Risk Management

Introducing RSM Bentley Jennison

Tony Stockdale, National Managing Partner and Team

RSM International Conference, Singapore 2007

Objective

• Structure

• Strategy

• Service Lines

• “Refreshingly different”


Group Structure

Board

Tony Stockdale

Managing Partner

Corporate Finance Audit & Business Services Risk Management Financial Management

Internal audit

Forensic & Investigation

Information Systems

Assurance

Consulting

Overseas


Lead Advisory

Transaction Services

Tax

Audit

Business Services

The Competitive Environment


BJ and the Market

Competitive Environment

• Number of competitors will continue to fall, especially those providing audit services

• Compliance work increasingly becoming a commodity, resulting in lower margins

• Practices/industry will look to reduce costs, possibly by outsourcing overseas

• Clients will buy specialist skills and advisory work, providing they improve the business operation

• New competitors will continue to enter the market in all our service lines


BJ and the Market

Competitive environment- how are we responding?

• Increasing our advisory income

• Building our corporate sector risk management business

• Joining a leading international network and linking up with like minded practices overseas


Marketing Positioning

Client Turnover

$0m $50m $200m $4bn

RSM BENTLEY JENNISON


Marketing Positioning

Client Turnover

$0m $50m $200m $4bn

ABS RISK MANAGEMENT

OWNER

MANAGED

MID

CORPORATE

LOCAL OFFICE

NATIONAL

WITH LOCAL

DELIVERY


LARGE CORPORATE

NATIONAL

What’s Next?

• Audit & Business Services

• Corporate Finance

• Tax

• Risk Management


Audit & Business Services

Phil Coleman, Head of Audit


Audit

Some opening statistics

• Some 1,400 audit clients

• 30 Partners/Directors with signing powers

• 350+ staff in 10 locations

• Wide range of activities and markets


Audit

Our audit approach is risk-based and ISA+ compliant

• Audit is a key specialism

• Our methodologies are similar in style

• ISA+ is ISA with a twist

• Key drivers:

– Risk assessment and response

– Communication

– Efficiency


Audit

Constant improvement is at our heart

• Regular training of staff

• Methodology reinforced

• Quality Assurance Visits to all locations annually

• Communication with clients is key feedback


Audit

Developing specialisms to meet needs

• Adding and developing the team

• Accreditation based

– AIM, Pensions, Charities, Grants, Not for Profits

• Changing market leads to new developments


Business Process Outsourcing

• Company formations

• Book-keeping

• Financial control

• Management reporting

• Payroll & benefits management

• Statutory returns

• Multi-location co-ordination

• Relationships with HMR&C

• Prepare audit files

• Several major contracts

• Communication is important

• Process re-engineering

• Software platforms

• Off-shoring


Internationalisation

• Changing client base

– Accelerating

• Changing reporting framework

– Standstill to surge

– IFRS & US GAAP

• Changing services

– Sign off to US standards

• Changing skills

– Adding to the US/IFRS skill set


Mark Eardley, Head of Corporate Finance


Overview

• Business growth

• Sell side business – M&A

• Buy side business – M&A / TS

• AIM Services

• Impact of RSMi


A Growing Business

Growth in fees

• 2004: $2.0m

• 2005: $4.0m

• 2006: $5.6m

• 2007: $7.5m

Growth in average deal size

• 2004: $6m

• 2005: $10m

• 2006: $12m

• 2007: $16m


Strong Sell side business – M&A

• Strong delivery teams in major UK offices - London,

Birmingham, Leeds, Manchester

• Transaction size up to $100m

• At least 30 M&A deals in 2007

• Aggregate value: $500m


Strong buy side – M&A

Strong Deal-Origination (“Growth Engine”)

• Dedicated team

• Imperfect marketplace – on-market and off-market

• Access to 4,000 vendor advisers

• Strong engaged Alternative Investment Market (AIM) client base

• Key for follow on services

• Significant opportunity to develop internationally

• Strong project management team


Strong buy side – Transaction Support

• Joint CF/Audit delivery playing to strengths

• Multi-disciplinary accreditation based team:

– 8 Partners

– 9 Managers

– Others as required


Strong buy side – Transaction Support

• Due diligence covering:

– Financial

– Systems

– Pensions

– HR

– Tax

• Clients include:

– Corporates

– Banks

– Private Equity Groups


AIM Services

The London AIM Market

• Established 1995

• Less Regulated compared with “Full Listing”

• Increasingly becoming the market of choice for IPO – wide range of industries

• Providing access to capital for the smaller and mid corporate companies

• LSE to open an office in Shanghai to encourage PRC companies to list in London


AIM Services

Significant target market

• Strategic importance

• Growing market place

• Wide service needs

• International dimension


AIM Services

Key service needs for AIM businesses

• Lead advisory

• Reporting accountants and transaction support

• Audit and assurance

• Taxation consultancy services

• Risk management and Corporate Governance


Impact of RSMi

• Higher quality disposal mandates

• More international “buy side” M&A

• More Transaction Support assignments for overseas corporates

• Increase in Reporting Accountants work – AIM overseas flotations

• Relationship opportunities with RSM Equico


Rob Meek, Head of Corporate Tax Services


Tax - The Leading Edge

Overview

• Strong national tax team covering all areas of tax – from private client services through to specialist corporate, transactional and cross border advice

• Focus on mid-corporate businesses

• Specialist tax arm servicing smaller accountancy practices

• Specialist public sector tax arm



Key statistics and objectives

• Currently 140 partners and staff

• Targeting 200+ by 2010

• Change of balance to consultancy work

• Further penetration of mid-corporate market

• Attacking certain channels

– Personal wealth

– Property & construction

– Transactional taxes

– Corporate consulting

– International (now !!)



• Major recruitment drive

• Additional partners in London and key offices

• Our growth track record and positive approach reinforced by strength of RSMI network is generating a stream of potential recruits

• Industry press coverage



International Work

• Teams in place in London, Birmingham, Manchester & Leeds

• Accredited team of RSMi dedicated 20 Corporate tax specialists

• Enhanced training on US/UK tax treatments and international tax issues generally

• Advisory work monitored by:

– Rob Meek – Head of Corporate Tax Services

– John Bowes – Head of International Taxes



How can you help us?

• Sharing thoughts on tax trends and solutions

• Positive business development processes

• Lend us your international experience, eg re-enforcement of our transfer pricing group

• Assist targeting on UK multinational groups

• Joint targeting of UK and European Private Equity



How can we help RSMi ?

• Top quality UK tax advisers and compliance delivery

• Capacity and energy for new work

– UK

– US

– Europe

• Promotion of cross border business development ideas, articles, briefings, products, training

• Secondments (maybe as part of a global staff retention plan?)


Risk Management and ISA


Key Facts

• Started in 1989

• Single national Risk Management practice from 2001

• We are now the largest specialist provider of internal audit and related services in the UK

• The division has more than 600 large corporate and public sector clients

• The largest UK corporate member of IIA UK and Ireland


Key Facts

• We employ more than 330 staff in the division

– 220+ internal auditors

– 30+ specialist IT auditors

– 50+ fraud investigators/forensic accountants

– 25 consultants

– 15 programmers/project managers


Key Facts

• Major London presence – more than 60 staff and over

$15m fees

• Large technical support department

• Significant internal audit experience including Sarbox and governance backed by IT specialists

• Largest forensic/investigative capacity outside of the Big 4

• Significant existing overseas clients and work

• Integrated with other parts of the division and wider RSM

Bentley Jennison – a complete service


Why “Risk Management” ?

HEAD OF DIVISION

Richard Smith

SPECIALIST SERVICES

Consulting

Paul Brown

Forensic

Accounting

Chris Hine

BIIS (Fraud)

Paul Bell


ISA

Ian Blatchford

IT solutions

John Jennison

Overseas Risk Mgt

Phil Tarling

INTERNAL AUDIT

Mike Gennard

Internal Audit Services

• Largest specialist Internal Audit provider in the UK (and Europe)

• 450 large IA clients across all sectors

• Co-sourcing, outsourcing of core audit work

• Specialist audit inputs (IT, Tax, Contracts etc)

• Bespoke approach

• 4Audit © system

• Large in house technical team

• Reports database for benchmarking


Internal Audit – Client Mix

• Numerous large corporates

• Numerous Government departments

• 100+ Hospitals and healthcare providers

• 60+ Social housing providers

• 200+ Further Education (FE) Colleges

• 30+ Universities and HE Colleges

• 70+ Local Councils

• 40+ Emergency Services (Police, Fire, Ambulance)

• 100+ Charities


Information Systems Assurance

• What we do?

• Definition: Provide assurance that information technology systems and the processes those systems support are functioning as intended and that all significant risks are being appropriately managed



Structure, skills and role

• National team

• Own ISA client work

• Provide support to the Internal Audit client base

• Provide support to the External Audit client base

• Provide support to Forensic teams

• Very experienced team – Big 4 & experience of GMNC’s & Sarbox

• CISA preferred qualification supported by CISSP/CISM



Services

• IT Internal Audit Services

• Risk and governance services

• Sarbanes Oxley services

• Third Party Assurance (incl. SAS 70 reviews)

• Information security

• Business Continuity Management

• Data Management

• Project Risk Assurance



Selected of clients & engagements

• Galiform Plc (Retail/Manufacturing)– IT Internal Audit outsource

• Premier Foods Plc (Food Manufacturer) – Programme assurance

& SAP project assistance

• Beazley Plc (Insurance) - IT Internal Audit outsource

• Blacks Plc (Retail) – Business continuity planning

• Heritage Plc (Insurance) – IT Internal Audit outsource

• University of Staffordshire – Strategic IT Review

• JCB (Manufacturing) – SAP Security Review

• British Computer Society – BS7799 benchmarking


Specialist Services

IT Solutions – Risk management related applications

• 4Audit ©

• 4Risk ©

• 4Action ©

• 4Performance ©


Overseas Working - Some Clients

• United Nations

• Department for International Development

• Polish Government

• Turkish Government

• European Union

• OHR (Bosnia)

• OXFAM

• NAAFI

• Isle of Man Government

• States of Jersey and Guernsey


Overseas Working - Services

• Internal audit and risk management training

• Fraud investigations

• IT audit

• Forensic Accounting

• Audit of NGOs and third party funded projects

• Internal audit and governance reviews

• General consulting on governance and risk management

• Grant certification

• Accounting advice on IFRS etc


Overseas Working - Where We Work

• Bosnia

• Italy

• France

• Nicaragua

• Turkey

• Germany

• Indonesia

• Spain

• Channel Islands

• Australia

• Poland

• Puerto Rico

• USA

• Portugal

• South Africa

• Bangladesh

• Bolivia

• Isle of Man

• Netherlands


How RSMi can help us ?

• Increase the proportion of our work in large corporates – a big opportunity

• Use Risk Management to access larger corporates for wider RSM Bentley Jennison services

• Increase sales, worldwide, of our specialist software

• Increase our international presence in both the public and corporate sectors


How we hope to help RSMi

• Assist in the development of risk management related services worldwide

• Take the lead in Europe and Africa for risk management

• Provide secondment opportunities

• Assist with joint bidding – Corporates and “Not for Profits”

• Provide appropriate access to software tools for RSM members and clients


Key Strengths

• “Can do” attitude

• Client service

• Quality of people

• Dynamic

• Desire and leadership

• Committed to RSMi


“The greatest danger for all of us is not that our aim is too high and we miss it, but that it is too low and we reach it.”

Michelangelo


Risk Management

Introducing RSM Bentley Jennison

Objective

Group Structure

BJ and the Market

BJ and the Market

Marketing Positioning

RSM BENTLEY JENNISON

Marketing Positioning

What’s Next?

Audit & Business Services

Audit

Audit

Audit

Audit

Business Process Outsourcing

Internationalisation

Overview

A Growing Business

Strong Sell side business – M&A

Strong buy side – M&A

Strong buy side – Transaction Support

Strong buy side – Transaction Support

AIM Services

AIM Services

AIM Services

Impact of RSMi

Tax - The Leading Edge

Tax - The Leading Edge

Tax - The Leading Edge

Tax - The Leading Edge

Tax - The Leading Edge

Tax - The Leading Edge

Risk Management and ISA

Key Facts

Key Facts

Key Facts

Why “Risk Management” ?

Internal Audit Services

Internal Audit – Client Mix

Information Systems Assurance

Information Systems Assurance

Information Systems Assurance

Information Systems Assurance

Specialist Services

Overseas Working - Some Clients

Overseas Working - Services

Overseas Working - Where We Work

How RSMi can help us ?

How we hope to help RSMi

Key Strengths

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