Executive Director’s Report Kevin Arnold Executive Director

Executive Director’s Report

Kevin Arnold

Executive Director

To provide a brief update on major developments and Strategic Plan Implementation since November 2010.

Scope

Start Point & Stats

Annual Conference: Dubai

Very successful conference with:• 206 Delegates• 96 accompanying guests• 71 countries represented

Annual Conference: Paris

Biggest conference attendance in Nexia’s history with:• 235 Delegates• 105 accompanying guests• 67 countries represented

Scope

Scale of our Network

Organisational & Financial Growth 2011

• 2011 Fee Income: US$2.33bn +12%• 548 Offices -5.5%• 2,308 Partners

+1.2%• 21,000 + Total Staff +5%

Financial Performance: 2009 - 2011

Major Developments 2011

• Amalgamation of Europe Middle East & Africa• Forum of Firms• Trial of new Annual conference structure• EU Green Paper • Strategic Plan Implementation

Amalgamation of Europe + Middle East & Africa regions• Consistent with international structure of peer

organisations, networks & associations.• Enables Nexia to strengthen resources/capacity of Middle

East & Africa firms through access to European resources on quality/training & education and marketing.

• Continue to maintain regional identity of Europe/Middle East/African groups within larger structure.

• No fee increase planned.• Board approval in principle.• Decision taken at November Council meeting.

Major Developments 2011

Forum of Firms

Forum of Firms

• Extensive debate and members views surveyed• US$64,000 annual contribution• Membership application accepted-effective from

October 2011

The objective of the Forum of Firms (Forum) is to promote consistent and high quality standards of financial reporting and auditing practices worldwide. The Forum brings together firms that perform transnational audits and involves them more closely with the activities of the International Federation of Accountants (IFAC) in audit and other assurance-related areas.

Objective

Full Members• ISAs• IESBA Code of Ethics• ISQC 1• Globally coordinated internal QA reviews• Report annual compliance• Dues

FoF Membership Obligations

• Baker Tilly International • BDO• Constantin Associates Network• Crowe Horwath International• Deloitte Touche Tohmatsu Limited• Ernst & Young Global Limited• Grant Thornton International Ltd• HLB International• IECnet• INPACT Audit Limited• JHI• JPA International

• KPMG International Cooperative• Kreston International • Mazars • Moore Stephens International Limited• Nexia International • PKF International Limited• PricewaterhouseCoopers International• RSM International Limited• Russell Bedford International• SMS Latinoamérica • Talal Abu Ghazaleh & Co.

International• UHY International Limited

FoF Full Members (24)

Major Developments 2011

• Members’ comments in Dubai led to trial of new Annual conference structure

Major Developments 2011

• Trial of new Annual conference structure.• Purpose: reduce time out of office.• Reduce costs without impacting on quality of conference.• Net result is a loss of half a day conference time.

2012 Conference Format

• Annual Conference Washington: 17 – 20 October:– Wed 17th: Committees Meeting– Thurs 18th: Audit Forum/ Board Meeting/Welcome Reception– Fri 19th: Conference Day 1– Sat 20th: Conference Day 2/Gala Dinner

2012 Conference Programme:Regional Conferences

EU Green Paper

• Potential significance to Nexia• Working Group established – to be

broadened• Board meeting January 2012 to review

findings

Major Developments 2011

Strategic Plan Implementation Update

Ambitious-Now Comes the Hard Bit!

• “Been tried before-won’t work”.• Note use of the word: “Consider”; need your support.• No plan survives contact.• Let’s just do it!

Strategic Plan Implementation Update

So, how have we done?

Underpinning Themes-The Bench Mark Questions

• Help members grow their business-organic growth.• Increase international referrals.• Improve members’ benefits-the reasons for joining-

and staying.

Strategic Objective: 1

Encourage members to develop an international focus to their practice and provide them with appropriate resources to apply a consistent Nexia approach to cross border engagements.

Tasks

Provide guidance to Members in developing …..international dimensions to their practice and leveraging the Nexia brand in their marketplace.

• Nexia Collaboration:

– Nexia Nordic– Central & Eastern Europe

Already Completed

Tasks

Develop a portfolio of marketing resources, templates and guidelines that enable Members to implement consistent Nexia brand messaging on cross border engagements and answer the question: “Why Nexia?”

Already Completed

• Increased Marketing Committee Output:– Mobile Application. (over 4,000 downloads)– Re-designed Web Site– E news letter-Nexia Global Insight– Bespoke Market reports– International Marketing Plan Template for members– Corporate video

Strategic Objective: 3

Ensure that Nexia maintains a strong presence in key strategic markets and identify opportunities to extend and enhance international coverage where appropriate

Rank Network Fee income ($m)1 Deloitte 26,578.002 PwC 26,569.003 E&Y 21,550.004 KPMG 20,630.005 BDO 5,283.606 RSM International 3,878.907 Grant Thornton 3,673.008 Baker Tilly 3,065.809 Crowe Horwath 2,729.0010 PKF 2,449.4011 Moore Stephens 2,151.1012 Nexia 2,101.0013 HLB 1,692.0014 Kreston 1,673.0015 Mazars 1,185.6016 UHY 648.4017 Russell Bedford 376.0018 ECOVIS 258.6019 IECnet/CPA-USA/EPR 119.1020 Reanda International 61.5021 SMS Latinoamerica 53.7022 UC&CS America 24.90

Network Positioning

Country Position

Australia 15th

China 10th

Japan 11th

South Korea 7th

France 14th

Germany 6th

Italy 17th

Netherlands 10th

Poland 19th

Russia 10th

South Africa 12th

Spain 11th

Turkey 1st*

UK 7th

Canada 14th

Mexico 7th

U.S.A. 17th

Brazil 14th

Nexia Firms National Positioning

Regional Composition: 2011

Scope

Improving Presence

More aggressive-proactive approach needed

Membership Gains 2011• Brazil• Luxembourg• Nicaragua• Italy • Philippines• Botswana• Switzerland

Membership Gains 2011• Togo• Angola• Australia

Tasks

Direct particular member firms to target cities in which there is a need for a member, making them responsible for recruiting there. If necessary, being prepared to fund selective recruitment.

Strategic Objective: 4

Raise the level of confidence between members by benchmarking and monitoring required standards of performance in relation to membership obligations.

Tasks

Develop, implement and maintain a system for monitoring and reporting member compliance.

Obligations of Membership• Category One: Failure to comply will lead to Board

review. Each case considered on merit but the board retains the right to expel the firm from membership.

• Category Two: Important but do not impact upon other Member Firms to the same degree as Category One.

• Data base established and performance record reviewed regularly by Executive Director and Regional Chairs.

• Performance record reviewed each year by Board of Directors, regular non-compliance could lead to expulsion.

Non Compliant Firm Procedure

Member Firm CATEGORY 1 OBLIGATIONS CAT. 2 OBLIGATIONS

Payment of Fees

Amount of Debt

QCR

Acceptance

Annual Survey

Membership Criteria

Effectiv

e Communication

Complaint

s

Regional Conference

Annual Conference

Web Site &

Stationery

Web Site Director

y

Input to

Nexia

Publications Total Score

xxxxxxxxxxxxxxxxx 3   3 3 -1 -1 3 -1 3 3 -1 3 17

xxxxxxxxxxxxxxxxx 3   -1 3 3 -1 3 -1 3 3 -1 3 17

xxxxxxxxxxxxxxxxx -1 7,834.92 3 3 3 -1 3 -1 -1 -1 3 3 13

xxxxxxxxxxxxxxxxx 3   -1 -1 2 3 3 3 3 -2 -1 -1 11

xxxxxxxxxxxxxxxxx 3   -1 -1 2 3 3 3 -1 -2 -1 3 11

xxxxxxxxxxxxxxxxx 3   -1 3 2 3 3 -1 -1 -2 -1 3 11

xxxxxxxxxxxxxxxxx 3   -1 3 2 3 3 3 -1 -2 -1 -1 11

xxxxxxxxxxxxxxxxx 3   -1 3 -1 -1 -1 -1 3 3 -1 3 9

xxxxxxxxxxxxxxxxx 3   -1 3 -1 3 -1 -1 -1 3 -1 3 9

xxxxxxxxxxxxxxxxx -1 2,678 -1 -1 2 -1 3 -1 3 3 -1 3 8

xxxxxxxxxxxxxxxxx 3   3 -1 2 -1 3 -1 -1 -1 -1 3 8

xxxxxxxxxxxxxxxxx 3   3 -1 2 -1 3 -1 -1 -1 -1 3 8

xxxxxxxxxxxxxxxxx 3   -1 -1 2 -1 3 -1 3 -1 -1 3 8

xxxxxxxxxxxxxxxxx -1 2,582 -1 -1 2 3 3 -1 -1 -1 3 3 8

xxxxxxxxxxxxxxxxx 3   -1 -1 2 3 3 -1 -1 3 -1 -1 8

xxxxxxxxxxxxxxxxx -1 3,008 -1 3 2 3 3 -1 -1 3 -1 -1 8

xxxxxxxxxxxxxxxxx -1 3,711.00 -1 3 3 -1 3 3 3 -2 -1 -1 8

xxxxxxxxxxxxxxxxx 3   3 -1 2 -1 3 -1 -1 -2 -1 3 7

xxxxxxxxxxxxxxxxx 3   -1 -1 2 3 3 -1 -1 -2 -1 3 7

xxxxxxxxxxxxxxxxx -1 18,847.01 3 -1 3 -1 3 -1 -1 -1 -1 3 5

xxxxxxxxxxxxxxxxx -1 2,000 3 -1 2 -1 3 -1 -1 -1 -1 3 4

xxxxxxxxxxxxxxxxx -1 2,006 -1 3 2 -1 3 -1 -1 -1 -1 3 4

xxxxxxxxxxxxxxxxx -1 2,000 3 -1 2 3 3 -1 -1 -2 -1 -1 3

Why is it important?

• Defines quality in broader sense.• Objective basis to terminate membership.• Sends a message from the board.• Develops confidence between members.

• Purpose:– Encourage– Raise quality– Confidence Building between Member firms to

increase referrals.

Non Compliant Firm Procedure

Tasks

Ensure that there is a rigorous set of procedures and guidelines governing Nexia’s internal operations and its interaction with Members.

• Greater transparency.• Approved by Board of Directors.• Form the basis of our Compliance requirements.

Nexia Operating Procedures

• Criteria for Membership.• Responsibilities of Contact Partners.• International referral work between firms.• Obligations of Membership.• Expenses Policy.• Un-Budgeted Expenditure.• Role & Constitution of Umbrella Groups.• Meritorious Service award.• Firm of the Year award.

Already Completed

• Meritorious Service– ….normally given to an individual nearing the end of

long service….– ….qualifying period has been significant, but that the

achievements during that service merit special recognition.

Awards

• Firm of the Year– A pro-active ambassador and champion for Nexia

International within their national or international markets.

– Willingness to collaborate/share ideas and expertise with other members….

– Participation/leadership on Nexia committees/interest groups.

– Submission of material/articles which can benefit member firms or the network.

Awards

• Firm of the Year– Attendance and active participation at Nexia

conferences/meetings.– Participation in other ad hoc Nexia activities.

Awards

Awards

• Firm of the Year– Attendance and active participation at Nexia

conferences/meetings.– Participation in other ad hoc Nexia activities.

– A winning firm is not eligible to compete in the two following years

Tasks

Support the development of specialist groups….

Specialist groups

• Business Advisory Group.• Global Tax Group.• Private Wealth Group.• IT & Internal Services Group (?)• Lawyers Group(?)

Specialist groups

• Great opportunity to increase business. • Need support.• Global organisations best developed from bottom up.

Tasks

• Develop a Charter for Umbrella Groups which would outline the Board’s expectations.– Done

• Hold a centrally funded Umbrella Chairmen’s meeting at least once every two years.– Meeting to be held in London 14 – 16 March 2012

Strategic Objective: 6

Encourage referral business flows across the network and support collaboration between members.

Cross Border Data Base

• Working Group Members:Ian Stone (Nexia Court Australia)Chris Appleton (Smith &Williamson UK)Dan Vanderberg (Rehmann USA)

• Purpose: To identify potential subsidiary clients.• Protocol developed.• Asia Pacific pilot trial.• Great potential.

Strategic Objective: 7

Encourage greater knowledge sharing opportunities amongst Members through the continued development of international technical committees, specialist interest groups and technical training initiatives.

Tasks

Create an International Education, Training and Secondment Committee in order to develop and coordinate the ‘softer’ benefits of membership.

• Now Nexia International People Development Team.• People Development Framework.• New Manager & Senior Manager Courses.• New Partner Course.• IFRS Training.• Secondments-Publicise and Evaluate.• People Development Brochure.

International Training & Secondments Committee - Output

Tasks

Consider the creation of an IFRS Help Desk.

Tasks

Consider the creation of an IFRS Help Desk.

IFRS Initiative-Christian Fuchs-Ebner Stolz

Tasks

Consider and review the level of secretariat support required to facilitate and improve greater knowledge sharing and specialist committee delivery.

Welcome Mike AdamsNexia International’s Tax Director

Strategic Plan – Some Realities

• Full time employees:• Crowe Howarth (No 9): 25• PKF(No 11): 20• HLB (No 12): 22• DFK (No 20): 14• Nexia – 10. (International plus Europe & Australia)

Strategic Plan Implementation Update

So, how have we done?

Strategic Plan Implementation Update

Achieved much but must maintain the momentum.

Any Questions?