Today in boilerplate press releases, MedAssets dropped BDO as its auditor for the bigger and bluer KPMG and the CFO punted on giving a real reason as to why.
BDO
We’re Not Convinced That CFOs Mean What They Say When They Switch Audit Firms for No Apparent Reason
By Caleb Newquist
Oral arguments for BDO’s appeal of the verdict in the Banco Espirito fraud case were this past Tuesday, the 16th, in front of the Florida 3rd District Court of Appeal in Miami.
If you’re not familiar with this case, we’ll catch you up: Banco Espirito Santo International Ltd., Banco Espirito Santo S.A., and ESB Finance all invested in E.S. Bankest L.C. BDO served as the auditor of Bankest. Crazy massive fraud (bogus accounts receivable) was going on at Bankest that was discovered by Banco Esprito. Bankest went bankrupt, their executives went to jail, Banco Espirito lost millions.
Advertising a professional service company is a challenge for ad agencies. First, the subject is not all that interesting, except maybe to the people who work there, their families, and their clients. And second, the differences from one company to another are minute. What you can say about one CPA or law firm is pretty much the same as another. You can’t advertise a firm as doing something better, the way Tide claims to clean better or Crest to whiten teeth better.
What can marketers do when they can’t make a claim that they are better? Why, write a jingle, like Coke or Pepsi of course. However, professional service companies have to maintain some gravitas. Schmaltz and accountants would be like wearing shorts and flip-flops to a client meeting.
We’re presenting some analysis of two current accounting firm ad campaigns, starting with BDO and tackling Grant Thornton this afternoon.
Analysis and videos, after the jump
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Let’s Speculate as to Why Certain Accounting Firms Weren’t on the Fortune 100 List
By Caleb Newquist
By now you’ve digested the Fortune list to the point of nausea, so we’ll dispense with rehashing the firms that we covered last week.
What we do want to address is the obvious absence of Grant Thornton, BDO, and RSM on this year’s list. Hell, they aren’t on any of the lists going back to 2006. Are these omissions meant to be a thumb in the eye to these storied firms?
Perhaps they blew their lobbying budgets on the BusinessWeek lists? OR maybe — GASP — they just don’t GAF?
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BDO Seidman Waited to Change Their Name Because They Had a Really Special Birthday Coming Up
By Caleb Newquist
When we saw the BDO rebranding story this week we were perplexed because we told you about this new effort to popularize the Global 6 in OCTOBER.
Come to find out that 2010 will mark the 100th birthday of BDO Seidman so there was no rush to change the name back on October 1 with the less-special firms because A) all the firm’s clients were already calling them ‘BDO’ and the change wasn’t really ness, and B) they couldn’t cancel all the festivities they had planned:
“The adoption of the single ‘BDO’ brand name reinforces our commitment to the BDO international network, even as we celebrate our firm’s centennial here in the United States,” said BDO (U.S.) CEO Jack Weisbaum in a statement. He acknowledged that many of the firm’s clients have been referring to the firm as BDO for years anyway.
BDO plans to conduct a year-long celebration of the firm’s founding by Maximillian L. Seidman in 1910, including historical podcasts on the firm’s intranet, a centennial video tracking the firm’s progress over the past century, and celebrations at the BDO Biennial and BDO Partner Meetings in November.
Gosh that does sound fun. We totally get it now.
Plus, the American firm still has to figure out how to pay $521 million to Banco Espirito. Going out at an even 100 years would put a nice cap on things.
BDO Seidman Rebrands as ‘BDO’ [Web CPA]
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BDO Announces Global Revenues, Reminds Everyone of the Entity Structure
By Caleb Newquist
BDO International Global Coordination B.V. announced their global revenue results today of just a smidge over $5 billion. This represents a drop of 4.5% compared to the firm’s prior fiscal year end of September 30.
BDO Global CEO — and infrequent blogger — Jeremy Newman would like everyone to know that he wasn’t dreaming when he stated that some financing agreements included “Big 4 only” clauses.
Apparently Newman was thought to be a little Patrick Byrne-ish on this particular point:
These are views that I have been expressing for some years, although many have questioned the prevalence of such clauses and indeed some have sought to deny their existence.
It was comforting therefore for me to read in the report published by the UK’s Financial Reporting Council in October 2009 entitled ‘Choice in the UK Audit Market’ that reference was made to restrictions in loan covenants. The report from the FRC noted:
‘..it is too early to determine how widespread such obligations are; however, the FRC continues to receive examples of banks imposing loan covenants with ‘Big 4 only’ clauses, including one which imposed a higher rate of interest if the borrowing company chose a non-Big 4 auditor.’
Surely there is now sufficient evidence to recognise that such clauses are a potential constraint on choice in the market place and regulators should be urged to ban them.
So despite the lack of evidence that these obligations are widespread, this remains a matter of “urgency,” according to Newman. There are examples, people. That should be enough for you. The man is trying to build a Global 6 firm after all. Kindly throw in a little additional bank regulation to help him out.
BDO’s managing partner Simon Michaels is emphatic. Fee income might be down 5% and profits down too, but underlying performance has been “solid”.
“When you look across the international networks, and across domestic firms, that is a pretty solid performance. Our national turnover has seen a modest contraction over the past year but that is purely as a result of lower levels of transactional and other one-off assignments.”
Plus there’s this: “In the end the firm made 10% of partners redundant [i.e. laid off] and around 8% of the UK workforce.”
Still going with solid?
BDO is done messing around. Having watched Grant Thornton fail miserably at trying to get the bean counter universe to embrace “Global 6 Accounting Organization”, the firm, with the help of global CEO Jeremy Newman’s blog, are stepping it up a notch.
According to Newman’s post for today and Accountancy Age, all BDO firms are now operating under the name ‘BDO’ rather than, for example, ‘BDO Seidman’ for the U.S. firm and ‘BDO Stoy Howard’ in the UK.
The reason for the name change, according to the one managing partner:
Continued, after the jump
We’d like to think that we encourage free and open discussion here. Everyone is welcome to join the conversation.
And by everyone, we mean if Dennis Nally, Tim Flynn et al. were to tell us in the comments how we deserved a life sentence of footing the Brooklyn phonebook because of our butchering of the English language, we’d be thrilled. Sadly, this is probably nothing more than a pipe dream.
Jeremy Newman, the CEO of BDO International, is by far the closest to fulfilling this dream. J. New, you’ll be interested to know, has his very own blog.
More, after the jump
