HI Guybrush
On the basis of my understanding I thought that pakistani companies are losing out. I put down my understanding first and kindly let me know if I am correct b4 we proceed further
Big four in pakistan are associated with UK practices. They use this association to drive to new clients within pakistan. As a result if they get a new client using their associated contacts, they are obliged to pay to foreign associate a sum of money. In doing so the clients already existed in pakistan. Say xyz was with AFF, it was taken over by KPMG by persuing aggressive marketing policies and using their UK KPMG contact. Apart from this I understand that there is no other business that flows from foreign associates to Pakistani companies. is it correct?
Talking of KPMG, their global chief is in india, any ideas whats he doing in india.
Thanks
zubair
well adding further to the discussions
first of all there are three real big firms AFF, FRSH and THK. I dunno much abt MYAS with ref to KHI but in lahore atleast this is the situation. They all have like 15-20 partners in Pakistan.
The procedure i presume is that they are working on local clients, plus some MNC which they attain some due to rotation and some due to them being members of Int. firms. but its not like calling the UK partner and telling him to pressurise the local company for their selection as auditor instead of company XYZ. The parent company has to do this and that surely due to the reason if the parent feel like it.
I have a lot of examples where parent's auditors are different than local company's auditors inspite of having a member firm of the parent's auditor in the country.
At times its like the Int firms have there own audit guidelines in addition to local requirements and they feel like there local members would be able to conduct audit more efficiently than other firms.
Acha lets take an eg. PwC's major clients are mostly huge US based Most of them may have no local company in Pakistan, but still AFF in Pakistan is earning....
There may be some influence on the local company to switch over for the local member firms of their parent's auditors but at the end of the day its certainly the quality of audit not firm
One of the benefit for the local firms which are members of Int. firms is
for eg
Mr ABC a partner in abc international calls Mr XYZ partner xyz and Co. Pakistan.
Hey XYZ how r u, i am partner and I have a client EFG Inc USA. This client of mine is looking for investment in Pakistan and is looking for some local company. whats the requirements blah blah ,,,,,,,,,,and lastly "i hope we will be working in future for this project of mine"
Here starts the game.........Mr XYZ and xyz & Co. will earn per there man hours (yet paying no royalty......i need clarity on this)
and they will not be sharing any money with their UK or US office..........
As regard the query if pakistani firms are loosing or not ... well they are not.. really.... they are into mergers... a lot of proposals are running with sole proprieters merging for 4-5 partner firm and many more...(SECP has disallowed using , for a sole proprieter, name of firm like, ABC & Co. Chartered Accountants..... instead word Accountant be used for "Accountants"... so these kinna restrictions may also prove helpful for more mergers) ICAP's past president has for quiet a no. of times appreciated for the firms to merge to become a good business partners and advisors..........
(i am willing for the coments on my post)
Regards
Thanks XBRL for highlighting the area of business.
Any other area of business anybody is aware of OR any other benefit that is driven out of this association between pakistani companies and Foreign companies.
zubair
Hi Guybrush and all
When I first came to know about the association of pakistani companies and UK practices, I was delighted, I thought that backend operations are being transferred to pakistan by foreign practices, which is a multi billion (yes billion) dollar industry.
With time speaking to the professional and other contacts, I realized that its nothing more than a marriage of convenience for foreign companies. They use pakistani associates when there is a project within pakistan, but no new work flows to the country.
All the foreign practices are taking their backend and middleend operations to countries around pakistan, not even to Eastern Europe. I honestly believe that If big practices of pakistan had collaborated with medium or smaller size foreign practices, they had more chance of becoming the backend offices of these practices whose turnovers runs in millions of dollars and pakistani practices would have accessed the bigger market. But collaborating with big practices they have effectively killed off such a move by any small or medium sized foreign practice.
FOr the benefit of those who want a bit more detail, I have worked for over 5 years with my last employer. The company happened to be a respectable city based firm of Jewish Chartered Accountants. I controlled the tax side and as such I had a limited (very limited) say in the Top managments' decision making process. The senior partner visited Pakistan in or around December 2000. As soon as he became aware that all the reputable companies are associated with big UK names he cancelled his program of meetings with such companies, he did other things and came back to UK but backend operations were not taken to pakistan. I think pakistani practices should aim to maximise the revenue potential and should aim to associate with companies of small or medium size.
Thanks
zubair