The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Several of the Bahamas’ leading accounting firms have reacted furiously to a perceived snub by the Securities Commission’s executive director, something they believe is symptomatic of how they are discriminated against when it comes to bidding on major audit contracts.

A September 7, 2012, letter obtained by Tribune Business, signed by five prominent accountants who are all heads of firms with major international affiliations, blasts Dave Smith for seemingly excluding them from a ‘business meeting’ to which the so-called ‘Big Four’ accounting companies were all invited.

The letter, signed by William Wallace, managing partner of Pannell Kerr Foster (PKF); Philip Galanis, managing partner of HLB Galanis; Paul Gomez, managing partner of Grant Thornton (Bahamas); Craig Gomez, managing partner of Baker Tilly Gomez; and James Gomez, managing partner of DFK James B. Gomez and Company, questions how a supposed “courtesy call’ by the Bahamas Institute of Chartered Accountants (BICA) “morphed” into a business meeting where important issues were discussed.

Apart from the BICA president and council members, plus BDO Mann Judd’s Clifford Culmer, the only other accountants present were representatives from KPMG, Ernst & Young, Deloitte & Touche (Bahamas) and PricewaterhouseCoopers (PwC).

As a result, the five firms not invited feel slighted and discriminated against, especially as they all audit investment funds and Securities Commission licensees. Grant Thornton is even the regulator’s internal auditor, yet it was not invited.

The letter, sent by the Forum of Firms in the Bahamas, which represents the 23 accounting firms that have international affiliations and conduct cross-border audits, including the ‘Big Four’, said it had no objection to BICA council members visiting regulators and government ministers.

“However, we strongly object to the manner in which this particular ‘courtesy call’ was apparently arranged and executed,” the five excluded managing partners wrote.

They said BICA’s president advised that a ‘courtesy meeting’ had been sought with the Securities Commission for some time, and was finally granted on August 31, 2012.

“When the president and other BICA Council Members arrived at the Commission, we are advised that the BICA Council Members were surprised that other non-BICA Council Members were present,”the letter said.

“The non-BICA council members included two representatives of KPMG, and one each from PriceWaterhouseCoopers, Deloitte, Ernst & Young (the Big 4 accounting firms) and Clifford Culmer from BDO Mann Judd, the only non-Big 4 accounting firm that was invited.”

Arguing that the Securities Commission was the only regulator or government ministry where non-BICA members attended such a meeting, the five managing partners said: “We understand that what should have been a courtesy call rapidly morphed into a business meeting, as you presented those in attendance with an agenda which was discussed by the attendees.

“That is precisely where the ‘courtesy call’ by BICA was transformed into a meeting of a select few accounting firms whom you deemed to be worthy of such a meeting with the Commission.

“And it is precisely that act of deliberate preference to certain firms in the profession that we find offensive. If this was a meeting of accountants, we maintain that all of the firms, including all of those who constituted members of the Forum of Firms, should have been invited.......

“We have also consulted several other accounting firms that are not members of the Forum of Firms, and they have also expressed their surprise and dismay at these developments. Not one of them was invited.”

The five managing partners said this was “prejudicial” against them and others, and appeared to confirm “the derision in which some regulators hold certain professionals”.

They added to Mr Smith: “We.... are offended by the preferential treatment that you extended to certain accounting firms, at the exclusion of others, and your deliberate effort to single out certain stakeholders in an industry which is varied and diverse.”

Tribune Business attempted to reach Mr Smith for comment yesterday and, despite leaving a detailed message as to the nature of the call, after being told he was in a meeting, no reply was received before press time.

This newspaper, though, was told that the affair had touched a ‘red button’ or ‘raw nerve’ issue for many accounting firms outside the ‘Big Four’, who feel they are discriminated against and excluded from bidding when tenders are issued on major contracts.

Tribune Business was told a ‘case in point’ was the tender for the College of the Bahamas (COB) audit that was issued in May 2007. The bid document was only sent to the ‘Big Four’ accounting firms, and it was only after an outcry was raised that five other firms were invited to bid.

“We seem to be slighted by not only the regulators but big government corporations when it comes to farming out work,” one major accounting firm head outside the Big Four said, noting that his company and others employed at least 25 qualified staff.

“We fight this battle every day in Nassau, in the Bahamas and globally,” another said. “We see him [Mr Smith] bypassing the people with the relevant experience.”