Firms Archives

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

Caleb Newquist
November 5, 2010

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

Caleb Newquist
November 5, 2010

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

Caleb Newquist
November 3, 2010

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

Caleb Newquist
November 1, 2010

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.

Grant Thornton CFO Survey Reminds Everyone That the Job Market Still Sucks

Caleb Newquist
October 21, 2010

But don’t just take the CFOs word for it, Stephen Chipman is hearing the same thing from the dynamic companies that GT is rubbing elbows with these days:

In a national survey of U.S. Chief Financial Officers (CFOs) and senior comptrollers conducted by Grant Thornton LLP, the U.S. member firm of Grant Thornton International Ltd, only 29% plan to increase hiring in the next six months, while 21% plan to decrease hiring.

A vast majority (79%) believe that the U.S. economy will not recover until the second half of 2011 or later, and more than half (59%) are concerned with a double-dip recession.

“These findings are consistent with what we have been hearing from our dynamic-organization clients,” said Grant Thornton LLP CEO Stephen Chipman. “Indecision stemming from a weak economy and the unknown impact of governmental tax policy and new regulation on business and individuals is causing paralysis, particularly as it relates to major business decisions, including expansion, expenditures and hiring.”

In related economic shitshow news, Fannie Mae and Freddie Mac are probably going to need more bailout cash. As you were.

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

Caleb Newquist
October 8, 2010

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.

Grant Thornton

Grant Thornton Is Done Selling: Acquires Huron’s Disputes & Investigations Practice

Caleb Newquist
October 4, 2010

If you had to judge the state of Grant Thornton based on the activity over the past year, you might assume that the firm was headed downhill because of their disposal of several offices around the country. Despite the haters and accent conspiracy theorists out there, Stephen Chipman was confident about the future. So much so that he sent hand-written notes to all of you encouraging you to become GT evangelists.

Now this morning, we learn that this unleashing of dynamic potential clients could be taking shape:

Grant Thornton LLP said Monday it has acquired the assets of Huron Consulting Group’s disputes and investigations practice in a deal that will bring 60 people to Grant Thornton’s offices in Boston, Chicago, New York and San Francisco.

The acquisition is part of Grant Thornton’s strategy to double revenue in the next five years. Huron Consulting has divested itself of its disputes and investigations practice. Huron’s D&I employees will join Grant Thornton’s economic and advisory groups in four cities, including Boston.

Well! This is quite the acquisition. Since GT and Huron are both Chicago-based, there is likely a lot of connections here that helped make this deal happen. Huron’s press release states that the D&I group (the smallest inside the company) had been on the block because the overlords wanted to focus its efforts on “businesses [with] a more substantial market presence”:

The Company stated previously that it was evaluating the long-term prospects of its D&I service line, which had accounted for approximately 5% of the Company’s overall revenue for the first six months of 2010. “The Disputes and Investigations practice has been a part of Huron since our formation in 2002. We recently conducted a comprehensive assessment of all of our businesses and concluded that the divestiture of the D&I practice would enable management to devote more of its energies and financial resources to businesses where we have a more substantial market presence,” said James H. Roth, chief executive officer, Huron Consulting Group.

[…]

Huron is also revising its 2010 revenue guidance based on the divestiture of the D&I practice and other market factors impacting two reporting segments. When the Company announced second quarter results in July 2010, it provided a 2010 revenue guidance estimate between $600-$620 million.

Based on the divestiture of the D&I practice, the 2010 Company revenue guidance would have been reduced by $35-$40 million. In addition to the D&I divestiture impact, the Company is reducing its annual guidance by an additional $25-$30 million to reflect contract and project delays in two of its service lines: Healthcare and Accounting Advisory.

On the surface, it may look like a good deal for both companies but in reality it feels like Huron was desperate to sell a good revenue-generating unit (19% as of June 30, 2010) and since GT is definitely shopping for acquisitions, the firm was more than happy to take it off their hands.

This acquisition will allow GT access to a sexy area of advisory work (D&I consists of “business disputes, forensic accounting and investigative services, tax controversies and intellectual property disputes”) in key markets and presumably, they can hype the new group internally to expand it and compete for more business.

The only possible downside is that some inside GT may be concerned (we’re speculating here) about taking on more Andersen refugees but ultimately it looks like a good move and the first example of the firm making good on its new strategy. If you’ve got a different opinion, chime in below.

Grant Thornton buys Huron operation [Boston Business Journal]
Huron Consulting Group Announces Divestiture of Disputes & Investigations Practice to Continue Focus on Core Businesses [EON]