, Low Quality Audits

BDO International CEO Jeremy Newman is a little concerned about the trend of lowball audit fees out there. Now, those aren’t his exact words, in fact he calls it ‘‘extreme downward pressure on fees’ which still seems far more than honest than “my US colleagues call ‘fee compression.’”

He’s worried because he thinks that all this slumming around for any little opining job will lead to shoddy audits:

There is increasing evidence that fees are being forced down to such an extent that one worries this will encourage audit firms to ‘cut corners’ to reduce their own costs and thereby reduce audit quality – particularly given that the buyers of audit services (ie clients) do not monitor or determine audit quality which is a role taken on by regulators who are not involved in the pricing discussion between the client and the audit firm.

Yes, the man has evidence, courtesy of:

Canadian Public Accountability Board – “CPAB has learned that certain audit committees are pressuring firms to significantly reduce audit fees. This stance may be incompatible with the audit committees’ important role … in helping to ensure the integrity of financial reporting.”

Australian Securities and Investments Commission – “We will also focus on audit quality for new or existing audits where audit fees appear low or appear to have been reduced for reasons other than changes in the underlying business of the entity being audited.”

And he rounds it out with a quote from a speech given by Stephen Hadrill, the Chief Executive of the UK’s Financial Reporting Council, “There is a role for the market in setting higher expectations of auditors. So far the market has not played that role. Quite the opposite. It is more likely to applaud lower audit fees than higher quality.”

So if you’re desperate to retain some business or provide “client service” through the Wal Mart method, you’ll be on your own. As long as Newman is running the ship at BDO, they will be choosing quality over quantity, “despite the pressure on us to reduce costs,” no matter what other firms (read: Igbay Ourfay) are doing.

A Bizarre Market [CEO Insights]

BDO Does Some Ribbon Cutting, Opens Raleigh, NC Office

More good news out of B to the D to the O as the firm announced today that it is opening an office in Raleigh, North Carolina (full press release after the jump). This will be the 39th office in the U.S. and fourth in North Carolina. The firm also has eight affiliate offices in the state.

In the process, the firm managed to pick up former Ernst & Young audit partner Michael Dannar (a refugee perhaps?).


The good times at BDO have been aplenty lately as the firm just admitted five partners on July 1 and was given a mulligan on the Banco Espirito lawsuit. Oh and don’t forget that the firm fka BDO Seidman is celebrating its 100th birthday all year.

No word if there will be cake or freakishly large scissors at the celebration but nevertheless, it’s good to see some expansion in the Tar Heel state for a change.

BDO USA, LLP EXPANDS NORTH CAROLINA PRESENCE WITH NEW RALEIGH OFFICE

Chicago, IL – BDO USA, LLP, one of the nation’s leading professional service organizations, has announced an expansion of it’s presence in North Carolina with the addition of a new office in Raleigh. The Chicago-based firm, which now has offices in 39 cities around the country, had previously serviced clients in this market through its Charlotte practice. Pending a move to permanent office space at 5430 Wade Park Boulevard in August, the new practice, which will have approximately 15 staff, will be temporarily located at:

BDO
5410 Trinity Road, Suite 310
Raleigh, NC 27607

The Raleigh business community will now have more direct access to BDO’s full array of services which include assurance, tax, risk advisory, financial planning, business restructuring, litigation and fraud investigation services. Michael Dannar, previously with Ernst & Young, has joined the firm as a partner and will assist in serving the firm’s assurance clients in Raleigh and throughout the southeast. Mr. Dannar has significant experience working with colleges, universities and other non-profit organizations.

“We have been working with clients in Raleigh for a number of years now and the time is right for us to establish a permanent presence. This new office will enable us to better serve our clients in this growing market,” said Jack Weisbaum, CEO of BDO USA. “We are also happy to welcome Michael Danner to the partnership. His knowledge of the market will be a valuable resource to our firm.”

BDO SEIDMAN FACTS:

• BDO is celebrating the 100th anniversary of its founding in 1910.
• BDO represents companies ranging from Fortune 500 multinationals to closely-held private businesses.
• BDO had $620 million in revenues in 2009 (6/30/09). Over the past four fiscal years, the firm has averaged double digit growth (10.2%).
• As an independent member of BDO International Limited (the fifth largest global network of accounting firms), the firm can leverage the resources of more than 1,000 member firm offices in 115 countries around the world.

ABOUT BDO USA

BDO is the brand name for BDO USA, LLP, a U.S. professional services firm providing assurance, tax, financial advisory and consulting services to a wide range of publicly traded and privately held companies. For 100 years, BDO has provided quality service through the active involvement of experienced and committed professionals. The firm serves clients through 39 offices and more than 400 independent alliance firm locations nationwide. As an independent Member Firm of BDO International Limited, BDO serves multi-national clients through a global network of 1,138 offices in 115 countries.

BDO USA, LLP,a limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms. For more information please visit: www.bdo.com.

Promotion Watch ’10: BDO Names Five New Partners

Fresh off their win last week in a Florida Appeals Court, BDO announced the admission of five new partners today in a press release (in full after the jump).

The new partners are Joseph Carr (Chicago – Tax), Anthony Lawrence (Grand Rapids – Assurance), Hoon Lee (San Francisco – Tax), Bryan Polozola (Dallas – Assurance) and Julie Valpey (National – SEC) and they get their big chairs effective tomorrow.

Congrats to the new partners and remember to keep the celebration under control.

Wednesday, June 30, 2010

BDO USA, LLP, ADMITS 5 NEW PARTNERS

BDO USA, LLP, IS PLEASED TO ANNOUNCE THAT 5 NEW PARTNERS HAVE BEEN ADMITTED TO THE PARTNERSHIP, EFFECTIVE JULY 1, 2010.

Chicago, IL– BDO USA, LLP, is pleased to announce that 5 new partners have been admitted to the partnership, effective July 1, 2010. Two of the new partners are in the tax practice, two are in the assurance business line and one is in the national SEC group. BDO is a leading national professional services firm providing assurance, tax, financial advisory and consulting services to private and publicly traded businesses.

“I am very proud to welcome each of these very deserving individuals to our partnership,” said Jack Weisbaum, CEO of BDO USA. “A key to success in our profession is a commitment to recruiting, training and retaining superior client service professionals. Each of these new partners has excelled in their specific technical area while providing the highest level of client service.”

The newly elected partners include: Joseph Carr (Chicago – Tax), Anthony Lawrence (Grand Rapids – Assurance), Hoon Lee (San Francisco – Tax), Bryan Polozola (Dallas – Assurance) and Julie Valpey (National – SEC).

About BDO USA
BDO is the brand name for BDO USA, LLP, a U.S. professional services firm providing assurance, tax, financial advisory and consulting services to a wide range of publicly traded and privately held companies. For 100 years, BDO has provided quality service through the active involvement of experienced and committed professionals. The firm serves clients through 38 offices and more than 400 independent alliance firm locations nationwide. As an independent Member Firm of BDO International Limited, BDO serves multi-national clients through a global network of 1,138 offices in 115 countries.

BDO USA, LLP,a limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms. For more information please visit: www.bdo.com.