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Tbilisi Branch of ‘Big Four’ Auditor Continues its Development, Plans to Continue Growing

Published: February 25, 2013 | 12:34 pm
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KPMG Managing Partner of Georgia and Armenia: “We believe that statutory audit requirements should be introduced in Georgia for companies above a certain size.”

The COMMERCIAL TIMES

Company Name: KPMG (Tbilisi Branch of KPMG CIS Limited)

Date of Foundation: 2006 in Georgia, 1987 global (merger of Peat Marwick International and Klynveld Main Goerdeler)

Number of People Employed: around 60

This is a short profile of the ‘Big Four’ auditor operating on the local market for 7 years already. The COMMERCIAL TIMES interviewed Andrew Coxshall, Managing Partner of Georgia and Armenia, regarding the global brand’s view of Georgia’s audit sector development and the country’s further development potential in this respect.

-  What would you say was the main achievement by your company thus far?

- In spite of the fact that KPMG was last of the Big Four firms to enter the Georgian market it experienced a drastic development and quite quickly gained a significant market share and the respect among the most influential public and private entities. The Tbilisi Branch of KPMG continues its development and plans to continue growing.

KPMG’s main achievements in the global markets are as follows:

In the annual ‘World Most Attractive Employer’ Universum survey rankings, over 75,000                   business students from the world’s top academic institutions have given KPMG the number two spot for the third year in a row.

2011 World’s Best Outsourcing Advisors – in recognition of the firm’s depth of experience, global reach and holistic approach.

Inducted into Working Mother Hall of Fame after being honored for 15 years as one of Working Mother magazine’s 100 Best Companies for Working Mothers.

- How was the company launched? Who are your top management members?

- The firm was established in 1870 when William Barclay Peat formed an accounting firm in London. In 1877 accountancy firm Thomson McLintock opened an office in Glasgow and in 1911 William Barclay Peat & Co. and Marwick Mitchell & Co. merged to form Peat Marwick Mitchell & Co, later known as Peat Marwick.

Meanwhile in 1917 Piet Klijnveld opened his accounting-firm in Amsterdam. Later he merged with Kraayenhof to form Klynveld Kraayenhof & Co.

In 1979 Klynveld Kraayenhof & Co. (Netherlands), Thomson McLintock (United States) and Deutsche Treuhandgesellschaft (Germany) formed KMG (Klynveld Main Goerdeler) as a grouping of independent national practices to create a strong European-based international firm. Then in 1987 KMG and Peat Marwick joined forces in the first mega-merger of large accounting firms and formed a firm called KPMG in the US, and most of the rest of the world, and Peat Marwick McLintock in the UK.

In 1990 the two firms settled on the common name of KPMG Peat Marwick McLintock but in 1991 the firm was renamed KPMG Peat Marwick and in 1999 the name was reduced again to KPMG.

In 1997 KPMG and Ernst & Young announced that they were to merge. However, while the merger to form PricewaterhouseCoopers was granted regulatory approval, the KPMG/Ernst & Young tie-up was later abandoned

In 2001 KPMG divested its U.S. consulting firm through an initial public offering of KPMG Consulting Inc, which is now called BearingPoint, Inc. In early 2009, BearingPoint filed for Chapter 11 bankruptcy protection.

The UK and Dutch consulting arms were sold to Atos Origin in 2002.

In 2003 KPMG divested itself of its legal arm, Klegal and KPMG LLP sold its Dispute Advisory Services to FTI Consulting.

KPMG’s member firms in the United Kingdom, Germany, Switzerland and Liechtenstein merged to form KPMG Europe LLP in October 2007. These member firms were followed by Spain, Belgium, the Netherlands, Luxembourg, CIS (Azerbaijan, Russia, Ukraine, Belarus, Kyrgyzstan, Kazakhstan, Armenia and Georgia), Turkey, Norway, and Saudi Arabia. They appointed joint Chairmen, John Griffith-Jones and Ralf Nonnenmacher. The new headquarters were located in Frankfurt, Germany.

Nowadays the members of the top management of KPMG are: Global Chairman of KPMG International is Michael Andrew, Senior Partner for CIS is Oleg Goshchansky and  myself, Managing Partner of Georgia and Armenia.

- What is the major attraction about the company why businesses should choose it?

- KPMG is one of the largest professional services companies in the world and one of the ‘Big Four’ auditors.

We operate in 152 countries and have 145,000 people working in member firms around the world.  The independent member firms of the KPMG network are affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. KPMG has three lines of services: audit, tax and advisory. Its advisory services are further divided into three service groups – Management Consulting, Risk Consulting, and Transactions & Restructuring.

KPMG’s main focus is to provide the best service available on the market and to serve to the development of the business companies, therefore of the financial and economic sector as a whole.

- What challenges did you have to face during the years of activities on the local market? What are the current challenges?

- KPMG is operating on Georgian market since 2006.  During the time of activity on the Georgian market KPMG faced several challenges, mainly related to the reforms in the economy, increased foreign investments, and development of the new sectors on the market. Current challenges are adapting to the new environment following the change of government and continued world-wide economic situation.

- In Georgia we see frequent amendments to tax code. What positive feedback/side effects it has on auditors’ activities?

- The frequent amendments of the tax code mean for us that we have to be more diligent in our work to make sure that our clients are in compliance with all the tax code requirements.

- Could you please name examples of international practice as far as audit service is concerned which you believe would be a good idea to implement in Georgia?

- We believe that statutory audit requirements should be introduced in Georgia for companies above a certain size. This will help to increase accountability, develop the local financial market and will benefit the local economy.

- How would you assess the feedback of alternative audit project?

- In general the alternative tax audit project has positive feedbacks in the business sector. We must say that our clients like it. Plus it helps the Revenue Service to carry out more tax audits in a year which reflects positively on the financial health of the country.

- What are your short-term, mid-term and long-term expectations regarding the local audit sector development?

- We don’t expect any changes in the short-term in the local audit sector development, in the mid-term, the impact of the new audit law will decrease the number of auditing companies ( through consolidation) and will positively influence the quality of the audit service in the country. We believe that in the long-term Georgia will adhere the international standards of auditing which will help Georgia‘s business sector to be compliant with the international standards and to become a significant player in the region’s capital markets.

 

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