News

Herbert M. Chain

Shareholder, Mayer Hoffman McCann. Deputy Technical Director, Global Audit Group, Kreston Global.

Herbert Chain is a highly experienced author is a financial expert with 40 years of experience in business, accounting, and audit, having served as a Senior Audit Partner at Deloitte. He holds certifications from the National Association of Corporate Directors and the Private Directors Association, with knowledge of private company governance and effective risk management. He has extensive knowledge in the financial services sector, including asset management and insurance, and experience with SPACs.

Contact Herb here

US issues final accounting standards for (certain) Crypto Assets

January 23, 2024

On December 13, 2023, the US issued the final accounting standards for Crypto Assets. The Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-08, titled “Accounting for and Disclosure of Crypto Assets”, an amendment of FASB Codification Intangibles—Goodwill and Other— Crypto Assets (Subtopic 350-60), to address the accounting challenges posed by cryptocurrency. The ASU aims to enhance accounting procedures and disclosure requirements for certain crypto assets, providing a more transparent view for investors, creditors, and other users of financial statements prepared by organizations with holdings of crypto assets.

Cost less impairment

As desired by many users and preparers of such financial statements, the new standard departs from the historical “cost less impairment” accounting model for crypto assets, requiring entities to measure qualifying assets at fair value with changes recognized in net income. In the ASU, the FASB noted that “accounting for only the decreases, but not the increases, in the value of crypto assets in the financial statements until they are sold does not provide relevant information that reflects (1) the underlying economics of those assets and (2) an entity’s financial position.”

Crypto Asset disclosures

The ASU also mandates disclosures about significant crypto asset holdings, contractual sale restrictions, and reporting period fluctuations to provide investors with comprehensive insights. To be subject to these amendments, crypto assets must meet specific criteria, including meeting the definition of an intangible asset as defined by FASB, not providing the asset holder with enforceable rights to or claims on underlying goods, services, or other assets, being created or residing on a distributed ledger based on blockchain or similar technology, being fungible, secured through cryptography, and not created by the reporting entity.

Fair value measurement

There are certain implications on businesses’ operations and recordkeeping resulting from the pronouncement. Fair value measurement introduces the need to stay informed about market prices and markets, and to report the impact of price fluctuations on financial performance. The detailed disclosures now mandated will require organizations to maintain comprehensive records of crypto transactions, and real-time tracking and valuation systems will be necessary to meet reporting demands.

2024 deadline

Entities are expected to comply with the new standards for fiscal years starting after December 15, 2024, with early adoption permissible for yet-to-be-issued financial statements. The changes, if adopted in an interim period, must be retroactively applied from the start of the fiscal year.

For more advice on the recent update from the FASB, please get in touch.

Auditing standards: Unpacking SAS 143 and SAS 145 updates

Herbert M. Chain from MHM explores the recent updates to SAS 143 and SAS 145, which signify significant milestones in auditing standards.

Global cryptocurrency accounting and tax standards

Herbert M. Chain and Guillermo Narvaez explore global cryptocurrency accounting and tax standards in a recent article in Bloomberg Tax.

Kreston BSG to host webinar on U.S. market expansion for Latino entrepreneurs

Kreston BSG is hosting a webinar on U.S. Market expansion for Latino entrepreneurs with guest speaker Veronica Quintana, Leader of the Latin-Owned Business Practice at CBIZ MHM. The webinar will be held in Spanish.

News

Kreston BSG to host webinar on U.S. market expansion for Latino entrepreneurs

August 30, 2023

Latino business in the US market

Latinos own nearly 5 million businesses in the U.S. and account for over $800 billion in revenue. If you’ve ever thought about taking your business across borders and stepping into the lucrative U.S. market, now is the perfect opportunity. Kreston BSG is thrilled to partner with CBIZ in the United States for a webinar aimed at guiding entrepreneurs through the tax and legal implications of starting or expanding a business in North America.

Event Details:

Date: September 7
Time: 16:30 pm (Mexico Central Time)
Language: Spanish
Audience: Open to the general public, clients, and collaborators of Kreston Global and CBIZ
Registration: Click here to register (It’s FREE!)

Meet the Experts

Veronica Quintana

Leader of the Latino-Owned Business Practice at CBIZ & MHM, Veronica Quintana brings a wealth of knowledge and experience in navigating the U.S. market.

Francisco Bracamonte

Legal-tax partner from Kreston BSG Mexico, Francisco Bracamonte, will serve as the moderator, steering the discussions towards actionable insights.

Key Takeaways

Understanding the U.S Tax system: Navigating the complex U.S tax landscape
Legal requirements: What are the do’s and don’ts when expanding or starting a business in the U.S?
Cultural considerations: Unpack the nuances of doing business in a diverse market.

Why Should You Attend?

Informative: The comprehensive coverage of the tax and legal aspects will equip you with the right tools to set up your business successfully in the U.S.
Networking: Opportunity to interact with experts and like-minded entrepreneurs.
Free of charge: Knowledge, insights, and an array of business benefits, all at zero cost to you.

Ecuador hit with VAT increase in 2024

Ecuador will see VAT rates increase in 2024 to tackle a $5 billion deficit, driven in part by a reduction in oil production and increased spending on tackling the country’s ongoing unrest. The rise also satisfies a new financing agreement with the International Monetary Fund.

Kreston Global network welcomes new Argentinian firm

Kreston Global welcomes Kreston BA Argentina to the network.

Auditing standards: Unpacking SAS 143 and SAS 145 updates

Herbert M. Chain from MHM explores the recent updates to SAS 143 and SAS 145, which signify significant milestones in auditing standards.

News

Herbert M. Chain

Shareholder, Mayer Hoffman McCann P.C. Deputy Technical Director, Global Audit Group, Kreston Global

www.mhmcpa.com

Herbert M. Chain is a highly experienced auditor and is a financial expert with over 45 years of experience in business, accounting, and audit, having served as a Senior Audit Partner at Deloitte. He holds certifications from the National Association of Corporate Directors and the Private Directors Association, with knowledge of private company governance and effective risk management. He has extensive knowledge in the financial services sector, including asset management and insurance.

Contact Herbert here

How audit companies can support staff to better detect financial fraud

August 18, 2023

Recently, Herbert M Chain, Deputy Technical Director at Kreston Global Audit Group and Shareholder at Mayer Hoffman McCann P.C. spoke to Bloomberg Tax about a holistic approach audit companies must employ to support staff to identify financial fraud effectively. Read the full article or the summary below.

Increasing risk in the audit process

Recent data from the Public Company Accounting Oversight Board in the U.S underscores the correlation between firm culture and audit quality. The study highlights an alarming increase in audit deficiencies, set to climb for a second consecutive year. A significant 40% of these deficiencies in 2022 are linked to cultural aspects such as leadership’s commitment to superior audits, compliance, and staff churn.

At its essence, the culture of a firm serves as an unseen guiding hand, setting the tone for behavioural norms, professional duties, and interpersonal interactions. A perfect alignment of culture, values, processes, and training is imperative to empower auditors to address potential fraud risks.

In the world of auditing, ensuring that professionals are adept at pinpointing and addressing financial fraud is multifaceted. At its core, each auditor works within a framework of professional standards, controls, and strategies tailored to spot and react to fraudulent financial statements. This system—rooted in the culture of the auditing firm—is a cornerstone of the company’s quality control mechanism.

Auditor toolkit to reduce deficiencies

Scepticism as a daily practice

For auditors, embracing professional scepticism is non-negotiable. It emphasises a probing mindset and a scrupulous assessment of audit evidence—key to recognizing and countering potential fraud risks. Auditors, in every step of the process, are expected by regulators, stakeholders, and the public to apply this scepticism.

Auditors with sharp scepticism are not just passive observers. They actively hunt for signs of fraud and methodically inspect every piece of evidence. Their scepticism also helps in assessing managerial responses, ensuring they are not only rational but also evidence-backed. Both intrinsic scepticism and context-driven scepticism shape an auditor’s approach.

Elevating this sense of scepticism through training, awareness programs, and supervision can significantly enhance the trustworthiness of financial audit reports.

Financial Auditing vs. Forensic Auditing

Drawing a line between financial statement auditing and forensic auditing is imperative. While the former is designed to offer an unbiased opinion on the authenticity of financial records, the latter digs deep into suspicions of fraud for legal documentation.

Auditors in financial audits maintain impartiality, while forensic auditors operate under a presumption of potential misconduct. It’s a delicate act for auditors to maintain objectivity, yet remain alert to discrepancies.

Nurturing staff expertise

“Due care” is a revered principle in auditing, defining the expertise and diligence auditors should bring to the table. For auditors to be effective, they need expertise, awareness, and adequate oversight—this means entrusting complex evaluations to seasoned professionals rather than novices.

Cultivating a culture that champions learning is vital for auditors to counter financial fraud risks. Academic research supports the idea that well-trained auditors, equipped with fraud detection knowledge, are more sceptical, employ advanced methods, and stand a higher chance of identifying deceit.

When developing training programs, audit firms should:

Promote scepticism and analytical thought: Cultivate a culture that values scepticism and analytical thought. Train auditors to challenge assumptions and view evidence with a discerning eye. Offer guidance on how to scrutinize managerial claims and navigate potential biases.
Raise fraud awareness: Educate auditors about different fraud tactics, warning signals, and potential indicators.
Impart forensic accounting skills: Introduce staff to specialized fraud detection and prevention tools and techniques.
Teach control assessment: Instruct auditors on how to spot control vulnerabilities that may elevate fraud risks.
Enhance interview and enquiry skills: Train staff to extract vital details during fraud discussions and guide them on the intricacies of fraud investigations.
Encourage continued learning: Push for ongoing learning in fraud detection and encourage acquiring certifications, attending seminars, or workshops related to fraud.

Embracing Technological Advances

With technology evolving rapidly, auditors can no longer afford to be on the sidelines. Forensic data tools are increasingly finding their place in the auditor’s arsenal, especially in cases with high fraud concerns. Similarly, AI-powered systems, like expansive language models, are being harnessed to spot and analyze potential fraud.

Turning a blind eye to these developments is perilous. It’s imperative for firms to integrate these tools into their strategy and train their team accordingly.

Mastering data analytics is crucial. By scrutinizing transactional data, algorithms can pinpoint anomalies like unforeseen revenue fluctuations or dubious transactions. Alongside this, auditors need a grasp on data visualization, statistical techniques, and data mining.

The power of AI can’t be ignored. AI can process vast data amounts, spot patterns, and offer invaluable insights. It’s essential for auditors to have a robust understanding of AI technologies. But, it’s also vital to be aware of its limitations, ensuring AI is used judiciously and its outcomes critically examined.

Get in touch

If you would like to talk to an Audit expert about Audit, please get in touch.

Understanding BEPS implications with crypto-clients

Pretino Albury discuses BEPS-compliant crypto policies, aligning with global standards, mitigating risks, and ongoing compliance in taxation.

Auditing standards: Unpacking SAS 143 and SAS 145 updates

Herbert M. Chain from MHM explores the recent updates to SAS 143 and SAS 145, which signify significant milestones in auditing standards.

Understanding BEPS implications with crypto-clients

Pretino Albury discuses BEPS-compliant crypto policies, aligning with global standards, mitigating risks, and ongoing compliance in taxation.

News

Christina Tsiarta

Advisory services on sustainability, ESG & climate change, Kreston ITH

www.ith.com.cy

Christina is an experienced consultant specialising in ESG, sustainability, and climate change. She has over 13 years of expertise and has worked with various organisations, including local municipalities, national government agencies, the Directorates-General of the European Commission, and the private sector across different industries.

Laurent Le Pajolec

Member of Board EXCO A2A Polska, Kreston Global ESG Committee member

https://exco.pl/en/strona-glowna-english/

General Manager and shareholder of consulting companies with a Marketing/ business development and a Financial background with direct experience with several sectors (Real estate, Transport, Fintech, Legaltech, M&A, Import- Export, HR, Restructuring). Exco Polska Board Member.

New International Standard on Sustainability Assurance (ISSA) 5000 proposed by IAASB

August 10, 2023

Sector: ESG

The International Auditing and Assurance Standards Board (IAASB) has recently unveiled the proposed International Standard on Sustainability Assurance (ISSA) 5000. This initiative is a testament to the increasing emphasis on sustainability reporting and assurance worldwide. Christina Tsiarta and Laurent Le Pajolec from the Kreston Global ESG Advisory Committee shared their thoughts on this step forward with Accounting Today Magazine. For a deeper dive into the topic and detailed insights, read the full article in Accounting Today magazine, or the summary below.

Key Takeaways:

Introduction of ISSA 5000: The IAASB has proposed ISSA 5000 as an answer to the growing call for transparent and verifiable sustainability reporting. This proposition follows shortly after the release of initial standards on sustainability and climate disclosures by the International Sustainability Standards Board and the expected climate-related disclosure rule by the U.S. Securities and Exchange Commission.
The Essence of ISSA 5000: Tom Seidenstein, the chair of IAASB, highlighted the importance of ISSA 5000 as a mechanism to fortify trust in sustainability reporting. The proposed standard will be compatible with various other reporting frameworks including those issued by the European Union, ISSB, and more. Both professional accountants and non-accountant assurance practitioners can use the standard for sustainability assurance engagements.
Stakeholder engagement: Emphasizing the importance of inclusivity and holistic viewpoints, the IAASB has embarked on an outreach program to gain insights from diverse stakeholders. These insights will be crucial in refining the final standard, according to Josephine Jackson, IAASB vice-chair.
Current landscape & challenges: Christine Tsiarta from Kreston ITH in Cyprus explains that while there is an increasing awareness of climate-related risks, many audit firms lack the knowledge and skills to accurately address these concerns. As regulations intensify, audit firms will need to enhance their capacities to recognize, monitor, and manage such risks. Laurent Le Pajolec from Exco Poland elaborated on the potential hindrances for auditors, including the necessity for independence, proper education, and adequate support from companies.
The Need for a Comprehensive View: Christine and Laurent emphasise the significance of holistic sustainability reporting. It is vital for companies to capture the complete picture, considering all emissions, including Scope 2 and Scope 3, to present an accurate representation of their sustainability efforts.
The Road Ahead: The IAASB has called for comments on the proposed standard through its website, aiming to ensure it addresses all concerns and offers a robust structure for sustainability assurance.

However, the road to comprehensive sustainability reporting isn’t without challenges. Christine Tsiarta, head of advisory services for sustainability at Kreston ITH in Cyprus, shed light on the current state of affairs, remarking, “So far, there hasn’t been lots of regulation requiring audit firms to report or help clients manage climate-related risks. Now we’re slowly seeing that changing and evolving. But as a result, even auditors themselves don’t have sufficient knowledge, skills and understanding.” She further highlighted the imminent evolution in the landscape as auditors increasingly acknowledge these risks’ relevance.

Laurent Le Pajolec elaborated on the obstacles auditors face. He mentioned the “lack of independence” and added, “It is difficult to be an engineer to identify, for example, what are the sources of emissions of CO2 for a company.” Le Pajolec and Tsiarta both underscored the significance of holistic sustainability reporting. Tsiarta states, “If you’re ignoring part of the picture, then you’re essentially giving a false image of what your impacts are.”

As the world inches closer to a sustainability-centric approach, standards like the proposed ISSA 5000 are indispensable. However, for it to be effective, the collaborative efforts of stakeholders, equipped with the right knowledge and approach, are paramount.

To learn more about the impact of the proposed International Standard on Sustainability Assurance (ISSA) 5000 on your business, please get in touch.

Latest News

New Netherlands firm joins the Kreston Global network

Kreston Global welcomes De Beer, a Netherlands-based audit and accounting firm established in 1952, to the network.

Luxembourg firm joins Kreston Global network

Kreston Global has today welcomed Luxembourg firm Global Osiris Audit & Expertise to the Kreston Global network.

Kreston Global announces new Singapore firm

Kreston Global has today welcomed Singapore firm, Helmi Talib LLP (rebranded to Kreston Helmi Talib), to the network.

News

Managing Partner & Chief Executive Officer, MMJS Consulting, Dubai

www.mmjs.co

Surandar Jesrani is the CEO of MMJS Consulting in Dubai, steering businesses toward successful VAT implementation in the UAE and GCC since 2017. Before MMJS, he managed finance and taxation at a top Private Equity Group and sharpened his international taxation skills at Infosys and General Motors. An alumnus of The Institute of Chartered Accountants of India, Surandar specialises in Accounting, Finance, and International Taxation.

UAE’s corporate tax update

Surandar Jesrani of MMJS consulting in Dubai shares his thoughts on the implication of UAE’s corporate tax update with eprivateclient magazine. Read the full article here or the summary below.

The United Arab Emirates (UAE) has long demonstrated its commitment to international tax transparency standards, notably as a member of the Organization of Economic Co-operation and Development (OECD). Here’s a glimpse into the recent evolution in the UAE’s tax scenario.

The path to global tax transparency

OECD’s 2015 Base Erosion and Profit Sharing (BEPS) Action Plans aimed at preventing Multi-National Enterprises (MNEs) from employing strategies to lower their tax liabilities across jurisdictions. Nonetheless, as the initial BEPS strategies weren’t wholly suited to the challenges of a digital economy, the OECD introduced an Inclusive Framework (IF) in 2021. This two-pillar model proposed that MNEs should pay a minimum corporate tax of 15% in every jurisdiction.

The UAE, endorsing this global tax framework initiative, joined a consensus with 139 other countries. In alignment with its OECD obligations and its vision of positioning itself as a leading global business hub, the UAE announced a federal corporate tax on business profits in 2022.

Key principles of the UAE corporate tax update

UAE’s corporate tax regime adheres to universally acknowledged principles ensuring:

Flexibility with modern business practices.
Simplicity and certainty.
Equitable taxation.
Transparent procedures.

Effective from 1 June 2023, the UAE corporate tax law encompasses 20 chapters and 70 articles detailing the scope, application, and compliance rules. All business and commercial activities, undertaken by individuals or entities, fall under this tax regime, divided into resident and non-resident classifications.

An overview of taxable entities

Resident Persons: Legal entities in the UAE are taxed on global income.
Non-resident Persons: Foreign businesses are taxed on income sourced in the UAE.

Moreover, all business-active individuals and legal entities will need to register under the UAE corporate tax law.

Certain entities can avail tax exemptions, like the UAE government entities, qualifying public benefit entities, qualifying investment funds, and some specific entities as designated by the Minister.

Tax rates and categories

Depending on the size and type of business, the UAE corporate tax rates vary:

Taxable Persons: 0% on income up to AED 375,000, and 9% on income above this threshold.
Qualifying Free Zone Persons (QFZP): 0% on qualifying income and 9% on other incomes.
Small businesses: 0% if the gross revenue of the previous year is under AED 3 million; otherwise, they’re taxed similarly to general taxable persons.

MNCs, until the full adoption of Pillar Two rules by the UAE, will be taxed under these regular corporate tax rates.

Compliances

Entities are required to file tax returns within nine months post the close of a tax year. While there are provisions for withholding taxes on specific domestic and foreign payments, currently, it stands at zero per cent.

Conclusion

UAE’s introduction of corporate tax is a strategic move in its journey as an OECD IF member, especially concerning the global minimum tax proposed by BEPS Pillar Two. With a 9% tax rate, the UAE remains an attractive proposition when compared to other tax jurisdictions. Furthermore, the UAE tax law’s foundation on internationally practised principles ensures a streamlined transition for businesses accustomed to similar laws elsewhere. As a result, many enterprises may re-evaluate their corporate structures to maximize genuine tax benefits under this new regime.

If you would like to speak to one of our UAE taxation experts, please get in touch.

Kreston NBB Saudi Group announces Kreston NBB Cluster Advisory

Kreston NBB Saudi Group, today announced the establishment of a new advisory organisation, Kreston NBB Cluster Advisor.

Doing business in the Middle East

Since the first member firm joined in Turkey in 1996, Kreston Global Middle East has been on a journey of expansion and innovation. Read our latest magazine on doing business in the area.

Client update July 2023

Read our latest client update with a wealth of insights from our experts across the network. Read, share, and let us know your thoughts!

News

A guide to setting up a business in Italy

August 3, 2023

Kreston TDL Italy, a member of Kreston Global’s international network, has created a detailed 128-page guide to setting up a business in Italy. This guide is for anyone investing in Italy, to help you navigate the Italian business landscape.

Download the guide here

Setting up a business in Italy for success

The guide offers an in-depth analysis of various aspects integral to operating a business in Italy. It begins with an introduction to the country’s corporate and legal structures, including an exploration of different business entity forms. Subsequent sections delve into setup and liquidation procedures, the intricacies of mergers and acquisitions, and the responsibilities arising from corporate criminal liability.

Understanding taxes in Italy

Kreston TDL’s guide shines a light on Italy’s complex taxation system. Covering corporate taxes, business income, VAT, and individual income taxation, the guide provides an exhaustive exploration of main incentives, anti-avoidance measures, and withholding taxes. It also presents in-depth knowledge on VAT registration, returns, deductibility, and the mechanisms behind international supplies of goods and services.

Business laws in Italy

The guide further examines various legal aspects like customs, excise, import VAT, accounting procedures, filing requirements, and audit systems. In addition, it offers comprehensive advice on potentially challenging areas like transfer pricing, bankruptcy, reorganisation, debt restructuring procedures, and employment laws.

Local experts

The guide offers you invaluable technical insights from Kreston TDL’s team of experts, to help you make informed decisions and save time and money setting up a business in Italy correctly.

Established in 1985, Studio TDL is an independent Italian firm that specialises in tax, corporate and labour consultancy, and administrative outsourcing services. With a team of Certified Accountants, Statutory Auditors, and Labour Consultants, the firm caters to multinational companies and groups, capitalising on its long-standing relationships with major international professional firms.

The quality of Studio TDL’s services is driven by the team’s high level of expertise. They offer a wide range of services in tax, corporate, accounting, and labour matters, serving both local and international clients. This is supported by the latest methodologies and a vast network of international relations.

Studio TDL’s professionals are active contributors at conferences and trade magazines and are members of study commissions set up by relevant professional institutes in Milan. This engagement, alongside their in-house Study Centre, allows them to maintain current knowledge and develop best practices. As such, they can provide reliable support for even the most complex operations. Their in-depth understanding of the Italian business environment makes Studio TDL a go-to source for business setup and operations in Italy.

Download your own copy of the guide here.

Contact Kreston TDL Italy

Click here to contact Kreston TDL to discuss setting a business up in Italy.

Contact

New Netherlands firm joins the Kreston Global network

Kreston Global welcomes De Beer, a Netherlands-based audit and accounting firm established in 1952, to the network.

Luxembourg firm joins Kreston Global network

Kreston Global has today welcomed Luxembourg firm Global Osiris Audit & Expertise to the Kreston Global network.

Resurrecting a dissolved company

When considering resurrecting a dissolved company several complex issues arise, particularly around intellectual property (IP).

James Hopkirk, Restructuring Partner at Kreston Reeves, offers a detailed examination of these challenges in his article for AAT Magazine

News

Global M&A trends in accounting

Recently, International Accounting Bulletin invited Kreston Global members to comment on global M&A trends in accounting. Mergers and acquisitions (M&A) have become a critical competitive strategy for companies worldwide. However, the landscape varies significantly across developed and developing markets. Kreston Global members Alexandre Kouame partner at Exco ECA in the Ivory Coast, George Itotia from Kreston KM in Kenya, and Chairman of the Board, Rich Howard from CBIZ MHM, share valuable insights to the discussion. Read the full article here or the summary below.

M&A in US and Canada

In developed markets like the US and Canada, M&A activity in 2022 was largely driven by a skills shortage. Companies have had to adapt, embracing remote working environments and supplementing resources through outsourcing and offshoring. Here, M&A provides a platform for immediate resource and capability amalgamation. Another surprising driver for M&A in these markets is succession. As Rich Howard points out, many partners in accounting firms approaching retirement age are seeking mechanisms to monetise their contributions, and M&A provides a sustainable solution.

Technology in M&A

Technology has played a significant role in M&A activity. To stay competitive, firms are investing heavily in technological development and implementation. Private equity investment, while creating some buzz, is not the dominant investment form in the US, according to Howard. Regulatory scrutiny may accompany the introduction of third-party capital, ensuring that relationships between firms and private equity groups adhere to the rules and regulations of the accounting sector.

M&A trends in Africa

Despite the M&A trends in developed markets, businesses in Africa face serious challenges. The lack of liquidity is a crippling factor, and raising funds or attracting investment for crucial M&A operations is difficult. Alexandre Kouame, accountant and statutory auditor at Exco ECA (a Kreston Global member firm), believes the issue lies with the financial sector, particularly European banks operating in African markets. These banks often support European companies established in Africa rather than local businesses.

George Itotia, a partner at Kreston KM, highlights that M&A in Africa isn’t merely about promoting growth, but survival. High taxes and low lending contribute to liquidity problems, resulting in many companies folding. He notes a shift by local lenders to invest in long-term government securities rather than in the private sector, deemed too risky. Thus, foreign direct investment is essential for local M&A to thrive.

However, M&A’s financial, tax, and legal challenges in Africa make partnerships a more viable alternative. Strategic partnering helps local companies collaborate on technology and enhance local personnel’s skills. Although private equity is gaining traction in Africa, Kouame asserts that the margins attracting PE companies are shrinking due to increased competition and tax pressure.

In South America and the Middle East, inflation and other economic challenges have created an uncertain environment for M&A. However, M&A continues to be discussed as a possible path forward.

M&A as a competitive advantage

In conclusion, while M&A offers a significant competitive advantage in developed markets, several obstacles hinder its effectiveness in developing regions. Experts from Kreston Global, including Rich Howard, Alexandre Kouame, and George Itotia, contribute to a more nuanced understanding of this global trend and its various implications. Kreston Global Chief Executive, Liza Robbins, recently wrote a blog on private equity investments in accounting firms. Read her full blog here.

Get in touch

If you would like to talk about M&A in your country, please get in touch.

Get in touch

Investing in Africa: Trade Finance Global magazine

Recently, our Kreston Global expert in Tunisia Tarek Zouari, Managing Partner Exco Tunisie wrote a piece on the trend of investing in Africa for Trade Finance Global magazine

Kreston Pedabo celebrates 25 years with rebranding

Congratulations to Kreston Pedabo in Nigeria, that recently celebrated its 25 anniversary with an Anniversary Symposium.

Kreston Pedabo on Africa Industrialisation Day

Kreston Pedabo share insight on key beneficial legislation for international businesses looking to expand on Africa Industrialisation Day.

News

Carmen Cojocaru

Managing Partner at Kreston Romania

https://www.kreston.ro

Carmen Cojocaru is a highly qualified professional with extensive experience in the fields of accounting, audit, tax, and business process outsourcing. Additionally, Carmen’s involvement with the ESG committee and Kreston Global highlights her commitment to promoting ethical business practices and fostering sustainable growth within the industry.

EFRAG approves European Commission’s adoption of European Sustainability Reporting Standards

August 2, 2023

Sector: ESG

EFRAG has approved the European Commission’s adoption of European Sustainability Reporting Standards (ESRS). The European Commission adopted the first ESRS, set on July 31, 2023. This is mandated by the Corporate Sustainability Reporting Directive (CSRD) and covers environmental, social, and governance matters. The adoption represents a significant step towards relevant and comparable sustainability reporting and identifying sustainability-related financial risks and opportunities for companies.

The European Commission adopted the ESRS after a comprehensive process that began in September 2020. EFRAG played a significant role in this procedure, including submitting a preparatory work report to the European Commission in February 2021, launching a public consultation on Exposure Drafts of ESRS in April 2022, and providing Technical Advice to the European Commission on the final draft standards delivered in November 2022.

EFRAG is putting significant efforts into developing standards for small and medium-sized enterprises (SMEs). Additionally, they are actively preparing guidance to encourage the implementation and interoperability of ESRS with overlapping ISSB standards, contributing to the joint work with the ISSB and ensuring the interoperability of ESRS with other relevant international standards.

On August 23, the EFRAG SRB will have a public session to receive an update on the first draft of the EFRAG Implementation Guidance and FAQ regarding materiality assessment (MAIG) and value chain (VCIG). Papers related to this will be posted on or before August 16, 2023. The EFRAG SRB and EFRAG SR TEG will also review the responses to the European Commission’s consultation for feedback on the Have Your Say portal on the draft ESRS to identify priority areas for further guidance. Furthermore, EFRAG will soon establish a single access point on its website for stakeholders to ask questions about the ESRS application.

Since its inception, EFRAG has aimed to contribute to the progress of sustainability reporting worldwide while preventing EU preparers and users from having to report multiple times. During its public session on August 23, 2023, the EFRAG SRB will receive an update on interoperability with other major standard-setting initiatives. The SRB acknowledges the excellent progress made in interoperability between the ESRS adopted by the European Commission and the ISSB standards published in June (IFRS S 1 and S 2). Additionally, the SRB will receive an update on joint efforts to promote straightforward interoperability of ESRS and ISSB climate-related standards. EFRAG and the GRI have approved a joint statement acknowledging a high level of commonality and the possibility for ESRS reporting entities to report regarding GRI, which will also be submitted to the EFRAG SRB.

According to the SRB, there has been significant advancement in the development of SME standards(both for listed SMEs (LSME) and for voluntary use (VSME)). The progress on sector standards is ongoing, but the European Commission will provide updated information on the timeline in the fall.

To learn more about your ESG reporting obligations, visit our Sustainability pages.

New Netherlands firm joins the Kreston Global network

Kreston Global welcomes De Beer, a Netherlands-based audit and accounting firm established in 1952, to the network.

Luxembourg firm joins Kreston Global network

Kreston Global has today welcomed Luxembourg firm Global Osiris Audit & Expertise to the Kreston Global network.

Resurrecting a dissolved company

When considering resurrecting a dissolved company several complex issues arise, particularly around intellectual property (IP).

James Hopkirk, Restructuring Partner at Kreston Reeves, offers a detailed examination of these challenges in his article for AAT Magazine

News

Liza Robbins

Kreston Global Chief Executive

www.kreston.com

Liza joined Kreston in 2018, after almost a decade with Morison Global. Liza manages all network operational activities, including Board and Global Expert Group liaison. She is focused on the development of the Network as a commercially-viable entity for its members and their clients.

Prior to Morison KSi, Liza held roles at Cision, Thomson Reuters, Conde Nast and Dennis, as well as holding a number of Non-executive roles.

Navigating the trend of private equity investment in accountancy

August 1, 2023

In a significant development highlighting the growing trend of private equity in accountancy, Moore Kingston Smith – a top-10 accountancy firm in the UK – was recently bought by a Dutch private equity group. For the first time in the UK, it will retain its partnership structure. According to press reports, this may lead to an influx of private equity investment locally, in our industry and in other professional services.

I wasn’t surprised to read this news. In recent years, there has been an influx of private equity money into our industry. In 2022, three top-100 US CPA firms were bought by private equity, and there are reports that “six of the largest accounting firms” in the US are currently in talks.

The appeal of accountancy firms for private equity

The trend is by no means restricted to large firms or to the US. So what are the lessons to be learned?

From the point of view of private equity firms, accountancy firms are an attractive proposition.

Our profession offers high client stickiness, with an expanding client base as we venture into advisory services, cybersecurity, internal audit and other related areas. As businesses become more complex, the demand for our services continues to grow. The accountancy sector also offers numerous opportunities for mergers and acquisitions, enabling private equity firms to establish substantial platforms quickly.

Many accountancy firms find the prospect equally appealing.

The traditional ownership model, where new partners buy out equity, is facing challenges. Younger accountants are often reluctant to take on significant debt, particularly when they are uncertain about committing to a single firm for the next three decades. At the same time, senior partners are seeking retirement options.

These circumstances open the door to alternative funding avenues, such as private equity investment.

It can be an excellent choice. There is currently a huge demand for investment in firms – whether that’s in talent acquisition, technology, the development of new services or the implementation of robust ESG policies. Private equity entities have the financial resources to make all this possible.

And their involvement can have a positive ripple effect on our entire industry, potentially raising standards, expediting innovation and driving substantial investment.

But there are also significant challenges when you take this path.

Challenges of private equity investment

Culturally, it can be very difficult to give up control of a firm which you used to regard as yours, sometimes leading to clashes between old and new management. (This can be true for any acquisition.)

There are also the exit strategies of private equity firms to consider.

More broadly, this trend can create pressure on smaller firms that don’t have the same access to funds, either to sell out themselves – or face falling behind their competitors.

The potential consequences of widespread consolidation within the industry remain uncertain, and there are implications for networks like ours, as well. Specific equity funds may prefer the firms they buy to belong to one preferred network, which may result in a lot of movement.

Is private equity right for your firm?

Whether or not the private equity route is right for your firm is a very personal decision – there is no objective right or wrong. By staying abreast with the big players and deals, you will be well-informed about developments. It is also important to consider your own exit plan.

Think, as well, about the future you wish for your team, because this concerns them too. Selling to private equity can provide many opportunities for them, including a more corporate structure, the chance to belong to a larger group, the opportunity to work for a well-funded firm and more. But be aware that others won’t like the cultural change that accompanies this transition.

Ultimately, if you do go down this route, do your due diligence on potential buyers – and look beyond the financial aspects. Do their values align with your firm’s? Will they respect your knowledge and expertise? Is there cultural alignment?

The success of any purchase will ultimately depend on the answers to these questions.

Join the network

Kreston Global is a network of over 25, 000 people across 160 accountancy firms, in 115 countries. If you are thinking of joining an international accounting network, please get in touch.

Get in touch

Latest News

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Kreston Global welcomes De Beer, a Netherlands-based audit and accounting firm established in 1952, to the network.

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Kreston Global has today welcomed Luxembourg firm Global Osiris Audit & Expertise to the Kreston Global network.

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Kreston Global has today welcomed Singapore firm, Helmi Talib LLP (rebranded to Kreston Helmi Talib), to the network.

News

CSR; a tool for employee engagement

January 25, 2023

Laurent Le Pajolec is a passionate advocate for ESG, or Environmental, Social and Governance standards. In addition to being an Exco A2A Poland partner and board member, he is a member of the CSR committee for the whole of the Exco network, and ESG committee member for Kreston Global. He was recently interviewed by the International Accounting Bulletin on his thoughts on corporate social responsibility and its role in employee engagement. Read the full article here, or read a summary of his contribution below.

What is corporate social responsibility?

It is officially recognised as “the responsibility of companies for the effects they have on society” within the European Union. CSR is an inherently outward-looking standard, often supported by law, which considers the impact of a business’s ethics and behaviour on its stakeholders.

Implementing a CSR strategy

Laurent advises a seven-stage process for implementing a CSR strategy effectively. It needs to be a whole-organisation policy and takes robust planning to be executed effectively. The stages are;

Getting support and sharing experience.

Appointing a project manager.

Conducting an audit.

Define a strategy and an action plan.

Evaluate the necessary budget.

Implement the necessary action plan.

Measuring ROI.

Using CSR as an employee engagement tool

Laurent warns about the dangers of under-resourcing a CSR project, particularly as it has so many other benefits, other than complying with the law or reaching minimum standards. It helps you build a better corporate brand, attracting talent that syncs with the business’s purpose, creating a clear vision that all employees can share and be part of, and sharing these values creates highly engaged and motivated teams. This corporate culture could also be a great differentiating point between your company and your competitor, which attracts not only employees, but similar-minded clients, too.

KPIs – measuring your CSR plan for success

Whilst a balance sheet can measure some of the successes of a robust CSR strategy, such as reducing recruitment costs and business development, it is important to not forget to measure customer and employee satisfaction.

To discuss these issues with Laurent, please get in touch.

Latest News

New Netherlands firm joins the Kreston Global network

Kreston Global welcomes De Beer, a Netherlands-based audit and accounting firm established in 1952, to the network.

Luxembourg firm joins Kreston Global network

Kreston Global has today welcomed Luxembourg firm Global Osiris Audit & Expertise to the Kreston Global network.

Kreston Global announces new Singapore firm

Kreston Global has today welcomed Singapore firm, Helmi Talib LLP (rebranded to Kreston Helmi Talib), to the network.

News

Kreston Global Chief Executive Liza Robbins talks to Financial Management Magazine

The latest edition of Financial Management Magazine features Kreston Global Chief Executive Liza Robbins. In a panel interview with journalist Jessica Hubbard, the group discussed how empathetic leadership is critical in times of anxiety.

Empathetic Leadership

In the article Liza offers four points of advice on creating structured support for staff:

Prioritise support

Strengthen key benefits

Signpost support clearly

Employees are your greatest resource – take care of them!

You can read the full interview here.

Latest News

New Netherlands firm joins the Kreston Global network

Kreston Global welcomes De Beer, a Netherlands-based audit and accounting firm established in 1952, to the network.

Luxembourg firm joins Kreston Global network

Kreston Global has today welcomed Luxembourg firm Global Osiris Audit & Expertise to the Kreston Global network.

Kreston Global announces new Singapore firm

Kreston Global has today welcomed Singapore firm, Helmi Talib LLP (rebranded to Kreston Helmi Talib), to the network.

News

Kreston Global starts 2023 by adding eight new firms across four continents

January 23, 2023

LONDON – Kreston Global has begun 2023 by welcoming eight new member firms on four continents: India, Uganda, Lebanon, Japan, Croatia, Bangladesh, Chile and Taiwan.

The eight new member firms are:

Kreston Croatia, based in Croatia (previously LID Revizija)
Kreston ProWorks, based in Japan
Kreston HM, based in Uganda (previously Nexia HMS)
Bhatia & Bhatia, based in India
Accurate Accounting & Audit, now Kreston Lebanon, based in Lebanon
Maria Howlader & Co, based in Bangladesh
Kreston ATC Chile, based in Chile
Top New, based in Taiwan – returning to the Network

Kreston Croatia was founded by Managing Partner Ivan Pečur who has worked in a number of international accountancy organisations over the last 16 years as an audit partner. He is joined by two other partners.

Bhatia & Bhatia was founded in 1981 and provides audit, tax and accounting services to a range of domestic and international clients. It works closely with a broad base of affiliated chartered accountant firms across all major cities in India.

Kreston HM was founded by Managing Partner Hitesh Mehta in 2005. It provides audit, accounting services and tax advisory to international and local clients from its offices in Kampala and Jinja. It has three partners and 45 staff.

Accurate Accounting & Audit was founded in 2021 and is led by four certified auditors. It has over 20 staff based in its central Beirut offices, providing services to corporate and private clients across the construction and building supplies, professional partnerships, hospitality, retail and sports sectors.

Maria Howlader and Co is based in Dhaka, Bangladesh and comprises 34 employees and offers audit, accounting and tax services to international businesses and foreign subsidiaries based in Bangladesh and overseas.

Kreston ATC Chile is a newly established firm in Chile, based in Santiago. The firm has 24 staff and five partners, and is led by Managing Partner Hans Caro. The firm is made up of previous Kreston partners including Ricardo Gameroff who is already involved with the Kreston network through the Global Audit and Quality

Groups. The firm has a number of international clients and specializes in external and internal audits, taxes, risk advisory, forensics, payroll and bookkeeping.

Top New & Co is based in Taipei, Taiwan and is returning to the Kreston network after a few months away. Run by Yashu Hung, who is the lead audit partner, together with two other audit partners and a staff of 20, they offer audit and accounting services to a range of privately owned and not-for-profit organisations.

2022 saw Kreston Global holding its hugely successful network-wide conference in Madrid, the first in-person conference the network has held since the pandemic began. 2022 also saw the launch of its first Environmental, Social and Governance Advisory Committee, launch of new international steering groups for Internal Audit, Transfer Pricing and Life Sciences, and lastly a flagship thought leadership report, ‘The Interpreneur Mindset’.

Liza Robbins, Chief Executive of Kreston Global, said:

“It is with great pleasure that I welcome our latest joiners to the Kreston Global network. To have eight firms join in a short period is a major achievement, but to have eight firms of this calibre join is a significant testament to our depth and breadth.

“In recent years we have spent a great deal of time evaluating and fine-tuning our strategy. We have listened closely to our members, working with them on a range of areas and launching a number of exciting new initiatives. I am excited to move into 2023 with both our existing and new colleagues as we continue to develop our proposition to the entrepreneurial business community.”

Get in touch to talk about how Kreston Global firms can help your expanding business in these eight countries.

Connected Leadership testimonial, Ryoji Kuroiwa

A testimonial for the Connected Leadership programme run by Kreston Global, from Ryoji Kuroiwa, Ark LLC in Japan.

India’s Digital Personal Data Protection Act, 2023 (DPDP Act)

The Digital Personal Data Protection Act, 2023 (DPDP Act) was passed in India on 11th August 2023. Darshil Surana at Kreston OPR Advisors explains.

A guide to starting a business in Chile

Kreston ATC Chile has launched a comprehensive new guide to starting a business in Chile.

News

Kreston launches new ESG task force for member firms

December 12, 2022

Sector: ESG

As part of the new strategic plan, Kreston Global has launched an ESG Advisory Committee. The committee will be set up as a task force to help guide the network through key areas of ESG and sustainability focus.

The task force, which will be led by Kreston Global Board member and Senior Partner at member firm Kreston Reeves, Andrew Griggs, will comprise expertise from across the network.
Our task force members are :

Stuart Brown, Head of Technical and Compliance, Duncan & Toplis; Carmen Cojocaru, Managing Partner, Kreston Romania; Laurent Le Pajolec, Managing Partner and Board Member, Exco A2A Polska; Ewan McClymont, Director of Business Development, Bishop Fleming; Karla Pastor, Head of Sustainability, Kreston FLS; Ganesh Ramaswamy, Tax Partner, Kreston Rangamani; Mahendra Rustagi, Chief Executive Officer, Kreston SNR; Christina Tsiarta, Head of Sustainability, ESG & Climate Change Services, Kreston ITH; Pam Tuckett, Partner and Head of Education, Bishop Fleming and Sheree Harrison from CBIZ MHM.

The three areas are assessing the regulatory environment within which our member firms operate internationally; providing guidance for member firms to implement sustainability strategies, and developing ESG advisory services for clients.

The task force aims to begin to issue some guidance and support to firms by early Autumn and report back to the World Conference in Dubai in December 2023.

Latest News

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Kreston Global announces new Singapore firm

Kreston Global has today welcomed Singapore firm, Helmi Talib LLP (rebranded to Kreston Helmi Talib), to the network.

News

Kreston Global welcomes Slovakia member firm

April 29, 2022

Sector: ESG

Kreston Global has today welcomed A4 GroUP, based in Slovakia, to its global network.

A4 GroUP was established in 2021 by merging two companies with more than 15 years of tradition in the market which created one of the largest consulting companies in Slovakia, providing audit, tax advisory, legal and accounting services, payroll services and specialist services such as ESG reporting and cybersecurity. It advises a range of companies and government institutions, including Bratislava’s international airport, The City of Bratislava, The Slovak Republic’s Ministry of Justice, the Supreme Court of the Slovak Republic, and the National Bank of the Slovak Republic, on multiple issues of data security.
The A4 GroUP has 44 employees, and five founding partners, including Head of Advisory Julius Cincala.

A4 GroUP is rebranding as Kreston Slovakia to be able to better serve its international clients looking for global reach

Liza Robbins, Chief Executive of Kreston Global, said:
“It is with great pleasure that I welcome A4 GroUP to the Kreston Global network. We are experiencing an unprecedented level of growth, a tribute to the exciting work carried out across the network in recent months and years. We will be working with our newest colleagues to build their links across the network as they explore new opportunities both at home and abroad.”

Julius Cincala, Partner and Head of Advisory at A4 Gro, said:
“Kreston Global are an established presence throughout the world and as such they were our first port of call when we made the decision to build our international profile. We look forward to supporting our existing and future clients in their aspirations in the region.”

Latest News

New Netherlands firm joins the Kreston Global network

Kreston Global welcomes De Beer, a Netherlands-based audit and accounting firm established in 1952, to the network.

Luxembourg firm joins Kreston Global network

Kreston Global has today welcomed Luxembourg firm Global Osiris Audit & Expertise to the Kreston Global network.

Kreston Global announces new Singapore firm

Kreston Global has today welcomed Singapore firm, Helmi Talib LLP (rebranded to Kreston Helmi Talib), to the network.

News

New PCAOB rules are on the way for lead auditors

March 16, 2022

As more companies expand on a multinational scale and their requirements become ever more complex, it’s increasingly common for their auditors to work with several other audit firms.

In fact, the Public Company Accounting Oversight Board reports that multiple auditors were used in 30% of all issuer audits in 2020, and nearly 30% of these had five or more separate audit firms involved.

This is a valuable and necessary way of working in many cases, ensuring the lead auditor’s report is backed up with sufficient evidence. But it also comes with its challenges.

Over the past few years, the PCAOB has been amending its requirements to increase the lead auditor’s involvement in these cases, and it recently issued a second request for comment on its proposed changes.

Essentially, the proposals aim to make lead auditors responsible for planning, supervising and evaluating the work of other auditors – not just using their reports and work.

With responses currently under review, the project could reach a conclusion soon, bringing about new standards for auditors to meet.

The challenges of working with multiple auditors

The role of other firms during the audit process has become more important as companies’ global operations have grown.

In many cases, the lead auditor will issue the auditor’s report, but they will be assisted by other auditors in obtaining enough appropriate audit evidence to support their opinions.

The PCAOB has pointed out, however, that working with auditors from other firms can be a very different experience to conducting an audit solely within one firm.

Business practices, communication styles and quality control systems can differ from one audit firm to the next – and then, when working across multiple countries, you have the potential for differences in language, culture and market conditions.

All of this can add up to miscommunication and misunderstandings about what’s required of the auditor in different firms. If the lead auditor isn’t directly supervising the work of other firms and evaluating the evidence they provide, this could affect the quality of the audit.

In recent years, the PCAOB says some firms have been increasing their lead auditors’ responsibilities when working with others, but not all have made these improvements. The board says its findings show that increasing auditors’ involvement and supervision in this area should lead to better quality audits, and better protection for investors.

The proposed changes

The PCAOB first published its proposed amendments on this topic in 2016. It aimed to “strengthen existing requirements and impose a more uniform approach to the lead auditor’s supervision of other auditors”.

In response to comments on this, it revised the proposals and issued a supplementary request for comment in September 2017.

Then, in response to further comments, the PCAOB issued a second supplementary request for comment in September 2021.

These most recent amendments are intended to:

adjust certain requirements to better take into account the lead auditor’s role in the audit, and
improve the readability and usability of the amendments and facilitate their implementation.

The responses to this request are currently being analysed.

Get in touch to talk about audit requirements for a multinational organisation.

Latest News

New Netherlands firm joins the Kreston Global network

Kreston Global welcomes De Beer, a Netherlands-based audit and accounting firm established in 1952, to the network.

Luxembourg firm joins Kreston Global network

Kreston Global has today welcomed Luxembourg firm Global Osiris Audit & Expertise to the Kreston Global network.

Kreston Global announces new Singapore firm

Kreston Global has today welcomed Singapore firm, Helmi Talib LLP (rebranded to Kreston Helmi Talib), to the network.

News

Kreston Global network welcomes Honduras member firm

March 15, 2022

LONDON – Kreston Global welcomes Alfaro y Asociados, based in Honduras, to its global network.

Alfaro y Asociados is one of the leading accountancy firms in Honduras. It specialises in providing audit and accountancy, corporate finance and tax services to domestic and international businesses in the country. Founded in 1995 by current managing partner Juan Angel Alfaro, it consists of three partners in total and 20 other fee-earners.

Alfaro y Asociados advises clients in a broad range of sectors including agriculture, banking, construction, retail, real estate, finance, tourism, hospitality, healthcare and manufacturing. It is authorised by the Honduras National Banking and Insurance Commission.

Alfaro y Asociados is the fifth firm to join the Kreston Global network in recent months, following the arrivals of member firms in Kuwait, Bahrain, Germany and the Bahamas. Like many of the other new firms recently joining, the firm has decided to rebrand to become Kreston Honduras to align itself to their new international brand and network.

2021 saw the Kreston Global network celebrating its 50^th anniversary as well as undergoing its own rebrand.

Juan Angel Alfaro, Managing Partner at Alfaro y Asociados, said:

“Kreston Global is a major player in the international accountancy space and we have been consistently impressed by their dynamic and collaborative ethos. My colleagues and I are excited to be partnering with the Kreston Global community, both to further the ambitions of our domestic clients looking to overseas markets, and to support international businesses doing business in Honduras.”

Liza Robbins, Chief Executive of Kreston Global, said:

“Honduras is a growing international business centre and Alfaro y Asociados are one of the most established firms in the country. Their rigorous expertise and their knowledge of the Honduras business landscape has already proved invaluable to their clients over the decades. We will be working together to bring that experience to Kreston Global clients all over the world.”

Ecuador hit with VAT increase in 2024

Kreston Global network welcomes new Argentinian firm

Kreston Global welcomes Kreston BA Argentina to the network.

Understanding the Mexican Federal Revenue Law 2024 update

The Mexican Federal Revenue Law 2024 update by the Mexican Senate is now benefitting from the recently approved Federal Revenue Law for the fiscal year 2024, marking a significant increase in the country’s projected revenues.

News

Kreston Global reports strong growth to retain 13th place in 2022 IAB worldwide network ranking tables

March 11, 2022

Kreston Global is still the 13th largest network in the world.

Kreston Global’s Network ranking has just been published by the International Accounting Bulletin, and remains at 13^th in the World, thanks to worldwide revenues of $2.6bn, an 8% increase on last year’s figures of $2.4bn. The rankings cover the financial year period of 2021.

“A very good result for the Network, particularly against the Covid backdrop “ commented Liza Robbins, Chief Executive, noting that a number of new firms had joined Kreston in late 2021/early 2022 so were not included in the Kreston 2021 revenue figures. “We feel that 2022 is shaping up to be a transformational year for Kreston Global, with many new firms coming on board and exciting new initiatives in the pipeline.”

Click here for more IAB ranking information on Kreston Global 13th largest network position – you do need to be a subscriber to access the tables.

New Netherlands firm joins the Kreston Global network

Kreston Global welcomes De Beer, a Netherlands-based audit and accounting firm established in 1952, to the network.

Luxembourg firm joins Kreston Global network

Kreston Global has today welcomed Luxembourg firm Global Osiris Audit & Expertise to the Kreston Global network.

Resurrecting a dissolved company

When considering resurrecting a dissolved company several complex issues arise, particularly around intellectual property (IP).

James Hopkirk, Restructuring Partner at Kreston Reeves, offers a detailed examination of these challenges in his article for AAT Magazine

News

Supporting Kreston Ukraine

March 7, 2022

Kreston Global condemns the war in Ukraine and the violation of international law. We are deeply troubled at the terrible impact on innocent people in Ukraine, Russia and Eastern Europe, and we stand by all people suffering from oppression anywhere in the world. We very much hope for a quick and peaceful resolution to this tragic situation.

We can confirm that Kreston Global does not have any member firms operating in Russia. Our member firm in Ukraine – Kreston Ukraine – has understandably been impacted by the current situation, and we are doing everything we can to support their team during this difficult time.

Accounting firms play a critical role in ensuring relevant economic measures and sanctions are applied effectively. To do so, our firms are encouraged to use resources available from professional bodies and government departments in their respective jurisdictions and to seek guidance from Kreston Global. As trusted advisors, our member firms will continue to support clients as they manage the significant disruption that these changes will bring.

Kreston Global firms from around the network have been in touch with offers of support. Kreston Ukraine has set up a fund to support its employees at this time. If you are a member and would like to offer support, please contact us here.

New Netherlands firm joins the Kreston Global network

Kreston Global welcomes De Beer, a Netherlands-based audit and accounting firm established in 1952, to the network.

Luxembourg firm joins Kreston Global network

Kreston Global has today welcomed Luxembourg firm Global Osiris Audit & Expertise to the Kreston Global network.

Kreston Global announces new Singapore firm

Kreston Global has today welcomed Singapore firm, Helmi Talib LLP (rebranded to Kreston Helmi Talib), to the network.

News

Value Chain Analysis

June 15, 2021

Sector: Manufacturing & Automotive

Value Chain Analysis

By Nipun Arora, Kreston Ardent CAtrust PAC, Singapore

Post BEPS (Base Erosion and Profit Shifting), Transfer Pricing Documentation requires analysis of the global value chain and identification of value drivers. Para 1.51 of the 2017 OECD Guidelines states that it is important to understand how value is generated by the group as a whole and the contribution that the related parties make to that value creation.

In line with the BEPS objective, the Singapore IRAS also endorses the principle that profits should be taxed where the real economic activities generating the profits are performed and where value is created.

Value chain analysis involves a thorough understanding of the functions, risks, and assets of the group as a whole and evaluating how they are in alignment with the value drivers. This analysis would assist in the attribution of profits to the respective group entities.

Case Study

SGPL is a company incorporated in Singapore and is in the business of manufacturing industrial equipment. The manufacturing facility of SGPL can only cater to a limited category of industrial equipment.
The customers of SGPL are majorly from the Middle East Region. SGPL negotiates with its customers on a principal-to-principal basis and finalises the contract terms.
PTX, a company incorporated in Indonesia, is the wholly-owned subsidiary of SGPL and is also in the business of manufacturing industrial equipment. The manufacturing facility of PTX can cater to a wide category of industrial equipment.
The customers of PTX are majorly local companies i.e., companies in Indonesia. PTX negotiates with its customers (in Indonesia) on a principal-to-principal basis and finalises the contract terms.
SGPL subcontracts the majority of projects, that is acquires, to PTX. The procurement of input materials is undertaken by SGPL and assembly is undertaken by PTX.
SGPL also undertakes procurement of input materials for its manufacturing and also for the independent contracts of PTX with its customers.
The brand name is owned by SGPL and PTX has been granted the right to use the brand name in its territory.

Evaluation of functions, risks, and assets

Some pertinent questions to consider:

Has SGPL guaranteed any part of the capacity of PTX? Can any part of the idle capacity of PTX attributed to SGPL and the corresponding remuneration?
Would SGPL be required to compensate PTX for idle capacity where the capacity has not been utilised by SGPL during a particular year, for example, downturn due to covid?
Do SGPL and PTX undertake inventory functions, such as the warehousing of raw materials procured, or is it a just-in-time purchase?
Concerning procurement function, does SGPL act as a support services provider/ commission agent/ buy-sell entity? Key aspects to be considered in this regard – location savings, supply chain intangibles, logistics.
Which entity undertakes the functions related to intangibles i.e., development, enhancement, maintenance, protection, exploitation?

Conclusion

Tax authorities around the world are evaluating transfer pricing outcomes based on value creation analysis. Realignment of taxing rights with the economic substance is the key message from the BEPS actions. Therefore, the taxpayers must prepare robust documentation along with underlying evidence to substantiate the substance alongside form.

Kreston Global announces new Singapore firm

Kreston Global has today welcomed Singapore firm, Helmi Talib LLP (rebranded to Kreston Helmi Talib), to the network.

A guide to setting up a business in Australia

In this guide to setting up a business in Australia, McLean Delmo Bentleys offers expert advice on establishing a business, complying with local regulations and understanding reporting obligations services to guide companies through the establishment process, ensuring successful market entry.

A guide to setting up business in Cambodia

The team at Kreston Cambodia have written a guide to setting up business in Cambodia. The guide offers local insight on registering a business in Cambodia, Cambodian tax regulations and a list of free trade agreements.

News

Updates to international financial reporting standards (IFRS) in Q2 2021

June 11, 2021

In May this year, the IASB issued updates to IFRS-16, with regard to rent concessions, and to IAS-12, which covers leases as part of income tax reporting.

The international financial reporting standards (IFRS) are a set of international accounting standards issued by the IFRS Foundation and the International Accounting Standards Board (IASB). They’re intended to bring transparency, make international comparisons more straightforward and give investors the information they need to make decisions.

The standards are frequently updated, as in the case of these two recent changes – but what do those amendments mean in practice?

Clarity on accounting for deferred tax on leases

On 7 May 2020, the IASB issued amendments to IAS-12, the IFRS standard on income taxes, clarifying how companies should account for deferred tax on transactions such as leases, or decommissioning obligations.

IAS-12 established how an individual company should account for income tax, including any deferred tax representing tax payable or which is later recoverable.

In certain circumstances, companies aren’t obliged to recognise deferred tax (that is, to record them in the financial statements that form the body of their accounts) the first time they recognise assets or liabilities.

In the past, whether the exemption applied to leases and decommissioning obligations, which companies recognise as both asset and liability, was something of a grey area.

This amendment removes that ambiguity, making it absolutely clear that companies are expected to recognise deferred tax on transactions of this type.

The amendments take effect for annual reporting periods beginning on or after 1 January 2023. Companies can choose to apply the amendments before that date under the principles of ‘early application’.

Extension of practical relief for COVID-19 rent concessions

On 31 March 2021 the IFRS issued ‘Covid-19-Related Rent Concessions beyond 30 June 2021’.

This amendment to IFRS-16 extends a ‘practical expedient’ (effectively an emergency measure) by a year, first announced in May 2020 as part of the global response to COVID-19.

The expedient recognised the impact of the COVID-19 pandemic on businesses. Many sought rent concessions from landlords as part of an effort to control cashflow as, for example, footfall in city centres dropped drastically due to national lockdowns.

Under the practical expedient, lessees were not required to assess whether rent concessions counted as ‘lease modifications’ for accounting purposes.

Without this amendment, the concession would have expired at the end of June 2021, while many world economies are still grappling with COVID-19 or its aftermath.

Under the terms of the recent amendment, a lessee can apply the expedient to COVID-19-related rent concessions for which a reduction in lease payments affects only payments originally due on or before 30 June 2022.

The lessee is required to apply the amendment for annual reporting periods beginning on or after 1 April 2021.

They must also apply the amendment retrospectively, with the cumulative effect of its initial application being recognised as an adjustment to the opening balance retained earnings. Disclosure requirements under paragraph 28(f)1 of IAS-8, ‘Accounting Policies, Changes in Accounting Estimates and Errors, don’t apply on this initial application.

Contact your local Kreston audit contact (or admin@kreston.com) for more information or to talk about how these changes might affect your company accounts.

New Netherlands firm joins the Kreston Global network

Kreston Global welcomes De Beer, a Netherlands-based audit and accounting firm established in 1952, to the network.

Luxembourg firm joins Kreston Global network

Kreston Global has today welcomed Luxembourg firm Global Osiris Audit & Expertise to the Kreston Global network.

Kreston Global announces new Singapore firm

Kreston Global has today welcomed Singapore firm, Helmi Talib LLP (rebranded to Kreston Helmi Talib), to the network.

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