Welcome to My RSM World

As CEO of RSM,  I’m always on the move working with RSM member firms in over 100 countries around the world. My travel gives me a unique perspective on both local challenges facing businesses and global trends shaping their future in a shifting economic landscape.

International accountancy has always been a fast-paced, exciting and rewarding industry. As technical as it may seem, our industry is also very much a people business. Through this blog, I plan on sharing with you  insights from my colleagues, our clients and other industry leaders which I hope you find interesting. And of course, I will keep you updated with news from within the RSM World.

I hope you enjoy reading.

Jean Stephens

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RSM welcomes Baker Tilly in the UK

I was delighted to announce earlier this morning to my RSM colleagues around the world, and to the media, that Baker Tilly, the 7th largest firm in the UK, is joining the RSM network. As RSM continues its drive to be the foremost provider of audit, tax and advisory services to internationally dynamic clients we are focused on securing the strongest representation in all markets globally to ensure we are best positioned to meet client needs.


The UK is a critical market for RSM and following the acquisition of our previous member firm, RSM Tenon, by Baker Tilly, this gave both Baker Tilly and RSM the opportunity to begin talks to see if there was a potential fit between us. Naturally, these discussions were in-depth and the progression over the last few months has included full due diligence on both sides as well as visits by Baker Tilly’s leadership to RSM members in Asia Pacific, Latin America, Europe, Africa and the US.

Baker Tilly shares the rigorous commitment to quality that distinguishes our network. There is a clear alignment with RSM’s aims and strategic vision, and the firm has the capabilities and expertise to support RSM clients worldwide.

I am confident that their admission will be of significant benefit to our clients, people and businesses worldwide and I very much look forward to working with them.

To read the full press release, click here.

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Saudi Arabia: diversification and entrepreneurialism

I was recently fortunate enough to visit The Kingdom of Saudi Arabia for the first time. Our member firm, Al Sabti & Bannaga, is based in the capital Riyadh and the trip was an important opportunity to learn more about the Saudi economy as well as potential future opportunities for RSM International.

Saudi Arabia is the biggest Arab economy, with the second largest oil reserves in the world, accounting for 90 per cent of its fiscal revenue (including 95 per cent of exports and 70 per cent of government revenue). It also has an incredibly large and young population, with around 27 million people and an average age of 26 years old.

Internationally known for its high-income economy – it has the 19th highest GDP in the world – I was particularly interested to see what was being done about the Kingdom’s youth unemployment problem. Brought about from a lack of proper education and a stagnant private sector which has relied too heavily on foreign workers (Saudi Arabia’s population includes nearly 8.5 million expatriates) I was pleased to learn of initiatives being introduced to boost spending on job training and education, with a particular focus on technical skills needed for the private sector. Indeed, just last week it was announced that UK skills providers have won contracts worth £1bn to run education colleges in Saudi Arabia as part of the Saudi plan to build 100 new colleges across the country.

The youth of Saudi are breaking with traditional careers in the public sector as a new wave of entrepreneurialism sweeps the country. As reported in a recent Financial Times article, only 43 per cent of Gulf Cooperation Council respondents preferred a public sector job, down from 64 per cent in 2012, with a greater number of young people in the Middle East and North Africa wishing to start businesses.

The Saudi government are also redirecting their focus for the economy as it looks to attract medium sized businesses and diversify beyond the oil industry. Social development and infrastructure projects, introduced to advance Saudi Arabia’s economy, have invested capital into its scientific and engineering sector, further cementing its prominence in these sectors. Nowhere has this been felt more than in Saudi’s second-largest city of Jeddah, (population 5.1 million), which has benefitted greatly from the government’s efforts. Keen to diversify beyond the capital Riyadh, the government has spent $373 billion since 2010 on establishing six “economic cities” in different regions of the country to promote foreign investment, and create new business and entrepreneurial hubs.

Change is happening quickly in Saudi and it is no surprise that the World Bank rates the country as the easiest place to do business in the entire MENA region. We at RSM International are keen to highlight this and look forward to seeing further business growth develop, both for our member firm and the country.


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Islamic Accounting Standards – bridging differences between accounting practices in Islamic and conventional finance

There has been much in the press recently about aspects of Shari’ah law being implemented in the UK and ahead of the UK Islamic Finance Investment Group Summit in London this week, I was reminded of the distance the West has to go in incorporating many Islamic principles.

This is certainly true in accounting. For some time, international accounting standards have been set by Anglo-American governing bodies, with little consideration given to the principles of Shari’ah or the economics of the Islamic states, in which interest payments and monetary speculation are prohibited.

Until recently, accounting methods adopted by Islamic banks have therefore been largely unregulated, and many Islamic financial institutions have had to develop their own accounting methods for contracts that govern their work. This process is inefficient, usually based on deliberation between the external auditor and management as well as, in many cases, the organisation’s in-house religious supervisors (Shari‘ahSupervisory Board).

I was therefore pleased to see that The International Accounting Standards Board (IASB) met with banks across the Middle-East last week to discuss how to bridge differences between accounting practices in Islamic and conventional finance. The London-based organisation’s International Financial Reporting Standards (IFRS) have a key role to play in major centres for Islamic finance such as Malaysia and Saudi Arabia.

With Islamic member firms in many areas across the world, the RSM network is supportive of a system that allows Muslim finance professionals and institutions to have a greater input into international accounting standards. With the IASB’s recent visit, and summits taking place in London and Dubai this week, the signs are that the industry is moving in the right direction.

For a good introduction into Islamic Finance, please refer to RSM’s Introduction to Islamic Law written by Dahman Awardh Dahman, Managing Partner of RSM Dahman in United Arab Emirates.

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Inspiring change for the women of RSM International

On March 8th 2014, millions of men and women around the world will take part in a range of events, campaigns and dialogues to celebrate the 103rd Global International Women’s Day. This year’s theme – inspiring change – reminds us that to create change and bring about greater equality, both in the work place and throughout our whole lives, requires us to, at the outset, inspire change.

President Barack Obama famously said that “Change will not come if we wait for some other person or some other time” but that “we are the change that we seek.”

When I became CEO of RSM International in 2006, the media coverage suggested that I had ‘broken through another glass ceiling’ by becoming the first female CEO of a top 10 global accounting network. Indeed, through my experiences as CEO I hope I have been an example to all the women within RSM International that to reach such a role was both possible and attainable.

However, we are now nine years on and I have realised that real change cannot come from another person nor be enforced top-down. Instead it must be something that every individual seeks for themselves, man or woman. As such, here at RSM (and within the profession in general), we are working to inspire change by encouraging women to rise up and not wait for it to take place (be it in the form of quotas or promotions) but to actively work to seize their goals and the roles to which they aspire. To the men and women inspiring change around the world, you inspire us as an organisation and that is what truly breaks a glass ceiling. Happy International Women’s Day.

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Embracing the Mexican wave

The first in a series of RSM blogs on the MINT economies looks at Mexico where collaboration, investment and entrepreneurialism are reaping rewards.

I was recently reminded of the saying by American entrepreneur Jim Rohn, that “for every disciplined effort there is a multiple reward.” On 5th February, the rankings agency Moody’s upgraded Mexico’s sovereign debt, giving it an A-grade rating for the first time in history. In an article in the Financial Times, this promotion to A3 from Baa1 was said to be motivated by reforms taken by President Enrique Peña Nieto that were expected to “strengthen the country’s potential growth prospects and fiscal fundamentals”. In this it appears, Mexico is starting to prove Rohn’s point.

Mexico has embraced a number of free trade policies in recent decades and since taking office on December 1, 2012, President Peña Nieto has acted swiftly to pursue overdue landmark reform. Having suffered a large decrease in FDI in 2012 (down from US$23bn in 2011 to US$15bn), he has worked hard to push through reforms including in telecommunications, energy, banking and tax legislation. Now it seems that Mexico is the Latin American market that investors like most. As Forbes’ Chris Wright states “this is largely as a result of market-friendly reforms and a sense of national momentum under President Enrique Pena Nieto”.

Our own research shows that Mexico has been one of the world’s most entrepreneurial countries; it ranked sixth in our study of 35 countries’ net new business generation in the five years since 2007, with a compound annual growth rate of 6.6%, ahead of the BRICs (5.8%) and the G7 (0.8%).

Further collaboration and investment look to be on the cards for Mexico. Mexico’s Finance and Public Credit Secretariat says it expects the country to attract a record amount of foreign direct investment for 2013 (the first quarter of the year already attracted 40 percent of 2012’s total sum) as investors show greater confidence in the Mexican economy than they have in recent years. Only two weeks after Davos, Pepsico, Nestle and Cisco announced major investments that together totalled more than $7 billion in Mexico.

However, with this increase in FDI starting to bear fruit, it is worth remembering that Mexico’s real potential lies not with exports, but with its internal market of 117 million people that are relatively young. Though half the country are considered to be living below the breadline, by 2050 Goldman Sachs project Mexico’s GDP will have increased by 4%, to $63,149 per capita across a population of 142 million.

We at RSM are very pleased to see these developments and the benefits they are bringing to the people of Mexico. And we are proud that we are part of the growth story with our Mexican member firm, RSM Bogarín, realising strong growth year on year and supporting their clients, both home grown businesses and others who are doing business in Mexico, to realise their potential and bring real economic success. 

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China is tougher but remains a huge opportunity for growth

Much of the debate at Davos last week focused on  how multinationals should rebuild their growth strategies in response to the varying economic dynamics and rates of development experienced across the globe.

Whilst the outlook is a good for the UK, USA and Japan, concern over Europe’s need for economic reform remains – with some provocative commentators even questioning whether the region should be reclassified as an emerging market. Hopes for the newly named ‘MINT’ group (Mexico, Indonesia, Nigeria and Turkey) have got off to a rocky start, dashed by political instability in Turkey and deficit issues in Indonesia.  Belief in the BRIC economies is waning, as Brazil and India tackle massive deficits and investors fear the Chinese gold rush is over – as highlighted by The Economist’s cover story this week, ‘China loses its allure’.

There is no doubt that for global companies, making China (and many other parts of Asia)  work, is not easy.  The Economist points to a range of issues, not least rising costs, and references companies leaving (including Best Buy and Yahoo) and those (such as IBM) that face declining revenues.  And, of course, the economy is slowing, having reached 7.7% last year.

But there are many stories of continuing success, not least at RSM, where we are seeing near double digit growth in Asia-Pacific. This is driven to a large extent by China where,  following a June merger last year to create Ruihua China CPAs, the country’s third largest accounting based network is part of RSM.

The run-away growth rates of the last 30 years, instigated by Deng Xiaoping’s reforms, may become consigned to the history books but China is entering a new, arguably more sustainable, phase of growth.  The big picture is one of great optimism.  In China services are now bigger than manufacturing, middle class wealth and expenditure is growing, and the government’s revolutionary Third Plenum outlined last November set the stage for a slew of economic reforms that will provide incredible business opportunities for western multinationals to sell their ‘know-how’.  As Jim O’Neill highlighted in The Daily Telegraph this weekend, China eclipsed Japan to become the world’s second largest economy – bigger than France, Germany and Italy combined – by the end of 2013. That‘s two years earlier than he had expected.

China is looking west more than ever before.  Outbound growth, including through M&A and strategic acquisitions, is on the rise.  So too is the demand for western education.  According to the Huron Report, published during Davos week, Britain is now the favoured country for the secondary education of wealthy Chinese, with the US in second position.  The implications are that, in time, we could see a significant increase in Chinese executives with strategic positions in western organisations. That is very exciting.

China is a long-term game.  It’s more complex and tougher than before.  But optimism about the country should not be waning and the allure should not be lost. 

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Celebrating European Business Success

I would like to congratulate the 100 businesses from across Europe that have been announced as the finalists and Ruban d’Honneur recipients in the 2013/14 European Business Awards. The finalists were chosen from 375 National Champions by an esteemed panel of judges made up of European business and political leaders, academics and entrepreneurs. The recipients in each category will go forward to the next round consisting of face-to-face interviews with the judging panel who will decide on the overall category winners to be announced in May. These businesses are shining examples of European business success and I wish them the well in the next and final round.

In addition, my congratulations also go to the 30 companies who have been named as their country’s National Public Champion in the separate public vote. A staggering 70,980 votes were cast, more than double the amount of the previous programme – so this is an amazing achievement for the winners and the programme itself – it is great to see so many people engage with the awards. The second phase of public voting, which is now open and runs until 25th March, will see all 30 National Public Champions, representing 30 countries across Europe, compete to become the overall European Public Champion. The winners of this and each overall category winner will be announced at a Gala Event in Athens in May.

RSM is the main sponsor of the European Business Awards 2013/14 and sponsor of the RSM Entrepreneur of the Year category. We have been associated with this specific category since 2007 and as such I, as CEO, have had the privilege to meet and work with some of the past winners over the years – all of whom have shown great business acumen, knowledge and above all passion for their business – I have learned a lot from each of them. And so, my special congratulations go to this year’s RSM Entrepreneur of the Year finalists. They are:

Czech Republic Kofola ČeskoSlovensko a.s.
France Easybike
Greece Epsilon Net SA
Greece ONEX S.A.
Ireland AirSpeed Telecom
Italy Grom
Sweden Hövding Sverige AB
Turkey Helvacızade Food Pharma & Chemicals Inc.
United Kingdom The Gym Group

Visit www.businessawardseurope.com to view the list of Ruban d’Honneurs and National Public Champions by country.

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