Monthly Archives: February 2011

Inspired by India

I just returned from a trip to Mumbai where I spent two days exploring the growth opportunities in India with the leaders of our member firm, RSM Astute Consulting*. Mumbai is very well known for its high energy and excitement and this trip certainly proved it no different. The positive energy generated from the people, in the offices and on the streets, is unbridled. One cannot help but leave feeling reinvigorated. The depth of the topics discussed, the forward thinking apparent in our discussions, and the patient and persistent manner in which plans are executed are all inspiring.   
Throughout my 15 years with RSM, I have probably travelled to India at least once per year and through these years, met with many of the accounting professionals and business leaders in all of the major Indian cities. There certainly exists a depth of culture that pervades all aspects of life and an entrepreneurial spirit that is clearly prevalent. There are many Indian business success stories which we have all read about.   
The country, as with many others globally, is facing some challenges – inflation has been on the rise with food prices most affected, the newspapers are full of reports on uncertainty with regard to corporate governance investigations, and an overhaul of the tax system at a state and national level is being discussed. The GDP growth rate continues to be high, projected at 8.4%, and there are no doubt challenges and pressures in order for the rate to be sustained at a level which provides for the vast population. These are being addressed at the national level and it was clear to me during my visit that there is a seriousness about ensuring India is a leader on the world stage.   
The opportunities in India are there – the business success stories will, no doubt, continue to develop and even more world business leaders will rise. It really doesn’t get more exciting than this.   
*RSM Astute Group, with over 800 personnel, is collectively the fifth largest firm in India.

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Filed under Asia Pacific, Economy, People

Time for gender equality at the top

Lord Davies, former chief executive of Standard Chartered, will tomorrow (24 February) announce recommendations resulting from his inquiry into barriers preventing women from taking top jobs in the UK boardroom.  He is expected to call for a fifth of FTSE 350 board members to be women by 2013, rising to a quarter by 2015. Meanwhile, European Union Justice Commissioner Viviane Reding has targeted that 30% of board directors will be women by 2015 and 40% by 2020. To achieve this it is possible businesses will be faced with the enforcement of quotas.

Is this going to be a massive shift?

Only 12.5% of directors in FTSE 100 companies are women. This figure hasn’t changed in the last three years.  In the US, women currently hold 15.7 percent of board seats at Fortune 500 companies. In both 2009 and 2010, more than 50 percent of these companies had at least two women board directors, yet more than 10 percent had no women serving on their boards.

There is an issue and it is right that it is being addressed.  At the same time it is important to recognise that there has been great progress. Female executives now lead some of the world’s most recognisable companies and institutions  – Carol Bartz at Yahoo, Irene B. Rosenfeld at Kraft, Andrea Jung at Avon, and until recently Dame Clara Hurse at the London Stock Exchange. On the global political stage, we have female leaders in major markets – Germany, Argentina and Brazil.

When I was appointed in 2005, I was the only female chief executive of a top ten global accounting network and so I am often asked my views on gender in the accounting profession.  At RSM International we have firms all over the world and in most countries, the sector continues to be dominated by men, in terms of numbers. In many large markets, over 50% of accounting recruits are women yet we are nowhere near 50% in terms of partners.  Progress has certainly been made with regard to retention of women but more remains to be done.  
Across all sectors, I believe there is no one-size-fits-all global solution.  While quotas may work in some countries and sectors, others would benefit from more work in investigating retention rates and this is likely to include analysing perceptions and attitudes within companies towards women at the top.  I have always said that in business, results matter and getting the right people, male or female, is more important than quotas.  But perhaps a little encouragement, like those being explored through the Lord Davies inquiry, would go a long way in driving change.

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Filed under Diversity, HR, Management, People

Progress in Panama

There is no doubt that business in the Latin American region is exciting at the moment, as large global businesses are jockeying to invest in the growth markets spread across the continent.

Just take a look, for example, at that narrow body of land separating the Atlantic from the Pacific at the upper end of South America.  This is where a huge percentage of the world’s goods in transit already pass through the Panama Canal. 

Built at the end of the 19th century, the Canal is now undergoing a very impressive $5.25 billion expansion to accommodate more and much larger modern cargo ships that currently must travel around Cape Horn at the southern tip of South America to reach their destinations.

Now add to that the recent Sino-Colombian agreement for a new railway across Colombia linking the Atlantic and Pacific. The proposed 220 km railway, sponsored by the Chinese, is on the drawing board.

The textbook issue for large infrastructure projects is whether there will be a strong-enough demand, and whether a trans-Colombian railway will really be more efficient and attractive than transiting via the Canal. But there can be no doubt that this vast increase in infrastructure will stimulate commerce and result in enormous growth in logistical and related services and suppliers in a concentrated zone that heretofore has been a tropical area of limited economic focus.

 In Panama RSM International has a new correspondent firm that is well-suited to serve the needs of global companies today and in the future. De Levante y Asociados, based in Panama City, was established in the 1950’s, and has evolved into a modern and sophisticated firm. They have the depth and breadth of experience which is essential for companies looking to establish or expand in this exciting region.

Panama and its canal will remain crucial to the health of the world economy and free flowing trade. I can foresee the increased demand in global trade will probably mean both the Canal and the trans-Colombian railroad will be kept busy in years to come.

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Filed under Latin America, RSM Regions

Challenging Audit Market Dominance

There is a growing consensus amongst government, regulators and the profession that, amongst other issues, something needs to be done about market concentration. I support measured change to allow RSM and other networks to thrive and compete for market share. It would be a mistake to enforce punitive measures against the largest firms, who have been successful over many years in developing services for large listed companies. However, the present level of market concentration reduces choice and in most major economies has created a degree of systemic risk to their capital markets. Ultimately it is about what is good for clients.

I was pleased to hear yesterday Commissioner Barnier confirm that the status quo is not an option. It is clear from the proposals announced that the EC is determined to actively tackle market concentration. This should be supported by our profession globally. Commissioner Barnier’s proposals in the areas of mandatory periodic competitive tendering, possible ceilings on market share and the introduction of joint audits do go beyond our response to the Green Paper. However, I welcome the debate within the profession as these proposals are considered in the context of what is in the public interest.

I am concerned about further restrictions on the provision of non-audit services and the introduction of mandatory rotation of auditors. The IFAC Code of Ethics already places appropriate restrictions on the provision of non-audit services and mandatory rotation of auditors may merely result in audits rotating between the largest firms. I would rather see international consistency in line with the IFAC Code of Ethics and transparency over the regular assessment by audit committees of audit appointments.

I would also like to see an end to lenders using restrictive covenants to limit choice to the largest firms and consideration be given to requiring regulatory approval for further acquisitions of established audit firms within the EU by the largest firms, in order to protect against further market concentration.

Audit networks like RSM International have the global reach, resources and technical capability, including common audit methodology, needed to serve larger listed companies.  Our member firms and similar networks should no longer have to fight what is essentially a two tier system, which significantly favours the largest firms. 

It is vital that the momentum for change that has been generated by the Green Paper consultation not be lost and RSM International will look to be actively involved in the further development of the EC proposals.

To read the full speech given by Commissioner Barnier please click here.

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Filed under Audit Proposals, EU, Europe, Technical News

Never a dull moment…

I count myself lucky to have chosen a career where there is never a dull moment. My journey started in California in the US where I qualified as a professional accountant. However, I found the international side of the business fascinating and I soon found myself packing my bags for London to begin the next phase on my career journey at RSM International. After 15 years, I now call London home and I am the proud holder of a British passport.

As CEO of RSM International, with headquarters  in the heart of the City of London, I interact on a daily basis with my RSM colleagues from every corner of the globe. The members in Asia Pacific are the first stop over breakfast, during lunch I am conversing with our European neighbours and Middle Eastern and African firms. In the afternoon my attention turns to our members in North and Latin America. They say that variety is the spice of life, and working in international accountancy could not be more varied!

RSM International is a diverse and ever-changing organisation. I never know what challenges, activities, tasks and joys it will bring to my doorstep. It’s this excitement and intrigue that makes my journey, and that of all the partners and staff within RSM member firms, so rewarding.

Our business and economic landscape is also changing. This week we proved as an industry that we can work together to benefit clients. Working closely with Jeremy Newman of BDO International, Patrick de Cambourg of Mazars and Ed Nausbaum of Grant Thornton International, we lent our voices of support  for the EU Commission’s Greenpaper on ‘Audit Policy: Lessons from the Crisis’. Please take a look at our joint statement here. ‘No change’ is not an option, however uncomfortable it may be.

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Filed under Management, People, RSM Regions

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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Filed under RSM Regions