BDO International

The world of BDO

Enhancing the credibility of our profession has to be a prime objective for any public accounting organisation. The potential damage to reputation arising from litigation cannot be understated. In recent years, several high prole court cases within the accounting arena have highlighted the risks of litigation creep, as well as the liability attachment from litigation that can affect the rms belonging to global accounting networks. BDO, in common with other organisations, has had to adapt to the changing environment and regulatory requirements. In the interests of transparency, the following pages outline the naming structure of the world wide BDO International network, as well as its operational methods and procedures.

Its all in a name

In 2004 and 2005, IFAC, the European Commission and the Forum of Firms debated at length the denition of network and network rm, noting the varied denitions used throughout the industry. Of overwhelming importance is the legal and factual distinction between the central coordinating function, the Member Firms, and the network as a whole. At BDO, there are clear directives as to the structures and terminology relating to the BDO International network, its Member Firms, and the Global Coordination Ofce in Brussels. It is also evident what actions are required of Member Firms in order to protect the BDO brand and all its constituent parts. BDO International is the name used to designate the world wide network and the name by which the network is known. There is no legal entity of this name and it delivers no services. BDO is the brand name for the BDO International network, and all BDO Member Firms. All BDO Member Firm client engagements whether for domestic work, referred work from other rms in the network, or international work sourced from non-BDO sources - are signed in the name of the local BDO Member Firm. All BDO Member Firm names are required to contain the BDO acronym followed by a local name, unless prohibited by local laws or regulations. The network is coordinated by BDO Global Coordination B.V., incorporated in the Netherlands, with an ofce in Brussels, Belgium, where the Global Coordination Ofce is located. This structure protects the integrity of the distinction between Member Firms activities and the coordination structures of the network.

How does BDO work ?

BDO International is a world wide network of public accounting rms, called BDO Member Firms, serving international clients. Each BDO Member Firm is an independent legal entity in its own country. BDO Global Coordination B.V., managed by the Executive, is tasked with coordinating the affairs of the network. BDO Global Coordination B.V. does not provide any professional services: this is the sole preserve of the BDO Member Firms.

The networks governing structure

Each Member Firm has

Funding
The cost of coordinating the network is funded by the BDO Member Firms. The cost recovery is budget-, not protbased, and nanced by a formula related to the size and network performance of the individual rms.

Member Firms

representation on the Council, which approves

Council

budgets matters,

and

nancial the

appoints

Internal collaboration
BDOs guiding principle of internal collaboration is upheld by a common methodology and unied service delivery. The networks services and activities are guided by international committees, which set the framework for quality control throughout the network, and the implementation of all new standards directives. BDO Member Firms are committed to effective knowledge sharing, and the international committees and intranet communities, as well as client extranets, aim to keep all personnel ahead of industry developments in order to give clients the best possible trans-national advice.

Policy Board

Executive

Council of Regions

Policy Board and sets the rules of the Member Firm Agreement.

The Policy Board is elected by the Council from the networks largest rms and sets policies and priorities for the network and BDO Member Firms. The Council of Regions is made up of Senior Partners from the regions. Together, they lead BDOs strategic approach and uphold the networks commitment to quality and innovation.

BDO Compass 3, for example, is software that assists in planning and carrying out audits in accordance with the principles of the BDO Audit Manual. It has been written by BDO exclusively for the use of partners and staff of BDO Member Firms. The software, templates and training courses are designed by the International Accounting & Auditing Steering Committee, with all related tools being downloadable from its community on the global intranet. The International Tax Steering Committee develops best practice and expert service capabilities via its centres of excellence, including transfer pricing, expatriate and private client services, value added tax and tax planning. The International Specialist Advisory Services Committee groups all activities in the areas of corporate nance, business consulting, business recovery and forensic services. Similarly, the International Risk Management Committee promotes awareness of the utmost importance of risk management within BDO Member Firms. Its online community includes a Regulatory Affairs section detailing, amongst other issues, recent regulatory alerts.

In recent years, the International Marketing Committee has been involved in the development of the international brand strategy, and is now concentrating on the delivery of international marketing initiatives and branding tools to raise the prole of BDO Member Firms, and in particular of their trans-national capabilities. The International Training & Human Resources Committee is primarily active in designing training courses and seminars, organising conferences globally for partners, and regionally or locally for managers and employees. It also promotes and monitors all international secondments. This culture of internal partnering enables BDO partners and staff to give the best possible advice to clients transnationally, and ensures the mutual success of both their clients and of the network. BDO International is also represented on a large number of inter-rm committees and working groups, including the Global Public Policy Committee (GPPC), the Regulatory and Standards Working Groups, the PCAOB Working Group, the Forum of Firms and the Transnational Auditing Committee, as well as several Large Firms IFRS sub-groups.

BDO Member Firms

Member Firm rights & obligations
Membership of the network confers certain rights on BDO Member Firms, as well as certain obligations. Rights include the use of the BDO brand, including the network name and logo, the ability to refer work to and from other BDO Member Firms and a wide range of resources (manuals, software). Obligations include the capability to offer the minimum core services, including accounting and auditing, taxation and specialist advisory services, and a high standard of professionalism and ethics.

Quality assurance
An active Compliance Monitor and Quality Assurance Review Programme encourage all BDO Member Firms to use their best efforts to comply with the quality criteria adopted by the network. Furthermore, each Member Firm is required from time to time to submit to a review of its local and referred professional work, and of its structure and governance. The BDO Quality Assurance Review Programme promotes the minimum quality standards applicable throughout the network and develops tools for BDO Member Firm assessments, which are performed on a cyclical basis.

Independence
All BDO Member Firms are required to adhere, at a minimum, to the ethical requirements of the International Federation of Accountants (IFAC) Code of Ethics for Professional Accountants, and to have a clear understanding of the critical importance of maintaining auditor independence on a global basis. BDO Member Firms are also bound by their national ethical guidelines, some of which may differ from, or go further than, the IFAC rules. All are aware of the need to be attentive to the independence rules of other BDO Member Firm countries, and an online database of national guidance on the global intranet provides up to date information.

Who can join ?

In any one territory, the competition to join the BDO International network ensures high standards. Considerable importance is placed on the value of origins, and BDO Member Firms are expected to focus continually on expanding local knowledge. Amongst other criteria, entities joining BDO must demonstrate local distinctiveness and expertise, as well as a proven reputation with domestic professional bodies and representation in appropriate commercial, nancial and industrial centres locally. Candidates must also agree to BDOs common methodology and quality control directives. Other joining criteria range from proper licensing by the regulatory bodies, succession security to ensure the continuity of the rm at partner level and maintaining BDOs mandated professional standards in each practice area, to presenting a professional image to the marketplace which is in keeping with the strategic goals, vision and culture of BDO International.

Working with BDO

BDO International is a network of independent, locally distinctive rms with global capabilities, serving both local clients and those with trans-national operations. Wherever you are in the world, BDO is close to your business. Using a deep understanding of clients local business needs, the networks objective is to remain the expert in every market. Clients work with individual BDO Member Firms, who will sign engagement letters and reports in their own name. When operating trans-nationally, the clients of a BDO Member Firm are served by distinct Member Firms in other countries, under the coordination of both the referring and receiving International Liaison Partners. If practical and economically justiable, a client extranet will be set up for the day to day coordination and running of the assignment, and for liaison between the network and the client in foreign locations. BDOs global intranet is used for internal communications. In this way the BDO network promotes the use of common methods and consistent service delivery world wide, while advancing compliance with national regulations and legal requirements, in proximity with the clients business, and in the local language. Our beliefs drive our actions, and in every sphere of activity, in every BDO Member Firm, it is evident that openness, responsibility and standards matter.