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Clients |
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DFK Working with Clients
The case studies beneath demonstrate how clients of our member firms have used the DFK global network to service their business needs.
ETO Magnetic
ETO Magnetic, a German company and
client of the DFK member firm in Munich,
Peters, Schonberger & Partner (PSP),
planned to purchase Lanker Diversified
Industries, Inc. (known as LDI) a Grand
Rapids, Michigan Auto Parts Manufacturer
through their subsidiary ETO Magnetic
USA. Bernhard Winterstetter, a partner
in PSP, contacted Frost, Ruttenberg &
Rothblatt, P.C. (FR&R), the DFK
member in Chicago, Illinois to
undertake due diligence work after a
letter of intent was written, but prior to
the closing of the Purchase.
FR&R Partners, Tim Crosby and Gary
Rose headed the project that involved
a number of FR&R employees and
several trips to Grand Rapids. In the
process of conducting the work,
Tim & Gary established a good
working relationship with the COO
and CFO of ETO Magnetic, Germany.
The ultimate result was a satisfied client,
a lower purchase price due to information
uncovered in the due diligence process
and an ongoing auditing relationship.
In addition, FR&R has been asked to be
the accounting arm for ETO Magnetic
USA and will be utilized to help them in
future acquisitions and for other business
needs as they arise.
USA Tax Issues
Three clients of Everralls DFK,
Canberra, Australia, recently requiring
advice on USA tax issues were referred
to Zainer Rinehart Clarke DFK in Santa
Rosa, California. Their requirements
covered tax planning for future asset
sales, personal tax issues, tax issues
related to retirement funding and
capital gains tax management.
“From our firm’s point of view, knowing
that we do not have to become experts
on USA tax laws but rather can rely on
the experience of a DFK USA member
firm is a great benefit to us and our
clients”, said Robert Shelton, Everalls
DFK’s senior tax partner.
Belgian Transportation Company
Belgian and Dutch members have joined
forces to serve the local subsidiaries of
a Belgian Holding company. This Holding
company is an international leader in
handling air, sea and road consignments.
Vias DFK in Belgium and Foederer DFK
in the Netherlands have successfully
worked together on an assignment to
certify the annual accounts of several
subsidiaries, for all of whom the
bookkeeping is centralised in Brussels.
The close collaboration between the two
firms has led to increased efficiencies
resulting in cost benefits for the client.
The international teamwork between
the two members of DFK pleased the
Belgian Holding Company and it is
expected to result in requests to undertake
more international work for them.
edding AG
“The DFK network compares
favourably with the “Big Four” in
carrying out international audits of
middle-sized groups. These are the
conclusions of a recently completed
audit”, says H-W. Kortmann, partner
of ESC, DFK’s member firm in
Hamburg, Germany.
In this particular case the board
of edding AG, a public company
supplying office equipment, which
is listed on the German stock market,
decided to change their auditor
from one of the “Big Four” firms.
When looking for alternatives they
invited ESC to tender anticipating their
ability to organise the audits of the
international subsidiaries as part of the
audit of the consolidated accounts.
They expected the auditor of the
consolidated accounts to have an
authentic judgement of the parent
company and all of the consolidated
subsidiaries as well and being head
of all worldwide auditing activities.
With the co-operation of DFK member
firms in the UK, Italy, Turkey, France,
the Netherlands, Japan and Argentina,
ESC was able to present a sustainable
proposal within one week. The
professional and economic features of
the offer and the remarkable speed of
response were the main reasons why
ESC was elected as auditor of the
statutory accounts (German GAAP)
and the consolidated financial
statements (IFRS).
At the beginning and throughout the
whole process ESC insisted on a highquality
DFK internal communication
and coordination. Main audit fields
were discussed by several conference
calls before and during the tender
process. Special items requested by the
German parent company as well as the
requirements of ESC as auditor of the
consolidated financial statements were
forwarded to the DFK auditors by
written “auditor’s instructions”. DFK
uniform reporting documentation was
used and simplified communications.
“During the audit process a permanent
exchange of important findings and
other relevant information was
submitted by the DFK members via
e-mail enabling ESC to maintain full
control of the process and to get
decisions from the German client’s
board whenever necessary. The client
appreciated the tightly system
of confirmations concerning the
intercompany transactions and accounts.
The audits of all the international
subsidiaries were formally finished
by discussions either “on site” or by
telephone conferences. This enabled
the directors of the subsidiaries as well
as the local DFK auditors to clearly
present the results of the accounting
and the auditing work and hence give
the CEO of the parent company a direct
insight into their operations. The Group
CEO and the local directors praised this
procedure as a positive and substantial
development in the quality of their
group accounting and communication.
For next year video conferences are
being planned by the client.
H.-W. Kortmann: “The board of the
German parent company and the
directors of the subsidiaries were
impressed and positively surprised of
the deep understanding of the group’s
business the DFK team achieved
during that short time and so being
able to add real value to the audit
work. The main reason for this is the
personal sense of responsibility of the
DFK partners involved on behalf of
their clients; this predetermines the
DFK network as auditors and advisers
for small and medium-sized international
groups and their sometimes very
special problems and requirements.”
Worldwide Audit of Software group of companies
Bennett Thrasher the DFK member
firm in Atlanta, Georgia, USA, was
asked to propose on the worldwide
audit for the 2004 year end to a group
of companies producing software that
enables governments to automate their
business processes. Unfortunately, the
work was initially awarded to BDO.
The client however delayed the start
of the 2004 audit due to a sale of their
North American operations. When
they were ready to resume the audit,
BDO in the US indicated that the
timing no longer worked with their
schedule and could not accept the
engagement. The client called
Bennett Thrasher.
“We accepted the engagement and
indicated that we wanted to use our DFK
member firms in the UK and Netherlands”
says Scott Hazy, partner in Bennett
Thrasher. “The only problem was that
BDO had already begun some initial
work in the Netherlands. We were able
to convince the client that by using the
DFK member firms, there would be better
cooperation, communication and
execution of the engagement. There
could not be a guarantee of such a result
if non-DFK firms were used. It was
impressed upon the client that we
personally knew each other’s firms
through the DFK International
conferences and this personal
involvement with one another carried
with it a personal accountability to
succeed. The client agreed to meet
with DFK member firms, Chantrey
Vellacott DFK in the UK and Foederer
DFK in the Netherlands. After the
initial meeting, the client remarked
that he could tell that the firms knew
each other well and took comfort in
the fact that they had worked together
on other client engagements. Our client
agreed to use the DFK member firms.”
“All seemed to be going favorably, but
now for the fun part… fee negotiation.
The client had agreed to a fee with BDO
for the non-US work and wanted the
same fee arrangement. In a fine show
of international cooperation, Chantrey
Vellacott DFK and Foederer DFK agreed
to the fee and would work it out between
their respective firms how to split it.
This saved the client a considerable
amount of time and effort by not having
to negotiate with three separate firms.
Furthermore, the billing issue was made
seamless to the client by having all of the
bills channelled through Bennett Thrasher.
Chantrey Vellacott DFK and Foederer DFK
each executed their respective parts of
the engagement as planned and to the
satisfaction of the client. During my
visit to the engagement teams, I was
impressed not only with the professional
acumen they displayed but various
insights into the business units they had
audited. We are completing the 2005
audit engagement now and it is no
surprise that everything is proceeding
according to plan” concludes Scott Hazy.
Fashion Biz
Oswin Griffiths DFK, a member in
Auckland, New Zealand, has acted for
the locally based company Fashion Biz
since it was incorporated. The partner
responsible, Navin Patel, was able through
working with DFK Laurence Varnay to
assist them in opening up in Sydney,
Australia and subsequently doing likewise
through the DFK firm in Melbourne.
Fashion Biz, which is now a market
leader in promotional garments, with
turnover exceeding $50 million, expects
to expand into Brisbane shortly. The DFK
member firms have provided audit, tax and
corporate finance services to this client.
Fiji Retail and Manufacturing
Oswin Griffiths DFK also has a longstanding
relationship with a Fiji based
retail and manufacturing client. To meet
their international requirements they
have used the services of DFK member
firms in Mumbai and Pune in India as
well as in Singapore and Hong Kong.
Recently Oswin Griffiths DFK acted for
this client to purchase via KPMG an
operation based in 23 locations in Fiji
and employing 600 personnel.
The Bank of India
Kato Audit Corporation, Tokyo, Japan,
has been appointed auditors for three
years to The Bank of India in Japan. This
came about as a result of M. P. Chitale
& Co., the DFK member in Mumbai,
giving the firm’s name to the bank when
they were wishing to make a change of
auditor in Japan. M. P. Chitale is a joint
auditor of this large state owned
commercial bank which is listed
on the Mumbai Stock Exchange.
MUI
The appointment back in 1999 of Chantrey Vellacott DFK in London as auditors of the international hotel group Corus started a relationship, which was to grow with the Malaysian stock exchange, listed company, Malayan United Industries (MUI). With the assistance of Kuala Lumpur member firm, Folks DFK & Co., this led to DFK firms across Europe being invited to bid for the audit of the international retailer, Laura Ashley, which is also owned by Malayan United Industries.
The appointment was subsequently won with substantial levels of work being undertaken by DFK firms in France, Ireland, UK and the USA. "I believe our capability to co-ordinate their various audit and other professional service requirements in a calm and timely way has been the benefit that the DFK firms have been able to offer MUI", says Mike Tovey of Chantrey Vellacott DFK.
Sonae SGPS SA
The key to the growth plans of the IT subsidiary of the Portuguese publicly quoted company Sonae SGPS SA was the recruitment and retention of effective executives to head up their businesses in Brazil, Portugal, France, Germany and the UK. The client decided that equity participation would help them achieve this objective.
The DFK member firm in Reading (UK) was asked to devise a share incentive scheme that would provide equal benefits to key personnel in the five different territories, all of which have differing tax regulations. With the involvement of the DFK firms in Lisbon, Paris, Hamburg and Sao Paulo a scheme was developed and presented to the client. This resulted in an effective share incentive scheme being introduced for its senior executives.
Argus Solutions Ltd.
Argus Solutions Ltd. (originally known as Iris Australia) was listed on the Australian stock exchange on 5 October 2004, which as well as being a landmark day for the company, was a cause for celebration in two of the DFK Australia member firms who have worked with this business over several years.
Argus Solutions specialises in providing identity management applications and solutions for government and commercial clients based on iris recognition technology.
Everalls DFK in Canberra performed the initial consulting in 1997 advising on business structure, tax, accounting and R&D issues. In 2001 Everalls DFK arranged for the Sydney member firm, Laurence Varnay-DFK to perform audits for the business and assist with advice towards listing. Laurence Varnay-DFK has continued to provide audit services and now sits on the audit committee of the listed company.
Today with strong partnerships with LG, Securimetrics and Panasonic, Argus takes to market best of breed iris recognition cameras and software solutions.
MultiFix Group B.V.
A client of Dutch DFK member Foederer DFK, MultiFix Group B.V., an international leader in trading fasteners wished to set up an operation in China to buy products direct at better prices, and then distribute them to their customers around the world through Hong Kong.
The assignment involved establishing companies in Shanghai and Hong Kong. DFK member, Shanghai Chang Xin Certified Public Accountants set up the required company and subsequently audits the statutory accounts and provides tax services. In Hong Kong, Andrew Ma DFK (CPA) Limited now carries out the audit and delivers tax and administration services.
The project has resulted in the Dutch client lowering their product costs and improving their tax position.
Spear & Jackson
Changes in circumstances and regulations in the USA on the auditing of SEC registered public companies lead to the Florida and Chicago based garden tool manufacturer, Spear & Jackson to use DFK firms around the world.
The relationship started when the requirement option to use a UK audit firm registered with the USA Public Company Oversight Board (PCAOB) resulted in the appointment of Chantrey Vellacott DFK in London as lead auditor, Spear & Jackson having their main manufacturing operation
in Sheffield, UK.
This led on to DFK firms in Paris, Auckland and Melbourne auditing local Spear & Jackson operations, while Holtz Rubenstein Reminick LLP in New York, Foederer DFK in Eindhoven, Netherlands and Segal & Partners LLP in Toronto, Canada give tax advisory services to this client.
Recently M.P, Chitale & Co. Mumbai, India and Shanghai Chang Xin Certified Public Accountants in China, are advising the client on business start up issues in their countries.
As with the audit, the DFK global advisory services for the client are managed through Chantrey Vellacott DFK in London.
Whilst the relationship is still in its early stages, we believe that the DFK network is demonstrating, once again, that it can add significantly to client success.
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