BDO re-enters India for 3rd time; ropes in MZSK & Associates

BDO's first partner was the Kolkata-based Lodha & Co, owned by late R S Lodha, with which it had broken off in 2008

The world's fifth largest auditing and accounting firm BDO International, which has just re-entered the country for the third time by roping in MZSK & Associates as its new partner, is bullish about the market and plans to nearly treble head-count to around 1,200 over the next six months.
     
After this association, the city-based MZSK & Associates will be known as BDO India and will be headed by Milind Kothari as managing partner.
     
Kothari told PTI that the formal association was inked in the last week of September.
     

"Currently, our head-count is close to 450, with 32 partners. Over the next six months, our head-count will be around 1,200. We are also looking at mergers, especially in the South, for this," Kothari told PTI over the weekend.

    
It can be recalled that the Belgium-based over USD 6 billion auditing and accounting firm had called off its four-year-old association with Haribhakti Consulting last December following differences between the two and sold 10 per cent of its stake to the city-based firm.
    
MZSK & Associates is the third partner for BDO here as its first partner was the Kolkata-based Lodha & Co, owned by late R S Lodha, with which it had broken off in 2008.
    
BDO, which takes its name from three of its founding members- Binder Hamlyn of Britain, Dijker & Co of Holland and Germany's Otte & Co, offers risk and advisory services, tax, regulatory and global knowledge services in 144 countries and employs 55,000 as of 2012.

    
Kothari said currently the company has offices in Mumbai, Delhi, Pune, Hyderabad, Gurgaon and Aurangabad, and its offices in Bangalore and Chennai will be opened in the next two-three months.
     
MZSK & Associates was formed after merging two Mumbai and Pune-based firms in 2011
When asked about BDO re-entry at a time when regulatory environment has been skewed against auditors following the new Companies Act, Kothari said, "none can afford not to be here as it is too big a market."
     
"We being the fifth largest after the Big Four auditing firms, we feel that it is in our interest that we are here. We are present in 144 countries and it makes no sense to keep off this large market," he added.

    
On the provisions in the Companies Act that makes auditors liable for misdeeds of their clients, including liable for class action suits, and if implicated a five-year ban from the market, Kothari said, "auditors will be required under any circumstances and they will survive come what may."
    
On the penal provisions in the Act, he said the new law is balanced, as at the end of the day an auditor cannot claim innocence if he did not do his job diligently.
    
Kothari, who is heading direct taxes at BDO India, specialises in corporate and international taxation and transfer pricing, and advises MNCs on cross-border tax issues, including structuring of inbound-outbound investment and formulating transfer pricing strategy, exit strategy etc, and is a member of the direct tax committee of the industry lobby CII.

    
It can be noted that the Institute of Chartered Accountants of India, the statutory panel regulating chartered accountants in the country, does not allow foreign auditors to own stake in domestic accounting firms--PwC, EY, KPMG and Deloitte.
    
Accordingly, all the Big Four global auditors are present in the country through local tie-ups as foreign investments are allowed in consulting firms, wherein the referral is managed by keeping the stake of foreign partner a little higher.
    
Domestic auditing and accounting firms team up with foreign partners as it gets them an exposure to a large pool of international clients and receive higher fees for their services.