Bigger is not always better

I once worked as a financial controller at an investment company that had 19 group companies at the time, located in the Netherlands, Slovenia, Luxembourg, Switzerland, Curaçao, and Gibraltar.

As part of my duties, I handled the accounting for the group companies, as well as the consolidation—combining all group figures into a single whole—and all annual accounts. At the head of the group was one BV that was audited by one of the Big 4 accounting firms (PwC, E&Y, KPMG, and Deloitte).

Large group companies

Generally, I maintained a good relationship with these firms, but this time things went seriously wrong. What was the issue? The consolidation was very complex. In Slovenia, there were large group companies that had completely different valuation principles than those in the Netherlands. The shareholding in these listed group companies fluctuated, and there was no 100% shareholding. Additionally, interests were sold within the group, which had to be removed from the figures upon consolidation.

Complicated situation

The manager of the large accounting firm left for America and was replaced by someone new who flew in an inexperienced team. It must reasonably be said that there was also room for improvement on the side of the investment company.
All in all, it was a very interesting environment for me to work in and to investigate matters thoroughly. This was truly necessary. What happened? The accounting firm could not get the figures to balance. There was a gap of €790,000, which they had glossed over in the figures without wanting to admit it. Simply put: they boasted that they had completely resolved a complicated situation, at a cost of over €330,000, but this turned out not to be true. Even worse, they had not informed us, whereas the role of an accountant is to audit figures, not to sugarcoat them!

Different accounting firm

When I discovered this, we entered into a discussion, and instead of admitting it frankly, they maintained that they were not to blame. And there was absolutely no room for negotiation regarding the amount of their invoices…
All in all, I learned a lot from this situation. I was able to resolve the discrepancy effectively, and we switched to a different accounting firm. This new team was able to do the entire job for €83,000, instead of €330,000.

Important matters

The moral of the story? First of all: remain critical and always ensure you stay in control. You may outsource important matters, such as finances, but you should never relinquish control. Secondly: do not be blinded by the name of a firm. Bigger is not always better!