Editor: Would you tell our readers about your professional background and experience?
Ginman: I have been a partner for 20 years focusing on the technical side and quality assurance. During the last seven years, I have been heavily involved in the development of our international network, primarily responsible for our quality assurance program and developing standards in the network.
Editor: Please describe the Baker Tilly International network.
Ginman: The network has combined revenues of $2.3 billion U.S. dollars as of last year. That makes us the eighth largest network in terms of combined revenues. We are represented in 93 countries by 126 member firms and 22,000 professionals.
Editor: What services do Baker Tilly International members provide? What geographic locations are covered by the network?
Ginman: Our members' core services are accounting, audit and taxation; many of our members have developed into consulting firms. A growth area has been corporate governance and risk management services. Section 404 of Sarbanes-Oxley generates significant work for our U.S. and other members.
With coverage in over 90 countries, the network is represented in the majority of the world's key business centers. If a member firm has a client that needs to be serviced in a country where we are not currently represented, we try and identify a firm that is suitable. We are not interested in adding firms to the network simply so that we can say we are in more countries or have more members. Where the network is represented is driven by where our member firms and their clients need us to be, and it is essential to find quality firms that can work to the same international standards.
In terms of key developing locations, we are in India and China - two of the fastest developing economies. In India firms cannot promote themselves as being part of an international network. All our members are separate independent firms in each country, but in India they have to be very careful about how they describe their connection with the international network.
Editor: What criteria are used to determine whether a firm can join the Baker Tilly International network?
Ginman: All applicants are subject to an in-depth due diligence process. Once admitted, all members are subject to quality assurance monitoring. Our procedures are the same for all members in all locations. We assess and monitor the quality of the work being done by member firms in smaller countries the same as we do in Germany, France, or the U.S., for example.
Editor: Are there any special problems in China?
Ginman: China is developing at an incredibly rapid pace. One of the difficulties is the shortage of suitably qualified accountants to keep up with the demands being placed on the profession. Also, the Chinese government is pushing for accounting and auditing standards to be improved and a complete overhaul of the standards in both areas is under way. We have a very good member firm in China and are working closely with them to help them meet these challenges. We have appointed a Director of China Services as our representative in Beijing to assist them and their clients in working with our member firms outside China. He is also helping our member firms understand the issues of doing business in China.
Editor: Do the firms have someone who is fluent in English so that there is no communication problem?
Ginman: Yes. That is a condition for membership. Every office has someone who speaks English so that communications/meetings can take place in English. If a firm cannot provide this, they will not be admitted to the network.
Editor: What about South Africa?
Ginman: We have representation there. There is a strong profession, which makes its current economic development easier in terms of both accounting and auditing requirements. The profession is much more established in South Africa than China as a result of its history of corporate reporting.
Editor: How does Baker Tilly International ensure the delivery of high quality services with integrity and objectivity?
Ginman: The key is having strict criteria for the admission of members and enforcing these on an ongoing basis. We are engaged in ongoing peer reviews of member firms. We consider all aspects of the firm, including the way it is managed and whether the firm has set up its own procedures to make sure that it offers services that meet our standards. We monitor rigorously. If firms fail to live up to those standards, they cannot be part of the network. We are not frightened of maintaining solid control over standards. There is a strong incentive for firms to keep up because they value being part of our network. Some networks have a "correspondent firm" status where the firm isn't up to full standards for admission. We only have members or non-members. If they do not meet our standards, then they cannot join.
Editor: How does Baker Tilly International give member firms such as Eisner LLP in NYC opportunities to build trust in other member firms so that they are comfortable using them to provide multi-jurisdictional services to their clients?
Ginman: Members rely on the procedures we have to maintain a uniformly high level of quality. Because they have confidence in the system, they feel comfortable in introducing their clients to a firm in another location.
Each year we have regional meetings as well as a world conference. If a member has a client that is looking at an opportunity in another country, these provide an excellent opportunity for the members to meet and discuss how best to deal with the engagement. We have approximately 350 delegates attending this year's world conference. It is an important part of the getting-to-know-you process which makes people feel comfortable when they make referrals.
Editor: Suppose a multinational corporation is looking for guidance to establish an international compliance program to cover its operations in North America, Europe, Asia, and Latin America. How would engagement of a Baker Tilly International independent member firm like Eisner facilitate that process?
Ginman: Eisner would act as the lead firm and principal point of contact with the client. They would coordinate the activities of the local member firms in all the jurisdictions to ensure that they meet the client's needs. The local member firm would be responsible for informing and liaising with the client's local subsidiary management to the extent that the client and Eisner felt to be appropriate. Eisner would manage the whole relationship. As far as the client is concerned, they would have one point of contact.
Editor: How would that process work where the company wants to establish that each of its subsidiaries or divisions has appropriate controls?
Ginman: The program of work would be agreed between the lead member firm and the local member firm. We have provided training courses for firms outside the U.S. to bring them up to speed on things like Section 404. The local member firm would carry out the review in accordance with the program that had been agreed on and report back to Eisner who would put together the report in the agreed format for the client. Eisner would take responsibility for making sure that the scope of work is correctly set at the start, depending on the client's needs and requirements. This would be no different than any other type of engagement.
Editor: I assume that your network has that type of experience with that type of review?
Ginman: Yes. It provided an opportunity for our U.S. firms and our entire international network to work with international companies that they had not previously worked with because the Section 404 review had to be conducted by firms with which the client had no audit relationship. Due to the volume of work received, our member firms gained significant expertise in Section 404 reviews.
Editor: What are some of the consulting activities that your member firms engage in?
Ginman: There is a lot of financial consulting in terms of corporate finance engagements and due diligence and corporate governance areas. Some member firms have specialist teams in IT consulting. Generally, the more "management consulting" type areas are not subjects covered by our member firms. There may be some limited involvement in business planning and so on, but we do not look at those as being an international offering of the network. Our member firms do provide services in the fraud area and other areas that may be rendered independent from an audit engagement.
Editor: Do you have specific recommendations with respect to global compliance issues peculiar to the audit or accounting profession?
Ginman: The challenge facing the whole profession is the change of pace in the regulatory area and the different emphases that are developing globally. You have to be aware of so many different issues in looking at compliance. It would be nice if everyone harmonized to one model but we are a long way away from that. In certain locations, for some firms, there are real problems in meeting these new regulatory obligations. I can see further contractions in the auditing profession as firms realize that they cannot meet those requirements.
Editor: What is your typical client base?
Ginman: Generally, our member firms' client base is private companies and small- to mid-sized listed companies. In the non-audit areas, members do have clients which are larger and more complex, but we are not, as a network, involved with the largest global companies.