BDO

The BDO Century Like many American success stories, BDO’s proud past began with the vision of an entrepreneur. Twenty-twoyear-old immigrant Maximilian (M.L.) Seidman emerged from a tenement on Manhattan’s Lower East Side to open a one-room office on the city’s Park Row. With little more than a good idea, personal drive to achieve, and a commitment to hard work, M.L. founded Seidman & Seidman in 1910. Together with his brothers, he would grow Seidman & Seidman into a national accounting firm known for serving its clients and communities with professionalism and integrity.

Fast forward one-hundred years to 2010. From the vision of an entrepreneur, the firm known today as BDO is a leading accounting and consulting organization with an extensive national and global footprint, sophisticated and loyal clients, and a talented team of people. Yet, despite its size and stature, BDO remains a family business in spirit, holding steadfast to the ideals M.L. and the Seidman family ingrained in the culture of the firm.

The BDO Century—Proud Past, Bold Future, is as much the story of BDO’s enduring culture as it is of the history, the profession, and the leaders that shaped the firm over the past one-hundred years. For behind the world wars, economic crises, geographic and service expansion, new and changing legislation, technological advances, and organizational changes,the story of BDO has always been about its people and the culture that inspires them to do great things.

Motivated by a culture that encourages entrepreneurial thinking, BDO embraces new ideas and the change that often follows. The same firm which in the 1940s had the courage to promote a talented file clerk, who would later become the firm’s first female partner and one of the country’s preeminent tax authorities, in the new Millen-

nium adopted a groundbreaking business strategy around workplace flexibility.

Anchored by a culture that expects individual accountability and the highest standards of professionalism, BDO recognizes its duty not only to its clients, but also to the public interest. J.S. Seidman’s Legislative History of Federal Income Tax Laws was published in 1938, but well before then the Seidman brothers established the firm’s leadership in addressing the issues and challenges of the profession.

Today, BDO is at the center of the conversation on matters of importance to a profession navigating the complexities of a global marketplace.

Distinguished by a culture where going the extra mile is the routine, BDO is known for its service philosophy of responsiveness, direct access to senior professionals, and open communications. Over the years there have been many slogans used to describe what service means to BDO, none of which truly capture the pride, ownership and “roll up the sleeves” attitude characteristic of the BDO service experience throughout its history.

Values that have stood the test of time. A proud past. From the vision of an entrepreneur to the unlimited possibilities of a bold future, we invite you to explore The BDO Century, the first chapter in what promises to be a long and rewarding journey.

Manufactured in Canada BDO USA, LLP 130 East Randolph Suite 2800 One Prudential Plaza Chicago, Illinois 60601 (312) 240-1236 www.bdo.com

The BDO Century

The BDO Century

SM

Published by BDO USA, LLP All Rights Reserved 130 East Randolph Suite 2800 One Prudential Plaza Chicago, Illinois 60601 (312) 240-1236 www.bdo.com

Copyright © 2010 by BDO USA, LLP All rights reserved. No part of this book may be reproduced or transmitted in any form or by any means, electronic, digital or mechanical, including photocopying or recording, or by any information storage and retrieval system, without permission in writing from BDO USA, LLP. This book has been printed on partially recycled paper.

Manufactured in Canada All servicemarks, trademarks, company names and logos cited herein, including but not limited to BDO, BDO USA, BDO Flex, and Pathways, are the property of BDO USA, LLP or its licensors.

Photo Credits: BDO USA, LLP would like to thank the following institutions and families for use of their photography for this book, with deepest appreciation to the members and friends of the BDO Family who supplied additional photos and images for this publication.

Page xiv: Battleship courtesy of istockphoto; Pages xiv and 35: Chicago courtesy of Getty Images; Pages xiv and 6: Congressional resolution courtesy of National Archives, Washington, D.C.; Pages xv and 32: High Point courtesy of the High Point Museum, High Point, North Carolina; Pages xvi and 48: Julia Norse courtesy of Grand Rapids, Michigan, Public Library, Archives; Pages xvii and Page 59: Bill Seidman and President Gerald Ford courtesy of Courtesy of George Bush Presidential Library and Museum; Page xx: Immigrants courtesy of Museum of the City of New York; Page 2: Immigrants on ship courtesy of the Library of Congress; Page 5: New York University courtesy of Museum of the City of New York; Page 6: Background photo by Berenice Abbott of 41 Park Row courtesy of Museum of the City of New York; Page 7: Seidman & Seidman documents courtesy of the Seidman family; Page 8: Seidman family members courtesy of the Seidman family; Page 10: War Department document courtesy of the Seidman family; Page 11: Grand Valley, Michigan, furniture manufacturer courtesy of Grand Rapids Public Library, Archives; Page 13: Grand Rapids courtesy of Grand Rapids Public Library, Archives; Page 14: Early aircraft propeller

manufacturer courtesy of Grand Rapids Public Library, Archives; Page 15: F. E. Seidman’s college diploma courtesy of Grand Valley State University, University Libraries, Special Collections & University Archives, L. William Seidman Papers; Page 18: Seidman & Seidman employees courtesy of Grand Rapids Public Library, Archives; Page 20: New York Stock Exchange courtesy of Museum of the City of New York; Page 26: Curbstone brokers courtesy of Library of Congress; Page 29: Background image of New York Stock Exchange floor courtesy AFP/Getty Images; Page 29: Foreground image of newspaper headline courtesy of Getty Images; Page 31: Statue of Liberty courtesy of Getty Images; Page 32: Foreground image of early High Point furniture manufacturer courtesy of the High Point Museum; Page 38: World War II women riveters courtesy of Getty Images; Page 41: World War II newspaper headlines courtesy of Bishop Museum Library, Honolulu, Hawaii; Page 41: James Forrestal courtesy of Getty Images; Page 43: Beverly Hilton courtesy of www.bisonarchives.com; Page 57: Seidman & Seidman executives with plane courtesy of Grand Rapids Public Library, Archives; Page 58: Bill Seidman and President George H. W. Bush courtesy of Grand Valley State University, University Libraries, Special Collections & University Archives, L. William Seidman Papers. Used by permission of the George Bush Presidential Library and Museum; Page 79: Enron “E” courtesy of Getty Images; Pages 82-83: 9/11 scenes courtesy of Getty Images.

v

Contents

Foreword by Jack Weisbaum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . viii Introduction by Barry C. Melancon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi BDO Timeline—The Proud Past of BDO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xiv Chapter One: Immigrant and Entrepreneur . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Chapter Two: Into the Middle Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Chapter Three: The BDO Client . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Chapter Four: Focus on Wall Street and Main Street . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Chapter Five: Taking the Lead. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Chapter Six: Driving Opportunities and Opening Doors . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Chapter Seven: From Family Firm to National Partnership. . . . . . . . . . . . . . . . . . . . . . . . . 55 Chapter Eight: Making Global Connections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 Chapter Nine: BDO in the Twenty-first Century . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96

Foreword When BDO USA, LLP, was founded as Seidman & Seidman in 1910, just over two thousand certified public accountants were practicing in the entire United States, approximately the same number of CPAs currently working at BDO. At the time of this writing, in 2010, the United States has hundreds of thousands of CPAs, yet just a small handful of national accounting firms. The number of firms is smaller still when you include only those firms that are members of true international networks.

What about our firm has allowed it to grow and prosper for one hundred years to emerge as the national professional service organization we see today? The keys are knowing what we are (and what we are not) and our demonstrated ability to embrace and adapt to change.

Knowing what we are and what we are not.

As you will learn when reading The BDO Century—Proud Past, Bold Future, the market’s view of our firm has evolved over the years. For much of the past century, we were viewed as the preeminent tax firm in the country, and we have been identified with America’s middlemarket businesses for most of our history. In more recent times, as we added many larger clients, BDO has emerged as the service alternative to the very largest of our competitors.

viii

This most recent description of our firm—the service

Our culture—which promotes professionalism, mutual

alternative—best captures the spirit of BDO. Every so

respect, and the ability to grow as individuals and

often, someone suggests that BDO or another national

professionals—empowers our people to recognize and

firm might develop some strategy through merger or

take advantage of opportunities to the full extent our

other means to gain inclusion in the Big Four (Five, Six,

resources allow. This culture, formed and nurtured over

Seven, or Eight, depending on the time). Perhaps that

a full century, makes us all proud to be the present and

is the goal of others, but it does not appeal to our firm.

the future of BDO.

If you aspire to be in a club, you have to structure

The following chapters take you across one hundred

yourself like the other members; but how then can

years of history at our firm. The journey brings you from

you possibly offer a service alternative to that club?

Seidman & Seidman to BDO Seidman and now to BDO

Our firm is structured to emphasize superior client

USA. Today’s BDO bears little physical resemblance to

service through partner attention. If a client wants to

the firm M. L. Seidman started in 1910, and today’s

talk to a partner, to a top technical person, or to me, we

firm will doubtlessly change drastically by 2110. What

are available. All the major accounting firms do a good

will stay the same are the high professional standards,

job. They all have good technical people. They all know

the commitment to dedicated client service, and the

how to audit, do taxes, and consult. What is BDO’s

ability to adapt to change.

differentiator? A culture that emphasizes partner

Our proud past is always with us. It is a history built on

involvement and accessibility at the highest levels—

the entrepreneurial spirit of our founders and the hard,

it’s the way you are treated.

innovative work of those who came after them. It’s this

The ability to embrace and adapt to change.

past that has made our firm what it is today and has instilled the very qualities that will make “bold future” more than words on a centennial logo, but a vision for the next one hundred years.

Change in our profession can come in many forms. It can be self-created by expanding to new markets or offering new services, or it can be thrust upon a company through new regulations, competitor moves, or unexpected challenges—and believe me, many unexpected challenges have cropped up over the last

Jack Weisbaum Chief Executive Officer BDO USA, LLP

hundred years. But even when we were not the drivers of change, we still succeeded. We learned from challenges and emerged stronger from the experience.

ix

Introduction

By Barry C. Melancon

Barry C. Melancon is president and CEO of the American Institute of Certified Public Accountants.

x

I am proud to have this unique opportunity to

In 1913, the U.S. government levied the first income tax,

congratulate BDO USA on its landmark one-hundred-

marking a significant change for the CPA profession as

year anniversary. Reaching one hundred years in

well as opportunity for the profession to greatly expand.

anything is a significant accomplishment. But when you

Maximillian L. (M. L.) Seidman, founder of BDO, saw the

consider that the accounting profession in the United

potential of the accountant’s role to provide tax services

States is only 124 years old, a one-hundred-year

to individuals and obtained his CPA license in 1914,

milestone for any firm takes on new meaning. When

when fewer than twenty-two hundred CPAs were

we review that history, it is safe to say that if history

practicing in the United States. He went on to write one

repeats itself, BDO will continue to be a driving force in

of the first tax columns in the New York Times and

shaping the CPA landscape of the twenty-first century.

New York Herald in the early 1900s. Considered one of

Since its founding in 1910 as Seidman & Seidman, the firm has been an active voice in setting the direction

the true activists in the world of finance, M. L. Seidman’s interest in public finance spanned several decades.

for our profession, representing CPAs and the public in

As the U.S. government tapped corporations and

regulating the profession and serving in government, and

individuals for more income and other taxes and the

helping to form policy affecting all CPAs. The profession,

tax code became more complex, Seidman stepped in

and business in general, has seen unprecedented

to help the public navigate. The firm served as an expert

change in the last twenty-five years. As president and

to search deeply and laboriously into corporate and

chief executive officer of the American Institute of

individual finances to determine taxes owed and to

Certified Public Accountants (AICPA) for fifteen of those

help educate about tax obligations.

twenty-five years, I have personally witnessed the tremendous contributions the firm has made and its ability to manage through these changing times.

BDO’s legacy has strongly influenced the three pillars of the profession: tax, accounting, and professional service. In many respects the firm paved the way for CPAs in government service. Let me share some of those milestones.

At the same time, the firm set an example of service both inside and outside of the profession. M.L.’s sibling, Jacob Stewart (J. S.) Seidman, served in the role of accounting consultant to the Hoover Commission under President Harry S. Truman in 1947. J. S. Seidman would later be awarded the AICPA’s Gold Medal Award, the profession’s highest honor, in 1956 and

xi

become president of the AICPA in 1959, the title then

audit firms in the United States, with a strong presence

used for the top volunteer leader of the profession.

in both public company audits and private enterprise

L. William (Bill) Seidman, son of cofounder Frank E. (F. E.) Seidman and former chair of Seidman & Seidman, served as director of the Federal Reserve Bank of

engagements. As numerous firms have entered and exited the upper levels of the audit market, BDO has remained solid to its commitment to investors.

Chicago (Detroit Branch)—the first practicing CPA to

The Seidmans’ influence on the profession extended

receive an appointment to the Fed. He also served on

beyond the family to the rest of the firm as well. Multiple

President Gerald Ford’s management team as an

heads of the firm served as volunteer leaders and staff

economic affairs advisor and later became chair of the

at the AICPA, holding great sway on policy matters of

Federal Deposit Insurance Corporation under President

importance to the national CPA profession.

Ronald Reagan. During that time, Bill also led the Resolution Trust Corporation to assist with the fallout of the savings and loan scandals of the 1980s.

The early founders of BDO helped set the precedent for CPA expertise to be commonly available in our government.

Bernard Z. (B. Z.) Lee, former chairman of BDO (1974–83), left his own mark on the AICPA, serving as chairman of the AICPA board of directors (1983–84).

He was also awarded a Gold Medal honor (1990) and headed the AICPA’s Washington, D.C., office, serving as a vocal advocate before federal, state, and local governments and regulators. In addition, B.Z. served on the committee responsible for the creation of the AICPA division for CPA firms, the Small- and MediumSized Firm Special Committee, and the Standard of

This history of service to the public has become a

Professional Conduct for CPAs Special Committee.

hallmark of the CPA profession. CPAs have served in

The three committees issued groundbreaking reports

Congress, in the executive branch of government, as

that shaped the profession.

comptroller general of the United States, and in numerous federal agencies. The early founders of BDO helped set the precedent for CPA expertise to

Introduction

be commonly available in our government.

xii

His commitment to take on a staff role leading the AICPA’s Washington office after being chairman is legendary. The AICPA board of directors at the time recognized the need for the profession’s role and

While leadership in tax may have been a key early trait,

presence in the nation’s capital to be completely

auditing evolved in the United States after the creation

reshaped—and quickly. The decision to turn to B.Z.,

of the Securities and Exchange Commission (SEC) in

a man of tremendous talents in the area, and to a

the 1930s, and the firm evolved in connection with

firm that was a leader in government involvement,

those changes. Today, the firm is one of the six largest

was deemed a huge success.

The firm continues to influence the auditor and investor community significantly, through the Center for Audit Quality (CAQ), which is affiliated with the AICPA. BDO is a founding member of the CAQ, and the firm’s CEO, Jack Weisbaum, has served on its governing board since the CAQ’s inception in 2007. The CAQ’s mission is to ensure that the public company auditing process is clearly focused on meeting investor needs. BDO’s Bernard Z. (B. Z.) Lee (on left) served the AICPA in many

involvement in this critical cause has demonstrated

ways, including chairing its board of directors, serving on

once again the firm’s commitment to the profession

many professional committees, and heading its Washington,

as a whole.

D.C. office. B.Z. was awarded the organization's Gold Medal in 1990. Here, B.Z. is receiving an AICPA award.

Further exercising its foresight and leadership, BDO was one of the first firms to establish a network of local firms. The BDO Seidman Alliance network provides

In fact, many of BDO’s partners and staff have served as volunteer members to AICPA committees, ranging from the SEC Regulations Committee to the Women

technical and information technology support to local firms. This initiative has helped improve the overall quality of the profession throughout the United States.

and Family Issues Executive Committee. The firm’s contributions to the profession are profound.

The future is bright for the profession and BDO. Issues such as International Financial Reporting Standards

One of the modern giants was Ben Neuhausen, BDO’s national director of accounting until his death in 2009. He chaired the Accounting Standards Executive Committee, the Institute’s most important technical committee, and was a leading voice in formulating the accounting guidance that standard

(IFRS), global business, changing investor expectations, rapid technology changes in services, staff evolution through different generational attitudes, and everincreasing and complex regulations all combine to ensure the need for forward-looking, dedicated firms like BDO.

setters and regulators ultimately adopted. Ben, like other BDO leaders, believed that the highest professional

The CPA profession expects BDO to help guide the

standards must embrace ethical excellence, not just

way to the profession’s continued success. History

technical achievement. In 2009, Ben Neuhausen was

tells us nothing less.

presented with the American Institute of Certified Public Accountants Special Recognition Award for his outstanding contributions to standard setting in the profession.

xiii

1910 Maximillian L. Seidman founds Seidman & Seidman in New York City.

Maximillian L. Seidman

1917 The firm is flush with new clients as the U.S. enters WW I and introduces corporate tax to finance war effort.

1920

1910

1917

The Proud Past of BDO

1921—24 Expansion to Chicago and Massachusetts.

1919

1913

125.h011228

1913

1919

Sixteenth Amendment to U.S. Constitution enacts individual income tax, stimulating the growth of Seidman & Seidman.

Frank E. Seidman opens second office in Grand Rapids, MI, and becomes closely identified with U.S. furniture industry.

1917

1925

1938

1933 1933

1930 Firm expands to North Carolina, to accommodate existing furniture clients.

Philip K. Seidman opens Memphis, Tennessee, office.

1934

1934 Creation of SEC and federal requirement that all financial statements be certified by an independent public accounting firm.

When it came to interpreting tax law, Jacob S. Seidman wrote the book.

Prentice Hall publishes Seidman’s Legislative History of Federal Income Tax Laws.

1939

1930

1938

Philip K. Seidman

1939 Seidman & Seidman make major contributions to AICPA initial audit guidelines.

In line with other wartime industries—but at the forefront

Barbara Taylor serves as the firm’s general counsel,

of the accounting profession—Seidman & Seidman

Wendy Hambleton is the national SEC director, and

promoted “gender diversity.” In 1942, with male employees

Sandi Guy is executive director of human capital.

heading off to war, the firm hired its first female CPA in Grand Rapids, Julia G. Norse. Mary A. Mead followed soon after, rising from the rank of file clerk to become a leading national tax authority, and the first female partner in the firm.

And BDO continues to foster an inclusive atmosphere. In 2005, BDO launched its Women’s Initiative to analyze why women leave the profession and developed programs to retain them. In 2008, the Keys to Success program was created to clarify the path to leadership positions within

Seidman & Seidman were pioneers, hiring women into

the firm, and the BDO Flex strategy was launched to help

what was traditionally a male-dominated industry. Over

staff achieve the optimal “work+life fit” for themselves

the years, women continued to excel at the firm. In 1986,

and their clients. “BDO does a lot to value diversity,” says

Roxanne Coady became the first female at any national

Wendy Hambleton. “We believe that the more points of

accounting firm to lead a practice area (tax). Today,

view you can come up with, the better it is.”

1934

1939

1940

1960

Jacob S. Seidman

1940s Numerous members of the Seidman & Seidman founding family contribute to the U.S. effort in WW II.

1950

1954 The firm grows throughout the booming 1950s as passage of Internal Revenue Code brings sweeping changes to federal income tax policy, driving increased demand for Seidman & Seidman tax planning.

1960

1954

Seidman & Seidman commemorates fiftieth anniversary at executive conference in Beverly Hills, CA, with appointment of second generation of partners, including first nonfamily member, Ben Grund.

Ben Grund

1959 J. S. Seidman elected president of the AICPA.

1963

1942

1942 Julia G. Norse, first female CPA in Grand Rapids, and future partner and tax authority, Mary Mead, join the firm.

1950

1963

Mary A. Mead

1959

Julia G. Norse

Seidman & Seidman co-founds Binder Seidman International Group (BSIG), a loose affiliation of accounting firms (predecessor of BDO) based in the United Kingdom, Germany, the Netherlands, and Canada (predecessor of BDO).

1960

1968

1968

1983

1980

L. William “Bill� Seidman named managing partner and announces restructuring of firm to a national partnership.

B. Z. Lee

B. Z. Lee named chairman of the AICPA and is succeeded

by John D. Abernathy as managing partner. BSIG becomes BDO International, a true global network.

Bill Seidman

1973 Bill Seidman joins the administration of President Gerald Ford as economic advisor and is replaced by Bernard Z. Lee, the first non-family member to lead the firm. Seidman would later chair the Federal Deposit Insurance Corporation under President Reagan and the Resolution Trust Corporation under President Bush.

1988 Seidman & Seidman is rebranded as BDO Seidman to highlight its membership in the BDO International network.

1988

1973

1970

1983

Bill Seidman confers with President Ford.

1975

1990

Dan Pavelich

1996 Dan Pavelich succeeds Gary Wetstein as chairman.

Firm begins move to national business lines.

John Abernathy

Gary Wetstein

2000

After a seven-year tenure that achieved cumulative fee growth of 170 percent, largely through mergers, John Abernathy is succeeded by Gary Wetstein as chairman (formerly managing partner).

1996

1990

2000 Denis Field named chairman and CEO.

1999 1993

Richard Rodel named chairman.

1999

1993

2002

Firm launches the BDO Seidman Alliance program.

2002 Sarbanes-Oxley Act is passed, greatly increasing regulation of the accounting profession.

1996

2005 2005 BusinessWeek cites Glass, Lewis & Co. data that identifies BDO Seidman as the firm benefiting the most from clients leaving the Big Four due to Sarbanes-Oxley constraints. The BDO Women’s Initiative is established to further promote diversity within the partnership. The initiative spawns additional programs, such as BDO Flex and the Keys to Success.

2008

2010

Firm completes a five-year period during which it experiences a net gain of 175 SEC clients, far more than any other firm (Public Accounting Report, Audit Analytics).

Joining its member firms around the world, BDO Seidman, LLP is rebranded as BDO USA, LLP as it celebrates the one hundredth anniversary of its founding in the United States.

Jack Weisbaum

Jack Weisbaum (CEO) and new board of directors are elected in the first-ever vote of the full partnership under enhanced governance rules.

Firm achieves 81 percent increase in cumulative revenues during Weisbaum’s initial term (2004—2008).

2008

2004

2004

Firm launches first-ever national advertising campaign —“People who know, know BDOSM.”

2010

BDO partners force leadership change and begin governance changes in response to insular, nonresponsive management.

2009

2003 2003

2009

2009

Manhattan’s Lower East Side immigrant community in the early 1900s, where Maximillian (M. L.) Seidman and his brothers lived upon their arrival in America.

“What I found out from literally my first day with the firm was that what we do is not just about numbers, it’s about people.”

Howard Allenberg Partner and Chief Financial Officer

Chapter 1

Immigrant and Entrepreneur

visionary im Seidman & Seidman was painted on the door to Room 715, 41 Park Row, New York City.

In 1910, when twenty-two-year-old Maximillian (M. L.)

Seidman opened the door for the first time, he was

living with five brothers and two sisters in a tenement on Manhattan’s Lower East Side. They were all children of Louis Seidman and his second wife, Fanny Goldfarb Seidman. Six more children remained in the Ukraine, where their mother, Louis’s first wife, had died. In approximately 1897, Louis and Fanny immigrated to the United States with M.L., Frank (F.E.), and a daughter.

They joined many other Jews in a late-nineteenthcentury exodus from Kamenetz-Podolsk, a town perpetually shadowed by czarist persecution, to New York and the promise of freedom.

Not that life on the Lower East Side was ever easy for a greenhorn, as new immigrants were called, and, even under the best of circumstances, supporting so large a family would have been daunting. Worse for the Seidmans, Louis had lost a leg in an accident before coming to America and was therefore limited in the work he could do, which meant that every member of the family grew up with an unshakeable conviction that

Chapter 1 : Immigrant and Entrepreneur

each bore hands-on responsibility for their common

2

welfare. For the Seidmans, family was paramount, and everyone worked for the sake of the family. Yet neither parents nor children ever let the demands of day-today survival in the New World blind them to the grand vista of opportunity that world offered. While the Immigrants came to America by the thousands,

children worked, they also pursued their education,

including M. L. Seidman (opposite).

all but one earning a college degree in an era when few young men and women even finished high school.

Like a Family The bonds among BDO team members seem to grow

from that very first day it was clear the culture was

only stronger and deeper with the passing of time.

something I was going to relish, and it is something I

“It’s almost indescribable,” says Al Ferrara, longtime

still enjoy.”

assurance partner and board member. “I’ve been in

“If you look back into our history, the original founders

the business thirty-nine years, and BDO is just a special

were very focused on family, and it’s still about people

place to work. It’s a family environment. Your employees

and valuing your people,” observes Sandi Guy, partner

are your friends; your partners are your friends. We

and BDO’s executive director of human capital.

socialize with each other; we fight with each other. I

Longtime partner and national director of assurance

mean, we kiss and make up, and we go on to our next

Wayne Kolins puts it this way: “It’s the way we work

battle. It's a great place to work.” Assurance regional

together. Everybody is so accessible. There’s a great

business line leader Jay Duke says that some of the

deal of comfort that people have working with each

people he met during his employment interview and on

other. Everybody walks into everybody else’s office,

his first day at BDO “are still very good friends of mine

and my friend in the file room calls me by my first name

today. I’ve been to weddings; I’ve been to their

and has done that for the last forty-nine years.”

children’s confirmations and bar mitzvahs. Really,

Los Angeles employees of BDO. (Background Photo) Seidman & Seidman employees and their families gather in Los Angeles in the early 1960s.

M. L. Seidman received his degree from New York University in 1912.

By day, M.L. worked as a bookkeeper (he had picked

Perhaps the surrounding tide of self-promotion moved

up basic accounting in high school), and by night he

M.L. to inscribe on his door “Seidman & Seidman,” even

studied at the city’s celebrated Cooper Union, planning

though he was Room 715’s sole occupant. Or perhaps

to become an architect. Yet, increasingly, his day job

he was simply exercising the impulse of a visionary

educated him to his true vocation. At work, by doing,

immigrant, anticipating a bright future that he was certain

he discovered a natural fluency in the language of

would include at least some of his younger siblings.

business: numbers, the movement of money, the ebb and flow of enterprise—and it excited him. In 1906, M.L. left Cooper Union to take night classes at New York University’s School of Commerce. Four years later, in 1910, even before he had finished his degree, he opened his office at 41 Park Row.

Billing clients at 75 cents to $1.50 an hour, Seidman & Seidman took in $500 in 1910 (when the average male office worker’s yearly wage was $850), which climbed to $1,200 in 1912, the year M.L. completed his college degree. By 1913, the year that saw ratification of the Sixteenth Amendment which levied a progressive tax on

The building was on the fringe of the Wall Street

individual incomes, billings stood at $2,610.50. Certified

financial district, but in the very heart of New York’s—

by the State of New York as a public accountant in 1914,

and the nation’s—burgeoning newspaper industry.

M.L. clearly foresaw that income taxes would become

5

41 Park Row a powerful force in the financial lives of all Americans.

Just three years later, in 1917, when U.S. entry into World War I dramatically raised tax rates and expanded federal income tax into the corporate world, M. L. Seidman was proven truly farsighted, and he set out to make Seidman & Seidman the nation’s premier tax firm. Newcomer though he was, he aimed to define the state of the art in this new field.

It was just one room, but it was in one of the nation’s most important buildings: 41 Park Row, home of the New York Times from its founding in 1851 until it moved to Longacre Square (now Times Square) in 1913. In 1889, the Times commissioned the prominent architect George B. Post to replace the original

By day, M.L. worked as a bookkeeper. . . . He discovered a natural fluency in the language of business: numbers, the movement of money, the ebb and flow of enterprise.

building with a grand twelve-story Romanesque structure of Maine granite and Indiana limestone, which was raised around the 1851 core so the publisher would not have to dismantle its great printing presses. Three additional stories of offices were added in 1896. In 1934, with passage of the Securities Exchange Act requiring independent certification

The Seidmans would become arguably the most recognized income tax

Securities and Exchange Commission (SEC), the

authority in the country.

Chapter 1 : Immigrant and Entrepreneur

of all financial statements filed with the newly created New York office of Seidman & Seidman moved to far larger quarters, at 80 Broad Street, in the heart of the financial district. Yet even in 1910, at the very beginning, M. L. Seidman had chosen to occupy not one of the many dark and dour offices that huddle in the shadow of Wall Street, but a great public building with a prominent corner location.

(Top) 41 Park Row, 2010. (Background Photo) 41 Park Row,

earlier in the 1900s.

6

A century after its founding, Seidman & Seidman would be known simply as BDO USA, a national firm generating $620 million in revenues (FYE June 30, 2009) and the U.S. member firm of BDO, an international network of independent accounting firms with 1,138 offices in 115 countries. Having come a long way from the solitary Park Row office with the double name on the door, the firm still possesses a business culture that feels like family and a client-centered work ethic as individual as it is formidable.

Personal financial and firm payroll account documents from the earliest days of Seidman & Seidman. The firm’s fortunes would change over its first century, with fiscal year 2009 showing net revenues of more than $600 million.

M. L. Seidman built his company to help individuals and businesses meet the emerging financial challenges that sweeping changes in taxation created, even as he guided his clients in making the most of the opportunities that the vibrant economy of the early twentieth century offered. The visionary DNA of Seidman & Seidman’s first years is unmistakably present in the BDO of today.

7

J. S. Seidman (right) and F. E. Seidman (left) strollng down Wall Street, New York.

“As the firm has changed and broadened from our original tax roots, we have not lost the passion and drive our founders possessed. Our success has been, and will continue to be, based on individualized client service and understanding each client’s business needs.”

Wendy Hambleton Partner and National SEC Director

Chapter 2

Into the Middle Market

M.L. knew that the demands of the new tax law would stimulate rise of the accounting profession by expanding opportunity but also increasing competition for his young business.

He knew that he was as well educated as any of the other twenty-two hundred CPAs active in the United States at the time, but his vision for the profession went much deeper than book knowledge. He built his firm with a profound understanding of the challenges and opportunities of an increasingly dynamic American economic and business environment. These two themes —professional vision and a genius for recognizing potential—characterized Seidman & Seidman in its formative years and remain today as hallmarks of BDO. As the Sixteenth Amendment opened new vistas in 1913, so America’s 1917 entry into the Great War— World War I—made even more urgent demands on U.S. business and offered dramatic opportunities for Seidman & Seidman. With tax rates skyrocketing during the war and with the introduction of corporate income taxes, the firm was flush with new clients. Yet even as the wartime tax business boomed, M.L. was not content to rely solely on tax work. The war was good for commerce and industry, and America’s expanding business base would soon require much more from accountants than filing tax returns. Taxes were a liability

Chapter 2 : Into the Middle Market

that required understanding, planning, and management.

10

(Left) The founding Seidmans were all immigrants, but loyalties to their new home were unquestioned, not only in military service but in providing advice to government leaders. (Opposite) Seidman & Seidman opened a Michigan office initially to serve the furniture manufacturers, such as this one in Grand Rapids.

perfectionis

Setting the Tone

Two of M. L. Seidman’s brothers, F.E. and J.S., became

“He was a perfectionist. He was a giant in accounting,

Seidman & Seidman partners in 1919 and 1922,

a member of the accounting principles board of the

respectively. Both rapidly made names for themselves

AICPA, which is the top technical position in the

in the accounting profession. “We stood in awe of

country, and he was one of the smartest or next-to-

[F.E.],” recalls retired partner John Kamp, who joined

smartest tax practitioners in the country.

the firm in 1952. In particular, Kamp remembers F.E.’s way of getting everyone down to business. “We’d have a meeting in his office about something or other. He

allotted fifteen minutes for this, fifteen for that. When

the fifteen minutes were up, the meeting was over, whether you were in midstream or not. That made you

be prepared to get the business of the day done.”

“He was able to see right through an issue. If you went into J.S. unprepared, you probably wouldn’t see J.S. again. But if you got the answer right, if you knew what the answers were and you knew what the issue was and you could clearly convey it, there was an enormous feeling of confidence, because if he bought it, then you were a star. He was a very, very tough indi-

Wayne Kolins, national director of assurance—whose

vidual,

BDO career spans more than forty-five years—

absolutely brilliant.”

remembers J. S. Seidman as another awe-inspiring

figure. “He was the firm. It was Seidman & Seidman.

That was his name on the door. To get to his office was

always an interesting expedition, and the few times I

was there it was like a haunted mansion. It was very

dark. He would have some table lamps in his office and very heavy drapes and a real oak table, very dark wood.

All the furniture was dark wood. And the pictures as you walked down the hall to get to his office were portraits of people in the 1800s or so and looked like their eyes were following you as you walked.

F. E. Seidman

J. S. Seidman

Downtown Grand Rapids, photographed about the time Seidman & Seidman opened the firm’s Grand Rapids office.

13

World War I brought deep concerns to all Americans, but it also led to the opening of Seidman & Seidman’s Grand Rapids, Michigan, office. Already heavily involved in the furniture industry there, the firm assisted manufacturers who converted to other wartime efforts, such as manufacturing aircraft propellers.

Propelled by the momentum of war, the firm could

In the days of wooden-frame biplanes, aeronautical

have coasted on tax work for years, but coasting

engineers turned to the nation’s furniture makers,

would never be the Seidman way, and certainly not

given that they possessed the specialized machinery

after another accountant emerged from the family.

and skilled hands required to shape wood gracefully,

Like M.L., F.E. worked days and studied nights,

join structural pieces strongly, and stretch fabric over

earning his NYU degree in 1913. In what would prove

them. Because Grand Rapids, Michigan, was the

to be a fortunate decision, he did not start with his

center of the domestic furniture industry, the aircraft

brother’s firm, but first joined the staff of the New

production board set up shop there. F.E. seized

York Public Service Commission, then entered the

opportunity where he found it. While working in

private sector in 1915 as an economist with an

Grand Rapids, he immersed himself in the furniture

investment bank. F.E. also continued his studies, earning through night classes a master’s degree in commercial science—the early-twentieth-century equivalent of an MBA—and becoming a CPA in 1917.

That same year, he returned to government service, working for the Federal Aircraft Production Board, which was headquartered in Michigan.

Because Grand Rapids, Michigan, was the center of the domestic furniture industry, the aircraft production board set up shop there. F.E. seized opportunity where he found it. industry, creating for it a revolutionary plant cost system. Whereas other accountants imposed their principles on a client’s business, F.E. met that business on its terms. Making himself an expert on the client’s needs, he approached the accounting task from the perspective of those needs. F.E. brought this philosophy to his brother’s company when he finally joined it after the war in 1919. Here were the seeds of what, nearly a half century later, David Wares, a leader in the firm’s Grand Rapids office, would call “Total Involvement,” a commitment never to be content with just doing the books. Instead, by seeking to understand a client’s business in all its dimensions, the firm’s people developed accounting,

15

BDO in the Media

Beyond their professional acumen and business savvy,

on taxes to Wayne Kolins, Ben Neuhausen, Lee Graul,

F. E. and J. S. Seidman were also pioneers of leveraging

and Wendy Hambleton on assurance matters. Jack

the news media to promote the firm. The brothers

Weisbaum, Bill Lenhart, and Jack Williams have been

bylined newspaper and magazine articles on issues of

quoted prominently over the years on matters of

taxation and economics to position Seidman & Seidman

restructuring, as have Carl Pergola and Glenn Pomerantz

prominently in the business world.

on forensic investigations, litigation support, and

The practices of these two members of the founding family began a long and distinguished history of BDO partners’ recognition as leading

business interruptions.

BDO also has an impressive history of branding the firm with different market segments or services by

financial authorities

conducting leading-edge research and disseminating

in the media.

the findings via the media. This research function began

Over the years,

in the late 1980s and early 1990s with Pulse of the

spokespersons

Middle Market, an annual survey of the owners and

ranged from Bernie

CEOs of America’s middle-market businesses on topics

Barnett, Mario Borini,

ranging from corporate finance to business management

Roxanne Coady, Terry

to international trade. The results appeared in the

Kelly, and many others

media—both print and electronic—throughout the year, firmly cementing the firm’s identity at the time with the country’s closely held entrepreneurial businesses.

In more recent years, proprietary research studies have played a prominent role in branding BDO’s national industry programs in retail, technology, energy, and other areas.

Research and the resulting media coverage have been equally effective in creating an authoritative presence for BDO with the capital markets, private equity, and executive compensation sectors.

auditing, and tax strategies uniquely suited to each client and each industry served.

The link that F.E. forged between Seidman & Seidman and the midwestern furniture industry proved to be fortuitous. Furniture would become a defining industry for the firm. While he was in Michigan, F.E. met Esther Lubetsky, whom he married in 1920. With family and business opportunity coinciding, F.E.

J.S. joined his brothers and went on to earn two law degrees and acquired a formidable reputation for incisive brilliance and authority. moved out of the New York office to open the firm’s second office, in Grand Rapids. Other offices followed in Jamestown, New York (1920); Rockford (1920) and Chicago, Illinois (1921); and Gardner, Massachusetts (1924). Acquisition of major clients, mostly midsize companies, fueled the expansion.

For a long time, although the main office remained in New York City, the firm’s growth also took place in midsize cities and towns serving clients big enough Over the next one hundred years, BDO is sure to add new service offerings and expand into new sectors as it reacts to changes in the marketplace. Based on the firm’s history of success, BDO is sure to continue to leverage the independent third-party endorsement of the news media to communicate its knowledge of and

to have complex needs, yet small enough to be, like Seidman & Seidman itself, entrepreneurial in attitude.

Even after the firm had become more truly national, its early reputation for owning the middle market would for years continue to distinguish it from both its smaller and larger competitors.

services for these markets.

17

Seidman & Seidman accountants, Grand Rapids office, 1947.

Following World War I, the firm not only grew geographically, it also expanded its reputation for excellence and the services it offered. In 1918, J. S. Seidman came aboard as a bookkeeper while taking night classes at NYU. He graduated in 1921 with a bachelor’s degree in commercial science, having set a GPA record that endured until 1936, when Robert L. Spencer, who later became a Seidman & Seidman partner, broke it. After his certification in 1922, J.S. joined his brothers as the third and youngest founding partner. He went on to earn two law degrees and a bachelor of science degree in 1928, and acquired a formidable reputation throughout the accounting community for incisive brilliance and authority. Along with F.E., J.S. expanded the firm’s expertise from taxation and auditing to include special tax and financial consultation and planning. All three brothers were superb communicators, but throughout the 1920s, F.E. made the firm’s name prominent in the business and financial world as well as with the general public through his newspaper and magazine articles on issues of taxation and economics.

Whatever else Seidman & Seidman was and would become, the three founding partners ensured that it would always be known for innovation, commitment to serving its clients, and industry-leading technical expertise that influenced the public perception of accounting as well as shaped the profession itself.

F. E. Seidman strived to gain prominence for Seidman & Seidman by being quoted in the media. From the New York Times, February 5, 1933.

19

The early days of the New York Stock Exchange.

“Change can be difficult, but as we have learned from the past and as we look to the future, it can be and has been very good to our firm.�

Jack Weisbaum Chief Executive Officer

Chapter 3

The BDO Client

Professional service firms, whether accounting or other types of consulting organizations, are often defined by their clients.

Many of the so-called Big Four accounting firms like to identify themselves with the G100 or global 100 businesses—the largest multinationals in the world.

Regional or local firms often identify their practices with smaller companies to assure clients of the importance of their business. Other boutiques choose to identify themselves with a specific industry in order to leverage the deep institutional knowledge developed around a specific sector of the market.

So, what is a BDO client? The answer has evolved over the years.

When M.L. founded Seidman & Seidman in 1910, the focus was on individuals and small business. With the introduction of the income tax, the New York Stock Exchange’s requirement of audit opinions in 1933, and the advent of the SEC and audited financial statements in 1934, the firm’s focus shifted to larger businesses, both privately held and publicly traded.

Due to the involvement of firm partners with the leadership of professional associations such as the AICPA, and the prominent visibility of partners in the media, Seidman & Seidman became viewed as the preeminent firm for tax planning. Upon opening its Grand Rapids, Michigan, office, and later expanding to High Point, North Carolina, and Memphis, Tennessee,

Chapter 3 : The BDO Client

the firm also became closely identified with the

22

furniture industry.

As it expanded west and south, Seidman & Seidman also became increasingly branded with what was becoming known as America’s middle market.

While not as large as Fortune 500 companies, middlemarket businesses had grown beyond local markets and were expanding regionally and nationally, and they needed professional advisors.

By the latter stages of the twentieth century, the firm— by then BDO Seidman—had become synonymous with the middle market of American business. The firm’s Pulse of the Middle Market survey was quoted regularly in the national media as the authoritative barometer on the state of middle-market business, and a front-page headline from the June 11, 1990, edition of Accounting Today stated, “For BDO Seidman, The Middle is Tops.”

But by the end of the 1990s and the first decade of the twenty-first century, BDO was no longer viewed or positioned as a middle-market firm. While a majority of clients may have still resided in that market, some of the firm’s oldest clients had grown with it over the years and were now members of the Fortune 500 or Fortune 1000. As the firm’s clients grew, BDO Seidman gained a reputation as an alternative for businesses seeking more attentive service than the Big Four provided, and BDO began to market itself as a service alternative to the very largest firms.

23

Chapter 3 : The BDO Client 24

BDO’s industry practices and expertise encompass a wide spectrum of industry markets, including retail and consumer products, technology and life sciences, manufacturing and distribution, health care, and many more.

This up-market trend accelerated a great deal with the passage of the Sarbanes-Oxley Act of 2002 (SOX), legislation that set new or enhanced standards for all U.S. public company boards, management, and public accounting firms. Over the next several years, the Big Four firms became resource constrained as they struggled to assist their largest clients—the G100— in meeting arduous compliance deadlines for SOX implementation. Many other clients, who had to meet the same deadlines, were underserved and in desperate need of a responsive accounting firm. At this point, many companies became much more receptive to

So what is a BDO client today?

Size no longer defines BDO clients. Nor does industry, as the firm has industry practices encompassing retail, technology, energy, real estate, health care, pharmaceuticals, financial services, manufacturing, government, nonprofits, construction, gaming, and hospitality.

A BDO client is best defined by its spirit, an entrepreneurial spirit.

the service alternative message that BDO had been communicating for years. BDO’s proven record with

A BDO client is best defined by its spirit, an

Fortune 1000 clients, outstanding SEC practice, and

entrepreneurial spirit. Whether the client happens to

membership in the fifth-largest global accounting

operate locally, regionally, or in numerous countries

network were clear differentiators for these larger

around the world, BDO serves entrepreneurs of all

clients. These credentials played a major role in BDO

sizes, ranging from Fortune 500 corporations to

experiencing a net gain (according to the Public

closely held family businesses.

Accounting Report) of 175 SEC clients from 2003 through 2008, far more than any other firm.

25

In the early 1900s, the stock market was called The Curb and those who helped companies sell stock, using elaborate hand signals and shouting, were called curbstone brokers. The stock market moved indoors in the 1920s.

“You have to keep your promises, commitments, and you have to be technically proficient. You have to be prepared each and every day to support the clients, the partners and staff, and the firm as a whole.�

Jay Duke Partner and Regional Business Line Leader

Chapter 4

Focus on Wall Street

Chapter 4 : Focus on Wall Street and Main Street 28

For most Americans in the early 1900s, the image of an accountant came with a great green eyeshade. CPAs were inconspicuous, outside the stream of general public interest. Seidman & Seidman broke the mold and shattered the stereotype.

From its beginning, the firm waded deep into the stream of general public interest and would be many things, but never inconspicuous. Recognizing income tax and World War I as profound epochs in the life of the nation, the firm engaged them as defining challenges and opportunities for itself, its clients, and the American people. As a result, Seidman & Seidman rapidly grew from a one-room startup into a national source of authoritative opinion and innovative strategy.

The firm’s swift and sure maturation was remarkable, but many young companies prospered in the commercial roar of the 1920s. Far more astounding is that, come Black Tuesday, October 29, 1929, and the Great Depression that followed, Seidman & Seidman not only survived but grew. The firm took on the events of the 1930s as it had taken on income tax and global war, not as cataclysms but as opportunities, and managed to increase revenues in all but one year of the dismal decade.

Not only did Seidman & Seidman pilot its clients through the many hazards of the Great Depression, its solid reputation as one of the nation’s premier accounting firms ideally positioned it to help public corporations satisfy the New York Stock Exchange requirement issued in 1933 that required listed companies to present audit opinions. Additionally, the following year the

The Securities and Exchange Commission was established in 1934.

federal government required independent certification and filing of all financial statements with the newly created Securities and Exchange Commission (SEC).

Already widely considered the gold standard in tax compliance and advisory services, Seidman & Seidman built a national brand as an audit specialist. The firm’s imprimatur on a company’s financial statements

From File Clerk to Tax Guru And Ben was right—100 percent of the time when he looked it up, 98 percent when he didn’t look it up.

“He was very short with thick glasses, but very imposing. When you’d walk into the room, he’d laser focus on you and pepper you with questions to make sure you understood the issues. Partners were afraid of him, not just staff people. But he’d get you to jump and get it right. He was a mentor to a lot of people. I learned a lot from him. I learned to be prepared. And as for clients, they absolutely loved him.”

One of the youngsters whom M. L. Seidman hired Chapter 4 : Focus on Wall Street and Main Street

was sixteen-year-old Ben Grund, who started in the file room in 1920. Wayne Kolins, national director of assurance, met Ben when he joined Seidman & Seidman as a junior accountant forty-four years later. By that time, Ben was national director of taxation and one of the foremost authorities on taxation in the United States— a big reason why Seidman & Seidman was so widely regarded as the go-to firm for tax advice.

In the file room, Wayne explains, Ben devoured the

As a measure of the weight carried by M. L. Seidman,

tax code while studying accounting in night school.

he was able to get President Franklin D. Roosevelt to

Eventually, “Everybody looked to Ben as having the right answer. I remember seeing a lot of memos and work papers that would specify ‘Per BG’ as the reason for a conclusion. If Ben said it, it must be right.

send Ben Grund a birthday telegram in early 1942.

That the White House mistakenly addressed it to "Bruce" instead of Ben was of less import than the fact that Seidman & Seidman's recognized authority and entrée

satisfied the SEC, which sought to restore confidence among the nation’s badly shaken investors.

The Seidmans demonstrated their own confidence in American enterprise with a bold move from the periphery of Wall Street to its heart. Seeking to accommodate an expanding client roster, the firm leased the entire twenty-sixth floor of a new building at 80 Broad Street.

The New York Stock Exchange, the U.S. Subtreasury Building, and other monuments to commerce were all a short stroll away, but the views from the twenty-sixth floor spoke with the greatest eloquence. They took in the financial core of the nation along with New York harbor, the Statue of Liberty, and Ellis Island, symbols of an American Dream especially meaningful to immigrant entrepreneurs and for those undimmed by economic crisis.

While Wall Street was important to the firm, the Seidmans continued to expand into the market they had developed during and just after the Great War. High Point, North Carolina—like Grand Rapids, Michigan—was a furniture industry hub, and the firm opened an office there in 1930. An office in Memphis, Tennessee—a center of the lumber industry, intimately tied to the furniture business—followed in 1933.

Whereas the High Point office was created to accommodate clients in the firm’s existing furniture practice, Seidman & Seidman leadership would once again break the mold by opening a Memphis office without any preexisting clients in the area. And the firm would open this new office in the deepest trough of the Great Depression, when other companies were downsizing just to stay alive. The firm worked under the assump-

When Seidman & Seidman moved to new offices at 80

tion that expertise with furniture firms would attract

Broad Street, their view took in the Statue of Liberty.

Seidman & Seidman opened a new office in High Point, North Carolina, in 1930 to service the growing furniture industry.

clients in related industries, but the move was still a

man’s ability in client meetings to penetrate unerringly to

gamble with long odds.

the heart of the subject. “It wouldn’t be his opinion or a

To Philip Kenneth (P. K.) Seidman, youngest of the Seidman brothers, those odds looked just fine. A 1928 graduate of Columbia University, he had worked in New

matter of personalities. Just strictly facts. Yet everyone left the meeting feeling absolutely satisfied. It would always end up with laughter.”

York and was under F.E. in the Grand Rapids office when

P.K. radiated the self-confidence common to all the

he volunteered to head the Memphis practice. Monte

Seidmans, and in an era before accounting firms

Weaver, retired longtime partner who joined the Memphis

marketed or advertised themselves, obtaining clients

office in 1957, remembers P.K. as “a consummate pro-

depended entirely on making yourself known. “Every

fessional, always in control.” Monte marveled at the

time you saw someone in a blue shirt and suit with a

P. K. Seidman with his ever-present carnation in his Memphis office.

33

white carnation neatly on the left lapel, you knew it was P.K.,” Monte Weaver remembers. P.K. broke the mold by making himself an icon in the Memphis business community, and the office grew and prospered.

In 1928, half-brother Lawrence J. (Larry) Seidman entered the New York office as an office boy, fresh out of

P. K. Seidman

high school. Eleven years later, he left New York to reinvigorate the Chicago office, which he built into a major profit center that complemented the firm’s two biggest offices in New York and Grand Rapids, and served to ensure an even balance between Seidman & Seidman’s commitment to Wall Street and Main Street.

(Left) BDO Chicago is located in this office tower in the prestigious “Loop” in downtown Chicago.

(Opposite) Lawrence J. (Larry) Seidman arrived in Chicago in 1941 to invigorate its office there. The city would ultimately become the home of BDO USA. 34

He Wrote the Book In 1938, PrenticeHall published J. S. Seidman’s Legislative History of Federal Income Tax Laws, 1861–1938. At 1,166 pages, it was and remains a monumental volume that had consumed a decade in the writing. “It is a cardinal rule of construction,” Seidman wrote in his preface, “that where the language of a federal statute is not clear, recourse to its legislative history is necessary to determine the intent of Congress. Our federal income tax laws are far from clear. The intent of Congress, therefore, becomes decisive.” The author declared his purpose

Chapter 2 : Into the Middle Market

as revealing “that intent through the mouth of Congress,” placing “under the thumb of all those interested in the meaning of the federal income tax laws everything of interpretive significance said to or

by Congress and passed or rejected by it, from the beginning of income tax legislation (1861) to date.”

By the end of the 1930s, clients who came to Seidman & Seidman for tax work had good reason to know they were coming to the source: J. S. Seidman literally wrote the book.

The firm emerged from the Depression bigger and

Seidman & Seidman required everyone to stretch, no

stronger. The business was still very much a family

matter whose son or brother they happened to be. By

affair, but the family had provided new leaders who

the 1930s, it was also clear that this firm had become

brought youthful vigor to the well-established enterprise.

a team of strivers and doers, at once competitive

Whereas many family endeavors become little more

and collegial.

than stagnant havens of guaranteed employment,

BDO Memphis 2010

During WWII, women were pressed into service at home to help in manufacturing military equipment.

“You cannot have a seamless organization without teamwork, communication, and the sense that everyone recognizes they’re working to provide the best possible services to the client.”

Al Ferrara Partner and National Retail Practice Leader

Chapter 5

Taking the Lead

“Like a torrent of cold water the wave of publicity raised by the McKesson & Robbins fraud case has shocked the accountancy profession into breathlessness.”

This was not language ordinarily found in a sober Journal of Accountancy editorial, but what had happened at the ninety-year-old maker of milk of magnesia, cough syrup, and quinine was far from ordinary. For fiscal 1937, the company had reported total assets of $87 million. Late in 1938, it was discovered that this figure included $10 million in nonexistent inventory and $9 million in fictitious receivables. That was bad enough. Worse: McKesson & Robbins’s audit firm had certified its 1937 financial statements.

Seidman & Seidman was not that auditor, but J.S. took seriously the Journal’s assessment of the scandal’s impact on the accounting profession: “Accustomed to relative obscurity, accountants have been startled to find their procedures, their principles, and their professional standards the subject of sensational and generally unsympathetic headlines.” He regarded the firm as a steward of the profession, and he led Seidman & Seidman’s 1939 executive conference in confronting this latest crisis head on. Determined to take a leadership role in shaping the future of the profession, Seidman & Seidman committed to learn from the scandal. The firm launched a proactive review

Chapter 5 : Taking the Lead

of its auditing procedures and techniques. The result-

40

ing recommendations reinforced an already formidable reputation in audit and contributed to the AICPA audit guidelines in 1939 and over the years that followed.

Like J. S. Seidman’s monumental 1938 Legislative History of Federal Income Tax Laws, Seidman & Seidman’s response to the McKesson scandal had a

lasting in-

him to advise the War Production Board—a service he flu-

performed at the patriotic rate of one dollar per year.

Other firm leaders also served: P.K. as a naval air intelligence officer; Richard H. (Dick) Seidman (M.L.’s son, who joined the firm just before the war) in the army’s Finance Corps; and Robert L. (Bob) Spencer (who joined the firm in 1936 and married M.L.’s daughter in 1941) as a navy supply officer. This left Seidman & Seidman scrambling to fill the gaps created in its ranks. Like other wartime industries, the firm

ence on the accounting profession.

recruited women to fill the talent gap and found them to be well qualified for the job.

In 1941, the United States entered World War II. Just as Americans and American companies had looked to Seidman & Seidman for financial guidance during the Depression and the crisis of confidence that the financial scandal created, so did the wartime government. In 1944, Secretary of the Navy James Forrestal recruited J.S. to lead an investigation of employee fraud in the U.S. Navy Department. Trading his business suit for the uniform of a lieutenant commander in the Naval Reserve, he rose to the rank of captain by war’s end.

Secretary of Navy James Forrestal

J. S. Seidman

Strategic vision finds challenges and opportunities in crisis. In the midst of war, M.L. insisted on planning for the postwar future. The November 1944 executive conference in Grand Rapids focused on a host of new

F.E. remained a civilian during the war; however, his

industries likely to emerge after the war and how the

leadership in the firm and his World War I experience on

firm could preempt the competition in understanding

the Federal Aircraft Production Board uniquely qualified

and serving the needs of these companies.

41

Accountant by Day, Angel by Night The firm’s leaders predicted that postwar clients would

Passage of the 1954 Internal Revenue code, which brought sweeping changes to federal income tax policy, created a fresh national demand for Seidman & Seidman’s renowned expertise in taxation. need to manage public offerings and to create internal By day, J. S. Seidman was a partner in a prominent accounting firm. But few people knew that come nightfall, J.S. could be found on Broadway, checking out

systems. New types of clients would surely require growing the firm’s professional staff after the war, and while the promise of increased revenue was seductive, M.L. insisted that the topmost priority would always be delivering quality service.

any one of the fifty-seven

Throughout the booming 1950s, Seidman & Seidman

plays he helped finance.

grew. Its standard of quality and discipline dictated that

An “angel” of the Great White Way, J.S. not only put his money into his passion for the stage, but had an unerring eye for picking winners. Indeed, forty-seven Chapter 2 : Into the Middle Market

financial controls, forecasting, and cost management

of his investments turned a profit, including the hits My Fair Lady and The Diary of Anne Frank.

growth would concentrate chiefly in the middle market, and new offices opened in Evansville, Indiana; Detroit, Michigan; and Baton Rouge, Louisiana. Yet passage of the 1954 Internal Revenue Code, which brought sweeping changes to federal income tax policy, created a fresh national demand for Seidman &

Seidman learned early to hedge his bets, never taking

Seidman’s renowned expertise in taxation.

more than a 50 percent stake in any production (except for Brigadoon, which became one of Broadway’s all-time money makers).

From the earliest days of the federal income tax, Seidman & Seidman had stepped beyond tax compliance and into tax planning. With the 1954 Code,

Theater people, he observed, are “engagingly on the

planning became more critical than ever, and by the

screwy side.” And the mild-mannered accountant was

end of the 1950s, Seidman & Seidman was deservedly

happy to be counted among them.

Beverly Hilton Hotel, circa 1960, site of the fiftieth anniversary Seidman & Seidman Executive Conference.

regarded as the leader in providing effective tax advice

celebrate at Seidman & Seidman’s fiftieth anniversary

to individuals and corporations. With this enhanced

executive conference, yet those gathered were far

identity in the profession came added pressure to

more interested in making another fifty years of history

grow—nationally and beyond the leadership that the

than in commemorating the fifty that had passed. The

Seidman brothers alone, formidable though they were,

conference honored a half-century of M.L.’s leadership,

could provide. By its fiftieth anniversary, on the cusp

but he had officially stepped down as managing

of the 1960s, Seidman & Seidman was approaching

partner two years earlier, making way for his brother

profound change.

J.S., who pointed the conference resolutely forward.

Beverly Hills, August 22–23, 1960—There was plenty to

J.S. announced the decision of the three founding 43

today’s env

partners to appoint five new general partners. Three

offering clients management services in areas including

bore the Seidman name, P.K., Larry, and Bill; and

mechanical equipment acquisition, office systems

one, Bob Spencer, had married into the family. Of the

deployment, budgeting and cost profitability analysis,

five, legendary tax expert Ben Grund was the first

and capital finance. The plan going forward was to

nonfamily member. It had taken him four decades to

expand these service offerings on a national basis.

be named general partner, and his appointment was

This initiative was the beginning of the firm’s consulting

an unmistakable harbinger of changes to come.

business and formalized activity that had long been

Yet so was the appointment of the other four. Yes, they

implicit in the value Seidman & Seidman offered its

were family, but they were also a new generation. Since

clients. David Wares, at the time one of the leaders of the Grand Rapids office, delivered a presentation on

The Beverly Hills conference also announced the birth of what would grow to become the firm’s advisory practice.

“How to Get New Clients” in which he spoke of “Total Involvement.” The phrase was new, but the depth of client commitment it identified had distinguished the firm since the beginning.

Today, former BDO Seidman vice chairman Terry Manning

1954 they had constituted the firm’s Junior Advisory Group (JAG), which had long favored opening up the closed partnership, sharing company information more widely, expanding voting rights, and initiating a program to generally grow Seidman & Seidman. Newly minted general partner P.K. addressed this last issue at the Beverly Hills conference, announcing a hybrid

Chapter 5 : Taking the Lead

approach to growth by which the firm would expand

44

through a combination of creating new offices—to be opened when the needs of existing clients or the potential of adding new ones warranted—and selectively merging with existing companies.

The Beverly Hills conference also announced the birth of what would grow to become the firm’s advisory practice. Since 1958, the Grand Rapids office had been

Terry Manning

vironment puts it this way: “Client service has always set us apart,

and the extraordinary length of time clients stay with

BDO is the measure of that service.” Fifty years ago, Wares reminded his executive conference audience that while all CPA firms offered clients accounting services, Seidman & Seidman delivered a strategic and tactical collaboration founded on a deep knowledge of each client’s needs, aspirations, and challenges.

In today’s stringent regulatory environment, which emphasizes the need for an accounting firm to remain demonstrably independent from its clients, the phrase “Total Involvement,” applied literally, may have outlived its usefulness. Yet it continues to mark a key moment in the firm’s evolution and still describes the spirit that drives each BDO engagement today: an uncompromising dedication to all stakeholders—the client as well as the public interest—while maintaining the highest standard of professional integrity.

M.L. died in October 1963, and two years later F.E. effectively retired. An aging J.S. was now the sole active founding partner. Thanks in large measure to the initiative of John Spinetto, a longtime leader in the Grand Rapids office and a future regional partner, Seidman & Seidman had begun aggressively recruiting accounting graduates from the nation’s best schools.

But how could these newcomers be expected to commit to a firm that offered only the most limited possibilities for partnership and virtually no prospect of equity ownership for anyone who was not a Seidman?

The perpetuation of Seidman & Seidman had motivated the appointment of the new general partners. These five BDO Grand Rapids 2010

understood that more needed to be done to carry the

profound change was called for: a breakthrough. Before

firm through the second half of the century. A more

the decade was out, Bill Seidman would make it happen.

45

Mary A. Mead, first female partner at Seidman & Seidman.

“Mary Mead, like Ben Grund, was a legend to the tax professionals at the firm.

She was in Grand Rapids and I was in New York, so we didn’t see each other much—but as another female partner, she was an icon for me.”

Roxanne Coady Former National Tax Director

Chapter 6

Driving Opportunities and Opening Doors

With several firm leaders and younger staffers serving in the military during World War II, Seidman & Seidman scrambled to fill the gaps created in its ranks.

In line with other wartime industries—but at the forefront of the accounting profession—the firm hired women for important roles, including, in 1942, Julia G. Norse, the first female CPA in Grand Rapids and one of just 175 in the United States at the time.

But in the 1940s, even amid the personnel shortages created by war, putting a woman in a professional position was such a bold step for an accounting firm that F. E. Seidman felt obliged to explain his decision in the Grand Rapids Press. Accounting, he wrote, calls for “accurate and careful” practitioners “with an infinite capacity for patience and detail. Women often excel in these qualities and when they are combined with an analytical mind, women make outstanding accountants.”

Long before there was a women’s movement, Seidman & Seidman offered what a later generation would call “gender diversity” as a key value for the firm and its clients.

Chapter 6 : Driving Opportunities and Opening Doors

Soon after Norse arrived, a brilliant young mathematician named Mary A. Mead joined the Grand Rapids office.

She started in the file room and rose, as Ben Grund had done years earlier, to become a leading national tax authority and a partner in the firm—the first woman to do so.

“Mary took to tax work just like a duck to water,” recalls retired longtime partner John Kamp. By the beginning of the 1960s, Bill Seidman wanted to make her a partner, which meant that she had to pass the demanding CPA exam. She did much more, scoring the highest mark on Julia G. Norse, first female CPA in

BDO's commitment was widely noted in not only its the Michigan examto in diversity 1961 and receiving the coveted

Grand Rapids.

internal publications, but in trade journals and corporate programs such as the BDO Women's Initiative. Efforts culminated in 2010 when BDO was named one of the Best Accounting Firms for Women.

48

49

Paton Award in recognition.

valuing it back,” recalls John Kamp. “She was tough, but in a

good way. She taught you how to get a job done and get

“She not only understood the tax code, but she understood what about it was important to her clients,” Phoenix office assurance business line leader Susan Wolak comments. “She was a caretaker of her clients’ best interests when it came to taxes, and she could stand toe to toe with any tax attorney. That left quite an impression on me.”

Mary Mead left an impression on everyone. Her first

it done on time: I’m assigning you this job. The budget is three hours. Don’t leave any loose ends. And, you know, I loved working with her. Of all the people I worked with

“BDO does a lot to value diversity, not just men and women, but diversity across the board. . . .”

commitment was to her clients, but a close second was her dedication to mentoring staff and her relentless

most closely in the tax area when I was getting started,

upholding of the highest standard of quality throughout

she taught me more than anyone else.”

the firm. “I learned you better do it right or you would get

Women continued to excel at the firm, and in 1986, Roxanne Coady became the first female—at any national firm—to lead a practice area when she assumed the position of national tax director of BDO Seidman.

Chapter 6 : Driving Opportunities and Opening Doors

Like many of her predecessors, Roxanne took a

50

prominent role in the media as a spokesperson on tax issues as a way of promoting the practice to the business community.

Roxanne Coady

Keys to Success, announced in 2008, seeks to clarify the career path to leadership positions within the firm, Following in Roxanne Coady’s footsteps, the firm in 2010 has three female partners leading national functions. Barbara Taylor serves as the firm’s general counsel, Wendy Hambleton is the national SEC director, and Sandi Guy is executive director of human capital.

Despite the prominence of many of the firm’s women, BDO is committed to doing more. With women representing more than 50 percent of accounting

and BDO Flex, launched the same year, is intended to give partners and staff the flexibility not only to manage their work+life fit but also to be more efficient and competitive in a global environment in which people typically work across multiple time zones.

“BDO does a lot to value diversity, not just men and women, but diversity across the board . . . the different backgrounds and approaches that people bring,” says

graduates, the firm realized it needed to make far better use of this talent pool. Since 2005, Barbara Taylor has chaired the firm’s Women’s Initiative to ensure that BDO remains competitive on diversity by analyzing why women leave the profession and developing programs geared to retain them. These efforts led to BDO being named in 2010 one of the Best Accounting Firms for Women by the American Society of Women Accountants and the American Woman’s Society of Certified Public

Chapter 6 : Driving Opportunities and Opening Doors

Accountants.

52

The Women’s Initiative also gave rise to two more programs that benefit all professionals at the firm.

Wendy Hambleton

BDO New York City 2010

“Our Alliance Program is a key growth strategy for BDO. At its foundation is having the right members in the right cities.”

Michael O’Hare Partner and Executive Director of the BDO Seidman Alliance

Chapter 7

From Family Firm to National Partnership

Chapter 7 : From Family Firm to National Partnership 56

Former chairman Dan Pavelich calls it Seidman & Seidman’s “breakthrough.”

But former vice chairman Al Finci phrases it less dramatically but more bluntly: “Everyone thought it was about time.”

To those assembled in Las Vegas at the 1968 executive conference, J.S. presented nothing less than a comprehensive plan for the future of the firm. The subject of mergers, which had been broached somewhat tentatively back in 1960, was transformed into an aggressive element of a growth policy. To ensure the firm would remain centered and cohesive, however, a national office and centralized computer center would be established. To ensure the firm’s ongoing quality and competitiveness, J.S. also announced external recruiting and professional development for current staff.

Momentous as these steps were, the most profound change was a plan to restructure Seidman & Seidman from a closed family partnership to an open general partnership, national in scope. At the end of the 1968 conference, J.S. also announced he was ending a decade as managing partner—and handing the reins to L. William “Bill” Seidman.

A highly educated and accomplished accountant, Bill began implementing Seidman & Seidman’s restructuring in his very first talk to partners at the Las Vegas conference. He called for creating a more pleasant, varied, and productive working environment, which would give partners and staff more time to study, to write, and to enjoy themselves and their families.

He announced his intention to democratize the firm and make it more transparent through a policy of full disclosure to partners. In turn, they would report more fully than ever to a reorganized management structure, so that vital information would be shared throughout the organization.

The Seidman & Seidman company plane aided the firm’s national expansion.

BDO Renaissance Man

Born in Grand Rapids in 1921, Bill Seidman was a

became one of five new general partners in the national

brilliant high school athlete who excelled at tennis,

firm. In the meantime, his activities outside of the firm

basketball, football, and track. He earned an

during this period were dazzling in their range. He was

undergraduate degree in economics in 1943 from

the first practicing CPA to be appointed director and

Dartmouth, where he was elected to Phi Beta Kappa.

chairman of the Detroit Branch of the Federal Reserve

With World War II at its height, he joined the U.S. Navy

Bank of Chicago. In 1958, he formed a committee to

directly from college, was commissioned an ensign,

explore starting a liberal arts college in Grand Rapids,

served on destroyers in the Pacific, and was decorated

subsequently securing a state charter for what is today

with a Bronze Star and eleven battle stars. After the

Grand Valley State University, which opened its doors

war, he earned a law degree from Harvard, followed

in 1963. (Bill would chair the university’s board for a

by an MBA from the Ross School of Business of the

dozen years.) Active in Michigan politics, he joined the

University of Michigan.

ticket of Republican gubernatorial candidate George Romney in 1962, running for state auditor general.

Although Romney took the governorship, Bill lost his bid for auditor general by a narrow margin but worked for Romney as special assistant for economic affairs, then went on to serve as finance chairman during Romney’s brief bid for the Republican presidential nomination in 1968.

Like his father and his

Bill Seidman with President George H. W. Bush.

uncle, Bill created a notable national reputation for the firm and himself. His high-profile charisma, however,

Bill joined the family firm in 1949, in 1954 was named

also lured him away from the firm and to Washington,

resident partner in the Grand Rapids office, and in 1960

where, in 1973, he became special assistant to Vice

The new managing partner was also determined to give the firm a truly unified national identity, and many of today’s programs had their genesis under Bill’s leadership. Having set quality of working life, democratic participation, and national firm unity as guiding values for Seidman & Seidman going forward, Bill presented a list of specific goals to be achieved within three years; among them were doubling the firm’s size, implementing five mergers and opening at least eight new offices, instituting a permanent in-house educational program, and introducing one major innovation every year—primary among which was computerizing client control and scheduling. The Bill Seidman confers with President Ford and Secretary of Treasury Simon in 1975.

new managing partner also sought to grow the firm’s consulting business, specifying that it should generate more than 10 percent of the firm’s income. He called

President Gerald R. Ford. He would go on to occupy

for a renewed focus on the high public and professional

positions in the Ford, Reagan, and first Bush administra-

profile J.S. and his own father, F.E., had created with

tions, chairing the FDIC and, during the savings and loan

their professional and popular articles, requesting that

crisis, the Resolution Trust Corporation. From 1982 to

partners and staff publish a total of fifteen articles

1985, Bill was dean of the business school at Arizona

annually. He put a number on the firm’s new

State University, and in the 1990s was a leading figure in

commitment to college recruiting, asking for outreach

the financial news media.

to seventy-five previously untapped colleges and

Throughout his life, Bill passionately pursued art. Inspired by the Philadelphia-born inventor of the mobile, Alexander Calder, he often created mobiles for friends and family.

When the City of Grand Rapids commissioned Calder to create a monumental public mobile, Bill asked Calder

universities over the next three years. He raised the bar on efficiency, asking for a 20 percent reduction in hours spent on engagements, without compromising quality, and setting a goal of completing the average audit within six weeks of the client’s closing date.

for an invitation to his studio. The artist hesitated, Bill

All told, this highly ambitious program made it

explained, because he was “worried . . . I’d see how he

unmistakably clear the intent to transition Seidman &

did his work. But after he saw my mobiles, he decided it

Seidman from a regional family firm to an enterprise

was OK if I came to visit. I guess he didn’t consider me a

intended to serve and compete on a national scale.

threat. But then again,” Bill added, “he hasn’t seen my latest work.”

In 1973, Bill left the firm to become special assistant to Vice President Gerald Ford. At the firm’s executive 59

conference in Los Angeles that year, New York managing

for more controlled growth but also embraced and

partner B. Z. Lee was elected as managing partner of

mastered new technological demands. Recognizing that

the firm, becoming the first nonfamily member to take

the Equity Funding fraud had been first and foremost

the reins of leadership. B.Z. had joined the firm through

computer fraud, Seidman & Seidman rejected the

a merger in 1969. By Seidman & Seidman standards of longevity, B.Z. was a relative newcomer, but Bill pointed out that he had “already proven to be a great leader” with “a rare combination of vigor and drive, tempered with judgment and maturity.”

All of these qualities—and more—would be urgently needed. In 1972, Wolfson, Weiner & Co., a small Los Angeles firm, merged with Seidman & Seidman. The following year, Seidman & Seidman learned of improprieties committed by the management of one of Wolfson’s audit clients, Equity Funding Corporation of America. Seidman & Seidman leadership, in cooperation with the SEC, conducted an investigation, which uncovered a major fraud.

This time, Seidman & Seidman was involved, even

Chapter 7 : From Family Firm to National Partnership

though the Wolfson audits were carried out before the

60

merger. For the first time since its founding in 1910, the firm was involved in major litigation, and some commentators on the outside started writing the firm’s obituary.

Through 1975, B.Z. and other key partners and staff successfully navigated the rocks and shoals of the Equity Funding crisis. They approached it not only as a threat—and a mortal one at that—but as an opportunity to take a long, hard, analytical look at the firm’s merger and audit policies as well as the state of the art of audit throughout the profession. Al Finci, managing partner of the Los Angeles office at the time of the Equity Funding scandal, recalls that the firm not only repositioned itself

After a decade as managing partner, during which firm revenues increased 126 percent, B.Z. was succeeded by John D. Abernathy III. profession’s then-prevailing view of the computer as a black box not to be opened during an audit. Instead of performing an audit around the computer, the firm would regard a thorough understanding of the technology as integral to the audit process.

In the end, Seidman & Seidman emerged from the Equity Funding episode having redefined some key auditing practices and having vindicated its absolute adherence to integrity. In 1983, the AICPA recognized the professional leadership of Seidman & Seidman as

He set up a long-range planning committee that sought to stimulate growth by attracting both public and private companies as clients, “not the General Electrics, the General Motors, but not the corner drugstore, either. We were looking for companies in any number of industries that were well situated and had opportunities to grow.”

During this time period, the firm completed mergers with Brout & Co. in New York, New Nork; Nankin, Schnoll & Co. in Milwaukee, Wisconsin; and Knopfler & Co. in Chicago, Illinois. These additions and others drove the firm’s cumulative fee growth of 170 percent during Abernathy’s seven-year tenure.

In 1990, Gary Wetstein succeeded John as chairman.

Like John, Gary had joined the firm in 1971, but Seidman & Seidman 1975 Partner Meeting. Left to right:

had merged his own small Detroit-based firm with

Joseph Klausner, Irv Rothenberg, and Roger Schafer.

Seidman & Seidman. After working his way through college, Gary worked for a small CPA firm, then joined

well as its managing partner by naming B.Z. the Institute’s chairman. Equity Funding had underscored the need to balance the growing competitiveness of the accounting profession with the imperative to maintain uncompromising standards of quality and ethics. Having brought this issue of balance to the forefront of Seidman & Seidman management, the new AICPA chairman made it a top-priority issue in the profession at large.

After a decade as managing partner, during which firm revenues increased 126 percent, B.Z. was succeeded by John D. Abernathy III in 1983. John had joined the firm in 1971, having been recruited from Arthur Andersen. As managing partner, he focused on growing the firm, as he explains, through a “fairly large number of mergers, as well as general practice development efforts, which were bringing in new clients.”

John D. Abernathy III, former managing partner, BDO Seidman.

61

A Matter of Perspective

Price Waterhouse. But Gary came to realize that he craved the personal touch of a smaller firm and left

Al Finci, retired vice

Price Waterhouse for a local partnership before starting

chairman of the firm,

his own practice. Gary confesses that he was at first

joined Seidman &

“very hesitant” to merge with Seidman & Seidman—

Seidman in 1956, after

“I really didn’t want to be involved in another national

having graduated from

firm”—but he was soon persuaded that Seidman &

UCLA as a member

Seidman was different, that it combined what was

of Phi Beta Kappa.

best about a small firm with an organization national

Although his road from

in scope and resources.

Chapter 7 :From Family Firm to National Partnership

the university to the firm was short and

At the time of his election to chairman, Gary was

direct, his journey to

running what John describes as “a very successful

UCLA had been long, arduous, and filled with peril.

office in Detroit. He was clearly a leader. He had

Born in Bosnia, the son of a publisher, Al and his

developed good people around him and had good

family fled the Nazis early in World War II and settled

ideas for moving that office forward.”

in Italy, where Mussolini’s anti-Semitic laws confined

The accounting profession, Wetstein explains, “was

them to a village in the north. When Italy overthrew Il

really turning itself upside down” in the early 1990s.

Duce and surrendered to the Allies in 1943, Hitler

Indeed, America was in the midst of a recession,

invaded the country, and Al fled with his family to

brought on by its entry into the Gulf War, a spike in

Parma.

oil prices, and the lingering effect of a savings and

Locals hid them from the SS until they secured a

loan crisis. The cumulative result led to government

guide who led them by night on a treacherous trek

deficits, inflation, and layoffs in virtually every sector

from Lake Como over the Alps and across the Swiss

of American business, including accounting. “We had

border. After the war, Al and his family returned to

some challenges to face. Our layoffs weren’t in the

Italy, where they lived until 1950, when they made

papers like the Big Eight firms were. We did it quietly

the journey to the United States. During the Equity

and with a lot of empathy. But we had to get it over

Funding crisis of 1973—a time of severe trial for the

with in order for us to be competitive in the future.”

firm, although ultimately triumphant—colleagues and

Partner and staff ranks were cut by a quarter—“really

lawyers asked the unflappable Finci how he managed

huge numbers, but it gave us the opportunity to move

to keep his cool. “You’ve got to put everything in

forward.”

perspective,” he replied, “and considering my youth and surviving Hitler, it’s going to be easy to survive

During this time, Wetstein focused the firm’s leaders on

this thing. If your attitude is right, you’re going to be

a plan to enhance profitability. “In order to retain good

in good shape.”

62

people, you have to be profitable,” Wetstein said.

Launching the BDO Seidman Alliance proved to be a

“We set up a very detailed plan and goals for people

major milestone in the firm’s ongoing development, and

to shoot for so this firm could continue to be profitable

Wetstein regards it as one of the high points of his

and continue to grow.”

tenure as chairman.

Out of the profitability discussions developed what would become the BDO Seidman Alliance program.

“It really was conceived,”

Launching the BDO Seidman Alliance proved to be a major milestone in the firm’s ongoing development.

Wetstein explains, “because wherever we had a couple of clients [in a new location],

In 1996, Dan Pavelich succeeded Gary Wetstein as

we felt that we had to go open an office cold or look for

chairman of BDO. Pavelich was born in the little town of

a merger.” The better alternative, Wetstein believed, was

Kellogg, Idaho. He began his Seidman & Seidman career

to work with select firms to serve the needs of certain

in 1969, when he left Price Waterhouse to work in the

clients without having to open a new office or merge.

firm’s brand-new Spokane, Washington, office. By 1976, he was a partner, and he joined the board of directors in

In 1993, the first four or five firms

1989. Asked to characterize BDO

joined the Alliance program,

Seidman under his chairmanship,

and by 2000, the BDO Seidman

Pavelich explains, “The firm had

Alliance had grown to forty-one

to change. The profession was

CPA firms. In 2010, under Mike

changing around us.”

O’Hare (partner and executive director of the BDO Seidman

The financial industry, including

Alliance since 2000), the Alliance

accounting, had been undergoing a

included 160 CPA firms and

steadily accelerating deregulation,

50 non-CPA firms. The BDO

which would culminate in the 1999

Seidman Alliance has profoundly

repeal of the Banking Act of 1933,

extended the reach of BDO while

better known as Glass-Steagall.

providing an opportunity for

CPA firms were being given

independent member firms to

unprecedented latitude in providing

gain a competitive advantage

financial services across a broad

through access to BDO’s

spectrum. Doors were opening—

resources.

but not just for BDO Seidman.

Michael O’Hare

63

From the Abacus

There is probably no one issue that has impacted the accounting profession in the last fifty years more than technology. While new laws and changes to tax code have created their own tremendous impact, it has been technology that has enabled the rapid growth and worldwide client service at firms such as BDO.

computers, the industry began to change. At BDO, its first mainframe—an IBM 360—was introduced at the firm in the 1960s, and a few years later BDO upgraded to an IBM 4331, both primarily used for internal accounting processing and assisting the audit staff in automating and simplifying the audit process.

“The firm was processing time and billing with the mainframe,” says Rich Rottman, a twenty-nine-year BDO veteran. “Paper time sheets were mailed in from offices around the country, and key punch operators would key the data onto cards, or later, onto floppy disks. The cards and disks were read into the mainframe, which would process, calculate, and generate printed billing reports. These reports were then returned by mail to the offices, where they would

Chapter 7 :From Family Firm to National Partnership

prepare the invoices based on these printed reports.”

(Above) At the Center for Information Management in Grand Rapids, the Infrastructure Sevices Team collaborates on a

However laborious the process, it was a huge

network project. (Right) This IBM 3380 disk storage unit cost

advancement over previous “technology”—the

$100,000 when it was purchased in 1986 for use by BDO.

green thirteen-column tabular forms which were

It was the size of a refrigerator and held 2.5 gigabytes of

hand calculated.

data, less storage than most thumb drives today that cost under $20.

In the mid-1980s, with the introduction of the personal computer, the BDO practice offices advanced to word

64

In the early days of Seidman & Seidman—and with

processing programs (in lieu of typewriters), and basic

every other accounting firm in the world—accounting

accounting and spreadsheet functions were now done

work was done primarily by hand until the late 1950s

with early programs such as VisiCalc and Lotus 123.

and early 1960s. But with the advent of mainframe

In the 1990s, BDO upgraded to a client-server system

To make the firm competitive in the new deregulated environment, major changes would be required.

Under this atmosphere, Pavelich and his leadership which enabled time sheets and billing reports to be

team introduced a new management concept. In

transmitted to and from Grand Rapids via modem and a

order to try to make everyone at BDO Seidman feel

telephone line. Also by the mid-1990s, Rottman recalls,

more like part of the firm, to feel more like owners,

the firm had established a data communication network

Dan Pavelich’s management team developed and was

connecting the firm’s offices back to Grand Rapids.

committed to a concept called Structured Ownership.

A primary use for this network was for BDO’s first email

Structured Ownership was both a functional process

system. All emails were stored on servers in the practice

and an attitude: a functional process of fulfilling

offices, and twice a day, the server in Grand Rapids

responsibilities, supported by a new business structure

would reach out and pull the emails and distribute them

that meant everyone—no matter his or her position—

to the appropriate recipients in other offices in the firm.

was an owner of the business; and an attitude of doing

Today, Rottman heads a National IT staff of ninety professionals, most of whom work in Grand Rapids.

National IT is responsible for supporting and maintaining a sophisticated and standardized environment throughout BDO (everybody uses the same technology, with

what it takes to be the best at everything the firm did. It meant participating in changing the firm in a positive way, being supportive of each other, and acting as a team—the idea that the true value of the firm lies in the individuals who make up BDO.

software upgrades

The Structured Ownership concept would eventually

automatically pushed

lead to the firm reorganizing around national business

to each user’s com-

lines after Pavelich’s tenure. This reorganization into

puter). National IT is

business lines ushered in an era of enhanced nimbleness,

not the only support

flexibility, and availability—all of which were required to

service department

prosper in a financial services marketplace that was

located at the Center

rapidly becoming richer with opportunity and denser

for Information

with competition.

Management in Grand Rapids. The firm’s Finance, Training & Development, Internal Audit, Retirement and Partner Records are also based here.

65

“BDO USA and BDO Germany are the only remaining member firms that founded the Binder Seidman International Group.

Both firms have a special responsibility today for the network and share a very special commitment to be the driving forces of the BDO International Network.�

Dr. Holger Otte Managing Partner, BDO Germany

Chapter 8

Making Global Connections

In 1968, Bill Seidman initiated the firm’s breakthrough from a family enterprise to a national partnership, yet even as it went national, the firm had already begun to go global.

After World War II, American businesses, including many of the firm’s clients, were no longer content to confine themselves within domestic borders, and as the 1950s drew to a close, it was clear to J.S. that the firm needed to find ways to provide clients with service abroad. Opening offices in selected countries overseas was an obvious option, but a costly one. J.S. had something more innovative in mind.

As president of the AICPA, J.S. left for London in the autumn of 1960 to participate in the eightieth anniversary celebration of the Institute of Chartered Accountants of England. He brought with him an idea for an international network consisting of Seidman & Seidman and established firms abroad. He met Sir William Lawson, senior partner of the British firm Binder, Hamlyn & Co., and formed a close personal and professional relationship. This led the following year to a working relationship between Seidman & Seidman and the Canadian firm of Thorne, Mulholland, Howson & McPherson, which already had a relationship with Binder, Hamlyn. From these contacts, a robust

Chapter 8 : Making Global Connections

international network would grow.

68

In 1962, Seidman & Seidman established relationships with the Dutch firm of Frese, Hogeweg, Meyer & Horchner and with the German firm Deutsche Warentreuhand. Seidman & Seidman also reached out to other European firms as well as companies in Africa, the Philippines, Hong Kong, Japan, and South America, so by 1963, Seidman & Seidman was prepared to create something more formal and permanent.

Meetings were convened in Zurich during May 1963,

and in London in early December of

who were alarmed by what

that year. Leaders from Binder, Hamlyn

they deemed an excessive

& Co.; Deutsche Warentreuhand;

investment of time and

Frese, Hogeweg, Meyer & Horchner;

money in travel during a pe-

and Thorne, Mulholland, Howson &

riod of severe recession. As

McPherson met with J.S. to create

the largest firm in the net-

what is best described as a loose

work,

international association. It was given

Seidman & Seidman was

a name—Binder Seidman International

expected to bear most of the

Group (BSIG)—but not status as a

BSIG operating costs, and

separate corporate or legal entity.

B.Z. feared that the global

To its clients, Seidman & Seidman

vision that had taken shape

announced the new association by

in the early 1960s would not

appending the expansively vague

only fail to come to fruition

phrase “Other Parts of the World” to

but would be lost altogether.

the locations listed on its stationery,

This did not happen, thanks

Chapter 8 : Making Global Connections

business cards, and office doors.

70

to the support of visionaries

As of 1963, the firm had done little more than dip a toe

within the U.S. firm as well

into international waters, but within five years, BSIG

as key leaders abroad. Aad Tempelaar of the Netherlands,

published its first directory, which listed network offices

Hans-Heinrich Otte of

in 131 cities in 48 countries. Little by little, one staffer at

Germany, and Michael Shirley-Bevan of the United

a time, members of the network even began exchanging

Kingdom created Binder Dijker Otte (BDO) as the Euro-

personnel. Yet, as B. Z. Lee remarks, “In 1974, when I

pean arm of what was now called Binder Seidman Inter-

BDO sought not to emulate the biggest firms but to offer a better service alternative to them.

national (BSI). The word “Group”—and the ambivalent association it implied— was dropped. The leaders assembled a strong executive committee for BSI, which included B. Z. Lee and Larry Seidman (succeeded by Bob Spencer and, afterward, John Abernathy). This move put the international

became managing partner, international wasn’t much of

endeavor on a course to serious commitment. In 1983,

a business. It was more of a gentleman’s club.”

Binder Dijker Otte & Co. became a global network, with

B.Z.’s efforts to transform BSIG from a club to a productive business met with resistance from partners

Seidman & Seidman as a preeminent member firm. Now the BSI name was dropped and “BDO” adopted for the

Hans-Henrich Otte (left) and B. Z. Lee (right) toasting the 25th anniversary of BDO at the 1988 Munich Biennial Conference.

entire international network.

Throughout the 1980s, BDO grew not only in Europe but throughout much of the rest of the world. Expansion in Southeast Asia began early in the decade, and growth in Africa and the Indian subcontinent quickly followed, as partners were added in Pakistan (1983) and India (1985). A Saudi Arabian practice joined the network in 1984, and in 1986, a major Hong Kong firm was added, giving BDO its first close connection with the People’s Republic of China. By 1987, the BDO network was represented in Hong Kong (and the PRC and Macau), Australia and New Zealand, Japan, Korea, Malaysia, Singapore, and

his own history of BDO (At the Beginning a Vision, Today

. . . the network is structured so no client is ever treated as a commodity.

Reality: BDO), the “federal structure consciously utilized [member firms’] local know-how whilst retaining national identities but at the same time . . . apply[ing] those resources internationally within the framework of a flexible and service efficient organization.”

Taiwan. Central and South

Like Seidman & Seidman, BDO of-

American firms also joined the

fered each client the best features

network during the decade.

of a local practice plus the enhanced scope and resources of a

In 1988, the BDO network had a

global network. As Jeremy New-

presence in 58 countries with 427

man, CEO of BDO International

offices, ranking ninth among in-

Limited, puts it, the network is

ternational accounting networks.

structured so no client is ever

The objective of the

treated as a commodity. When the

international network, however,

American firm refers a client to a

Chapter 8 : Making Global Connections

was not to eclipse what at

72

BDO

the time was the Big Eight

member firm in another country,

accounting firms. As with

that client will “feel that it has a

Seidman & Seidman, BDO

local person to speak to while also

sought not to emulate the

having access to total international

biggest firms but to offer a

interconnectivity.” Every BDO

better service alternative to

member firm treats each referred

them. Hans-Heinrich Otte

client “as its very own. This is not

characterized the organizational strategy of the network as “federal.” As he explains in

consistently the service model for the biggest international firms.”

Also in 1988, the national firm

with an annual around-the-world trip that all my friends

members added the initials “BDO” to their own names.

envied. But it was extremely exhausting because I had

Seidman & Seidman thus became BDO

to do it all in three weeks. I had to visit Japan, Germany,

Seidman, the name by which it would be known until

Belgium, France, England, and sometimes some points

January 2010, when the firm joined the other member

in between—Taiwan, for instance. It had to be done.”

firms in adopting the simple BDO brand name. By 2010, BDO International Limited was the world’s fifth largest accounting network, with 1,138 offices in over 115 countries and fielding a combined

Today, BDO’s commitment to secure networking

workforce of more than 44,000 people.

technology has made working globally less dependent

In the early 1960s, when Seidman & Seidman was just embarking on international operations, doing global business meant first and foremost travel, and lots of it.

As former vice chairman Al Finci explains, the early objective of international operations was straightforward: “We basically needed accounting firms in foreign

BDO member firms share a common vision and standards while retaining their local and national identities. countries that would be able to do audits following American Generally Accepted Accounting Principles [GAAP], and so it was a matter of finding those firms,

on world travel. Client records and work papers can be shared digitally, regardless of the parties’ locations. Yet, as Jeremy Newman observes, to “balance electronic with face-to-face communication” is still critically important. If anything, the ease of remote digital communication has made personal meetings all the more valuable and compelling. When BDO serves an international client, the engagement partner gathers all the background and other relevant data in advance, electronically, using remote communications to build a foundation of fact on which to base subsequent face-toface communication. “You can check the day-to-day status of an account electronically,” Newman notes, “but electronic communication doesn’t substitute for personal contact. You can’t share culture electronically.”

training them—that is, providing a mutual training

For BDO, the personal touch is not limited to client

ground—and those firms were able to serve us. We

relations. BDO member firms need to share a common

would normally send one of the partners in charge of a

vision and standards while retaining their local and

particular international engagement to the various

national identities. To ensure this outcome, interna-

countries, review the work, and then bring it back.”

tional liaison partners work with clients and BDO mem-

Finci recalls that one client “acquired a company in Japan to manufacture hi-fi equipment for them, and the next thing you know, they were selling it in Europe. So, as the partner in charge of the engagement, I ended up

ber firms to create a seamless connection among all stakeholders, wherever they are located. Being in the global accounting business means getting into the global teaching—and learning—business. Leland Graul, 73

today an international liaison partner, recalls that when he joined the firm in 1986, “There was no international training program. There were biennial conferences, in which we would get together and socialize, and there were annual conferences, in which we would talk about developments in BDO, but there was no coordinated international training program. We started the first such program late in 1989 or early in 1990.”

SEC regulations required companies doing business in the United States to issue statements that followed U.S. GAAP and to secure audits that met American auditing standards.

The U.S. firm started teaching people around the world what public company rules were in the United States, because so many businesses Chapter 8 : Making Global Connections

wish to go public in the United States.

74

BDO now has formal programs to educate overseas clients who want to do business in the United States.

Clients and international staff need

BDO International Limited issues a proclamation on behalf of the entire network of 115 independent member firms congratulating

not always come to BDO in America to learn. “Today,

BDO USA on reaching its centennial anniversary in 2010.

BDO has an international training director in Brussels to coordinate these kinds of efforts,” Graul says. “We train on tax, accounting, and auditing topics.” Most recently, BDO’s

consulting group has been sending people

Sandi Guy, BDO’s executive director of human capital,

overseas to train in consulting areas.

chairs the International HR committee. “It’s really

Educating staff and clients and formulating common policies to guide and coordinate the international network have been critical to creating a cohesive yet flexible global network, but Jeremy Newman points out the importance of starting with “right-minded people” by bringing into the network only those firms whose

interesting,” she says, “to come to that table with other firms from around the world and understand how some of the challenges that we face in the United States from a human capital perspective are no different from those in other countries. It’s nice to know you’re not alone out there facing those challenges. You can bring solutions to them; they bring solutions to you.”

leadership and personnel share a global attitude and a

The BDO network is a long way from M.L.’s one-man

commitment to client service of the highest quality.

office on New York’s Park Row in 1910, but the core

This approach requires taking steps to ensure that all

truth remains unchanged. As CFO Howard Allenberg

BDO firms are seen as “employers of choice,” the com-

learned when he joined the firm nearly forty years ago,

panies that the very best people aspire to work for.

BDO is “about people, not numbers”—the right people,

Howard Allenberg

Connect, the BDO network’s global intranet, is a collaboration tool used by BDO member firms around the world.

75

BDO Miami 2010

“The single most important thing future firm leaders should strive to do is not let anyone change the culture of this firm. . . . It will be the key criterion for success . . . and most importantly the viability of the firm going forward.�

Jim Blinka Partner and Regional Business Line Leader

Chapter 9

BDO in the Twenty-first Century

Chapter 9 : BDO in the Twenty-first Century 78

Back in 1980, the Depository Institutions Deregulation and Monetary Control Act began dismantling key provisions of the Glass-Steagall Act of 1933, the core of federal legislation regulating banking practices.

The Gramm-Leach-Bliley Act of 1999 finished the job, repealing the Glass-Steagall prohibition against bank holding companies owning other financial enterprises, thereby tearing down the firewall that had long separated lending from investing institutions. In October 2001, scandal began to erupt around one of the highest-profile poster children for deregulation, the Houston-based energy company Enron. Through a host of “special purpose entities� within the company and a combination of poor and deceptive financial reporting, Enron had been hiding billions in debt from failed projects and deals, even booking losses as profits. In mid-2000, Enron stock had hit a high of ninety dollars per share. But the house of cards soon began to come apart, and by the end of November 2001, a share sold for under a dollar.

On December 2, 2001, Enron filed for bankruptcy, and more and more attention turned toward the company’s external auditor: Arthur Andersen. On June 15, 2002, Andersen, among the most admired of the Big Five accounting firms, was convicted of obstruction of justice for shredding documents related to its audits of Enron. On August 31, 2002, the firm agreed to surrender its CPA licenses and its right to practice in the United States. Although the conviction was later overturned on appeal, the Enron scandal had effectively put Arthur Andersen out of business.

As Enron exploded and Andersen imploded, Congress passed the Sarbanes-Oxley Act of 2002, which set demanding new standards for management and accounting in publicly held companies and significantly

building specific aspects of the business rather than the business as a whole. Less than transparent communication from leadership to the partners also marked this period.

Partners who cared about the future of the firm recognized this path as divergent from the one traveled for some ninety years and called it into question at the firm’s 2003 partner meeting. The meeting resulted in chairman and CEO Denis Field taking a leave of absence from the firm (he eventually left the partnership) and the addition of five new members—Al Ferrara, Lee Graul, Jeff Kane, Wayne Kolins, and Jack Weisbaum—to a transitional board of directors. Weisbaum, who came out of retirement at the request of the partners, was elected to serve as the chairman of the transitional board. The firm also announced the approval of a board expanded the oversight and responsibility of external

resolution to develop amendments to the

auditors. The demise of Andersen and the increased

partnership agreement that would allow for increased

regulatory requirements that Sarbanes-Oxley instituted

partner participation in board

would bring new opportunities for the accounting

elections and firm leadership. Jack Weisbaum and the

profession and BDO Seidman. The firm would soon

transitional board of directors took oversight of the

seize upon those opportunities, but first it had to

day-to-day operations of the firm at this time.

address management issues of its own.

In 2004, following a year of widespread partner

In 1999, Richard Roedel briefly replaced Dan Pavelich

participation in significant governance changes and

as chairman of the firm before he was in turn replaced

revisions to the partnership agreement that provided

by Denis Field, formerly the firm’s national tax director,

greater checks and balances and more transparency,

in early 2000. In an effort to broaden the brand of the

Jack Weisbaum, who was elected to a four-year term

firm from accounting services to financial services,

as CEO—and a newly elected board—brought a fresh

Field ushered in a period of leadership that focused on

perspective to the firm.

79

Weisbaum had joined the firm in 1982

requirements fell on “accel-

from the New York firm of Benjamin

erated filers,” the very

Nadel & Company. He was brought in to

largest public companies—

build a restructuring

the majority of which were

practice that would later serve as the

clients of the remaining Big

foundation of today’s BDO Consulting.

Four firms. Unfortunately for

Similar to some of the members of

the Big Four, there was liter-

Seidman’s founding family, Jack

ally too much work to han-

had taken his first public accounting

dle. The workload would

position with Nadel at age eighteen

have tested the capacity of

while attending night school at Pace

the firms at any time, but it

University. He would later graduate from

was further exacerbated by

Hofstra University and made partner at

the fact that many of these

Nadel at the age of twenty-eight.

firms had just recently absorbed clients from the

Said Weisbaum, “The actions taken

now-defunct Andersen.

by the partners at the 2003 annual meeting speak volumes about the

Due to their strained

self-correcting nature of our firm culture. I was honored

resources, the Big Four were unable to service all of their

that the partners reached out to me at that time and

clients during this demanding time. They focused their

that they later made me the first CEO elected by the full

efforts on their very largest clients and walked away from

partnership.”

others for economic reasons, while still other clients left

Chapter 9 : BDO in the Twenty-first Century

After stabilizing the firm by further empowering its

80

partners, Weisbaum and the new leadership team

for service reasons when they found their audit firm far from responsive to their needs.

quickly focused on the new business opportunities

According to national director of assurance Wayne

that the Sarbanes-Oxley legislation afforded and

Kolins, “BDO’s reputation for partner involvement

began to build new market strategies around BDO’s

positioned it to take advan-

finely honed industry expertise.

tage of the impact of

For the remaining Big Four accounting firms, the Sarbanes-Oxley Act was the ultimate in good news/bad news legislation. In the immediate aftermath of the Act, there was a rush to meet deadlines for new compliance requirements. The brunt of these

Sarbanes, which precluded public accounting firms from offering certain accounting and auditing services to the same firm. The Big Four were forced to make choices Wayne Kolins

none of the other firms could match the coverage and quality of the BDO international network. The accessibility of BDO’s outstanding SEC practice and attentive client service were also welcome changes for these businesses. As a result, BDO achieved a net gain of 175 SEC clients from 2003 through 2008 (Public Accounting Report), far more than any other firm.

“For BDO, Sarbanes-Oxley didn’t simply mean more work, it meant that, more and more, the firm was being seriously considered and sought by a new kind of client,” recalls Alan Sellitti, partner and regional business line leader. “Seidman & Seidman had built its

. . . the increased regulatory requirements that SarbanesOxley instituted would bring new opportunities for the accounting profession and BDO Seidman. as to which clients and services they would support.

business chiefly in the profession’s

This left the door open for BDO to acquire many clients

middle market and had acquired a

who suddenly found themselves being

much-valued reputation for serv-

‘underserved’ or even dropped by their former account-

ing midsize firms. Now compelled

ing firm.”

to seek an alternative to the Big Four, larger companies discovered BDO and liked what they found.”

Businesses became much more receptive to the

CEO Jack Weisbaum explains

service alternative message that BDO had been

that the experience of helping

communicating for years. BDO was able to differentiate

businesses comply with Sarbanes-

themselves clearly from the remaining national firms as

Oxley in a most difficult and

the only one with a long and impressive track record of

demanding period allowed BDO

Alan Sellitti

handling Fortune 500 and Fortune 1000 clients, and 81

Pulling Together, Lending a Hand Wayne Berson was thrilled. He and Andrew Lang were

“The next thing you know, everyone’s gathered in the

about to merge their Washington-area accounting

room, watching TV. It’s New York. It’s the World Trade

firm with BDO Seidman. They were specialists in the

Center,” Duke recalls.

burgeoning nonprofit area and had been approached by the likes of H&R Block, American Express, and others, but it was Howard Allenberg who had convinced them that BDO Seidman offered the level of client service, the collaborative environment, and the overall excellence that would get them where they wanted to go (in Wayne’s phrase) “as a team.”

And now the deal was just about done.

Then Wayne: “We’re standing in my office, where if you look in the direction of the Pentagon, you couldn’t see the Pentagon, but you could see the smoke rising.

I didn’t know that smoke could rise so high. We stood up against the window, and Jay and Gary looked at each other and then at me.”

What could they say?

Jay said, “Welcome to BDO,” then stopped cold.

“We’ve got to go. We’ve got to get home.”

To get home. That’s what everyone wanted that day.

But for Jay and Gary, as for so many others, it wasn’t easy. No planes, no trains, no buses, no cars for rent.

Washington and the surrounding area were in lockdown. Jay and Gary, like other Americans that day, felt something Americans aren’t accustomed to feeling: helpless. But the feeling didn’t last long. Lang Group was now a member of the BDO family, and Andrew Lang took Jay and Gary into his house. Then his sixteen-year-old daughter lent them the brand-new car she’d just been given a few days earlier. It got

Gary Mitchell from BDO’s Denver office and Jay Duke from Dallas were in the Lang Group’s Bethesda, Maryland, office, for the final phase: due diligence.

It was a great day. It was also September 11, 2001.

America had just come under attack in lower Manhattan, not far from where the firm had been founded in 1910.

them on their way home.

Like families all over America, BDO people pulled together in the hours, days, weeks, and months following the 9/11 attacks. The firm immediately reached out to clients who needed office space or whose businesses had been disrupted. A BDO

to prove that it had the “resources to work with very large companies.”

The client gains weren’t exclusively on the assurance side of the business. Sarbanes-Oxley also had an indirect impact on the tax side of the business.

For years, the tax practice, especially at the Big Four firms, had gone to market on the coattails of the audit business. In the post-Sarbanes environment, audit committees limited the amount of tax work that they would allow their audit firm to handle. Given the Seidman Alliance member firm specializing in disaster

overwhelming percentage of accelerated filers that

recovery sent a team to Ground Zero in New York to

the Big Four audited, BDO was able to add many large

recover materials vital to payroll and cash matters.

tax clients since the firm suffered from fewer conflicts

When the USA PATRIOT Act was passed a little more

than competing Big Four

than a month after the attacks, “We in BDO and BDO

firms.

Consulting started to consult with major financial institutions to ensure that their anti–money laundering procedures were effective in helping them deal with a sometimes significant backlog of suspicious activity reports,” national director of BDO Consulting Carl Pergola explains. “The professionals in BDO worked with the financial institutions to evaluate those suspicious activity reports and optimize clients’ computer systems to enable them to identify possible terrorist financing faster than they otherwise would.”

“Sarbanes provided the BDO tax practice with opportunities as well. It was a wedge for us in getting new business,” says Doug Sirotta, partner and regional business line leader. “We were able to get in the door and work with tax clients—

Doug Sirotta

September 11, 2001, brought the country together, and

companies in the Fortune

it brought the people of BDO even closer together than

50—that we would never have previously approached.”

they had already been. In the end, the firm responded to the attack as it had in the past to other great national crises—affirmatively, creatively, compassionately,

Not surprisingly, in the post-Enron world, BDO Consulting emerged as a significant business line during the first decade of the twenty-first century.

and productively.

83

Chapter 9 : BDO in the Twenty-first Century 84

2010 BDO Board of Directors (Seated, left to right) Christopher Tower, Lee Graul; Doug Sirotta; Barbara Taylor (General Counsel, guest of the board); Wayne Kolins, Presiding Member; and Al Ferrara. (Standing, left to right) Andy Gibson; Howard Allenberg (CFO, guest of the board); Jay Duke; Jack Weisbaum, CEO; Wayne Berson; and Jim Blinka.

Not pictured: Wendy Hambleton and Alan Sellitti.

A leading provider of

for “being able to go into extremely messy situations

litigation, investigation, restructuring, and risk

and get companies back on their feet.”

advisory services, BDO Consulting advises many of the nation’s leading companies on their most sensitive business issues. During the decade, the firm completed major engagements related to Enron, WorldCom, and Lipper & Co. Time Warner also retained BDO Consulting to serve as an independent examiner subject to an SEC consent order. According to Carl Pergola, national director of BDO Consulting, “Every crisis that occurs creates a demand for litigation and investigation services. A few years ago it was Enron and WorldCom, and today we’re responding to the subprime crisis.”

The business restructuring practice became especially important in coming to the rescue when bad things

Based on the new regulatory environment growing out of the corporate scandals earlier in the decade and the reaction of all three of BDO’s business lines to those

The strong growth the firm experienced in the decade put a premium on recruitment and retention of staff to meet the growing demand for services.

happen to good

changes in the

companies. “Re-

marketplace, the firm achieved an

structuring is no

81 percent increase in cumulative revenue during Jack

longer mainly about

Weisbaum’s initial term as CEO (2004–2008).

bankruptcy or working on behalf of creditors— though these remain important services.

Today, restructuring includes an innovative debtor advisory practice, Jay Duke

which offers cre-

ative ways for

The strong growth the firm experienced in the decade put a premium on recruitment and retention of staff to meet the growing demand for services. To address this issue, BDO increased its overall human capital staff by more than 50 percent and doubled the number of senior HR personnel at the firm. These moves resulted in a dramatic improvement in the firm’s professional retention rate and the implementation of an integrated recruitment program that has yielded impressive results.

companies to deal with the challenges in the economy.”

“If you work in professional accounting, you’re going

As Jay Duke explains, BDO has acquired a reputation

to work hard. But we want to ensure BDO is a place

85

service

BDO San Francisco 2010

and partners.

where people want to work, and we’ve put programs in place to make that a reality,” says Sandi Guy, executive director of human capital. Specific initiatives included: •

•

A strategy—BDO Flex—that positively impacts the business and employees by enabling professionals to achieve a work+life fit that allows them to work

An award-winning Women’s Initiative dedicated

smarter in a competitive, do-more-with-less business environment.

•

A program—Keys to Success—that identifies potential leaders and outlines the steps by which professionals can rise to the level of partner.

•

A Pathway to Success program that identifies potential recruits prior to their junior year of study and invites them to spend a week with BDO to learn what it’s like to be in public accounting.

“BDO is the for of thefemale firm’s volunteerism to Counts” increasing theumbrella retention professionals initiative across the country.

87

People who know, know BDO

SM

For nearly one hundred years, BDO had confined its

on that success by using advertising to further

promotional activities to proactive media relations and

differentiate our brand and proactively market our core

direct marketing activities, while eschewing the use of

services beyond our ongoing public relations and direct

advertising. That changed in 2009 when the firm

marketing initiatives,” said CEO Jack Weisbaum in a

launched its first-ever sustained national advertising

press release announcing the campaign.

campaign. The campaign was predicated on market research that confirmed two things BDO’s leadership had suspected—CEOs, CFOs, tax directors, and corporate board members familiar with BDO thought very highly of the firm, but overall awareness was surprisingly low. The timing was right for BDO to launch a national advertising campaign to differentiate its brand and increase awareness of the firm among its target audience.

Launched in February 2009, the campaign employed the concept of “conversations” between executives in real-world scenarios to position BDO as the capable, responsive professional services provider that companies can turn to in working through business challenges.

The advertising also introduced a new and memorable tagline—“People who know, know BDOSM”—reflecting the sentiment of the market research and the positive experiences of those familiar with BDO.

“In recent years, BDO has enjoyed a period of unprecedented growth. It is our intention to build

The three-year program was designed to create a significant and sustained presence on the early-

Accountants and Consultants www.bdo.com

“An IPO track record – you don’t build that overnight.”

For 100 ye

© 2010 BDO Seidman, LLP. All rights reserved.

As the decade came to a close, the changes at BDO kept on coming. In February 2009, in a bold response to a tough economy, BDO launched its first-ever morning programs of national cable news networks such

national advertising campaign, an ambitious three-year

as CNN, Fox News, CNBC, and MSNBC. Complementing

program encompassing television, print, and digital

the television advertising was a consistent presence in

media. While its external goal was to increase brand

business print, including the Wall Street Journal, Fortune,

awareness, internally the campaign grew out of a spirit

Forbes, and CFO, and an extensive online campaign.

within today’s BDO of confidence and pride, not only in

According to published media information, in 2009,

the accomplishments of the firm but in its people.

the campaign generated an estimated 915 million impressions, or views of the ad, by adults eighteen and older. A repeat of the firm’s market awareness research showed an 18 percent jump in unaided awareness of BDO in less than a year—a great success.

In January 2010, all 1,138 BDO offices worldwide adopted a single trading name: BDO. As of June 30, 2009, BDO in the

During the firm’s centennial year, BDO created a new

United States employed

television spot that references the firm’s one hundred

2,712 men and women,

years of experience, and the tagline for both the print

including 273 partners and

and television advertising has been modified to state,

2,122 professional person-

“For 100 years . . . People who know, know BDOSM.”

nel, in 37 offices, and re-

00 years... People who know, know BDO.

ported $620 million in Al Ferrara Limited, the firm revenues. Through BDO International

is networked with offices in 114 other countries, the fifth-largest network of independent accounting firms in the world. The BDO Seidman Alliance program links

As of July 1, 2010, the firm’s statutory than 300 U.S. andname more thanbecame 100 international publicly traded and LLP. was the only national firm to be BDOentities USA, BDO to more than 400 independent Alliance firm

locations nationwide. In 2009, the firm served more

named as one of the Best Accounting Firms to Work For by Accounting Today magazine and Best Companies Group.

A popular disclaimer in the investment industry is “Past performance does not imply or guarantee future

89

Faces of BDO Today

Chapter 9 : BDO in the Twenty-first Century

Faces of BDO Today

92

Faces of BDO Today

Index Numbers in italics indicate photographs.

A

B

96

Abernathy, John D., III, xviii, 60, 61, 62, 70 accountants, image of, 28 Accounting Today, 89 advisory practice, 44 AICPA. See American Institute of Certified Public Accountants Allenberg, Howard, 1, 75, 82, 84 Alliance Program, 55 American Institute of Certified Public Accountants accounting principles board, 12 Accounting Standards Executive Committee, xiii J. S. Seidman’s service to, xi–xii Lee’s service to, xii naming Lee as chairman, 60–61 service to, by BDO partners and staff, xiii Arizona State University, 59 Arthur Andersen, 78 At the Beginning a Vision, Today a Reality: BDO (Otte), 72 auditing, evolution of, xii Banking Act of 1933, repeal of, 63 Barnett, Bernie, 16 BDO adoption of name, 70, 87 culture of, 75 federal structure of, 72 growth of (2000s), 81 personal touch of, 73 proclamation, 74 providing service alternative, 72, 81 responding to USA PATRIOT Act, 83 worldwide growth of (1980s), 70–72 BDO Consulting, 80, 83 BDO Counts, 87 BDO Flex strategy, xv, 52, 85, 87 BDO Germany, founding member of BDO Seidman International Group, 67 BDO International Limited, 72–73, 87 BDO Seidman association of, with America’s middle market, 23 governance changes at, 79–80 growth of, in 2000s, 25

management difficulties at, 79 marketing itself as the service alternative, 23–25 naming of, 72 reorganizing around national business lines, 65 upmarket trend for, 25 BDO Seidman Alliance, xiii, 55, 63, 83, 87–89 BDO Seidman International, 70 BDO Seidman International Group, 67, 70 BDO USA, 7 board of directors (2010), 84 branding, with different market segments and services, 16 Center for Information Management, 64–65 committed to diversity, 48–53 culture of, ix emphasizing partner involvement and accessibility, ix entrepreneurial clients of, 25 family environment of, 4 first national advertising campaign, 87, 88–89 founding member of BDO Seidman International Group, 67 founding member of the Center for Audit Quality, xiii increase in cumulative revenue (2004–2008), 85 influence of, in the accounting profession, xi–xiii Los Angeles employees of, 4 named as a Best Accounting Firm to Work For, 89 named one of the Best Accounting Firms for Women, 48, 52 named to Best Companies Group, 89 National IT staff, 65 presence of, in news media, 16–17 research function of, 16 as the service alternative, ix size of auditing practice, xii staff increases at (2000s), 85 BDO Women’s Initiative, 48, 52 Berson, Wayne, 82, 84 Beuhausen, Ben, 16 Beverly Hilton Hotel, 43 Big Four firms, resource constraints on, after Sarbanes-Oxley, 25, 80, 83 Binder, Hamlyn & Co., 68 Binder Dijker Otte (BDO), 70 Binder Dijker Otte & Co., 70 Binder Seidman International Group, resistance to expansion of, 70 Blinka, Jim, 77, 84

Borini, Mario, 16 boutique firms, 22 Brigadoon, 42 Brout & Co., 61 Bush, George H. W., 58 Bush (George H. W.) administration, 59 business restructuring practice, 85

C

D

Calder, Alexander, 59 Center for Audit Quality (CAQ), xiii Chicago (IL), 34, 35 clients defined by entrepreneurial spirit, 25 growth of, for BDO Seidman, 23 identification with, 22 Coady, Roxanne, xv, 16, 47, 50 Connect, 75 Cooper Union, 5 CPA profession, service to the public, history of, xii curbstone brokers, 26 Depository Institutions Deregulation and Monetary Control Act, 78 Deutsche Warentreuhand, 68 Diary of Anne Frank, The, 42 Duke, Jay, 4, 27, 82, 84, 85

E

80 Broad Street, 6, 31 Enron, 78, 83 Equity Funding Corporation of America, 60–61

F

face-to-face communication, importance of, 73 Federal Deposit Insurance Corporation, xii Federal Reserve Bank of Chicago (Detroit Branch), xii, 58 Ferrara, Al, 4, 7, 39, 84, 89 Field, Denis, 79 financial industry, deregulation of, 63–65 Finci, Al, 56, 60, 62, 73 Ford, Gerald, xii, xvii, 59 Forrestal, James, 41 41 Park Row, 6 Frese, Hogeweg, Meyer & Horchner, 68, 70 furniture industry, 11, 14, 15–17, 22, 31, 32

G

gender diversity, xv, 38 Gibson, Andy, 84 Glass-Steagall Act, repeal of, 63, 78

G100 businesses, 22, 25 Gramm-Leach-Bliley Act of 1999, 78 Grand Rapids (MI), 13, 15, 45 accountants in, 18 support service departments located at, 65 Grand Valley (MI) State University, 58 Graul, Leland (Lee), 16, 17, 73, 74, 79, 84 Grund, Ben, xvi, 30, 43, 47, 48 Guy, Sandi, xv, 4, 52, 75, 85

H

Hambelton, Wendy, xv, 9, 16, 52 High Point (NC), 32 Hoover Commission, xi

I

income taxes changes in Internal Revenue Code (1954), 42 corporate, introduction of, 10 personal, introduction of, xi Infrastructure Services Team, 64 international training program, 73–75 international travel, 70, 73

J K

Journal of Accountancy, 40 Junior Advisory Group, 44

L

Lang, Andrew, 82 Lang Group, 82 Lawson, William, 68 Lee, Bernard Z. (B.Z.), xiii, xvii, 71 elected managing partner, 60 on formation and expansion of BSIG, 70 named as AICPA chairman, 60–61 service of, to the AICPA, xii Legislative History of Federal Income Tax Laws, 1861–1938 (J. S. Seidman), 36 Lenhart, Bill, 16 Lipper & Co., 83 Lubetsky, Esther, 17

Kamp, John, 12, 48, 50 Kane, Jeff, 79 Kelly, Terry, 16 Keys to Success program, xv, 52, 85 Klausner, Joseph, 61 Knopfler & Co., 61 Kolins, Wayne, 4, 12, 16, 30, 79, 80, 84

97

M

98

Manning, Terry, 44 McKesson & Robbins, 40 Mead, Mary A., xv, 46, 47, 48–50 media, firm’s use of, to promote the practice, 16–17, 19, 50, 59 Melancon, Barry C., xi Memphis (TN) office, 31–34, 37 mergers, firm planning for, 56 Miami, 76 middle market, firm’s association with, 17, 22–23 Mitchell, Gary, 82 My Fair Lady, 42

N

Nankin, Schnoll & Co., 61 Neuhausen, Ben, xiii Newman, Jeremy, 72, 73, 74 New York City, xx, 54 New York Stock Exchange, 20 New York Times, 6 New York University, 5 Norse, Julia G., xv, xvi, 48

O

O’Hare, Michael, 55, 63 Otte, Hans-Heinrich, 70, 71, 72 Otte, Holger, 67

P

Pathway to Success, 87 Pavelich, Dan, xviii, 56, 63, 65, 79 Pergola, Carl, 16, 83–85 plant cost system, 15 Pomerantz, Glenn, 16 Post, George B., 6 proprietary research studies, 16 Pulse of the Middle Market, 16, 23

R

Reagan, Ronald, xii Reagan administration, 59 regional firms, 22 Resolution Trust Corporation, xii, 59 Roedel, Richard, 79 Romney, George, 58 Roosevelt, Franklin D., 30 Rothenberg, Irv, 61 Rottman, Rich, 64–65

S

San Francisco, 86 Sarbanes-Oxley Act of 2002 (SOX), 25, 78–83 Schafer, Roger, 61

Securities Exchange Act, 6 Securities and Exchange Commission (SEC), xii, 6, 28, 31 Seidman, Fanny Goldfarb, 2 Seidman, Frank (F.E.), xii, 2, 8, 10, 12 advising the War Production Board in World War II, 41 broadening firm’s expertise, 19 education and early work career of, 15 explaining decision to hire women, 48 leveraging the news media to promote the firm, 16, 19, 59 setting up offices in Grand Rapids (MI), 15, 17 Seidman, Jacob Stewart (J.S.), xi–xii, 8, 12 announcing changes at fiftieth anniversary executive conference, 43–44 authoring taxation volume, 36 awarded AICPA Gold Medal Award, xi–xii broadening firm’s expertise, 19 as Broadway producer, 42 confronting McKesson & Robbins accounting scandal, 40 ending his time as managing partner, 56 joining firm, 19 leveraging the news media to promote the firm, 16, 59 presenting plan for the firm’s future (1968), 56 recruited to U.S. Navy Department in World War II, 41 as sole active founding partner, 45 taking the firm global, 68–70 Seidman, L. William (Bill), xvii appointed general partner, 43 becoming managing partner, 56 government service of, xii implementing changes in firm’s culture and management structure, 45, 56–59 on Lee’s leadership, 60 as Renaissance man, 58–59 as special assistant to Vice President Ford, 59 wanting to make Mead a partner, 48 Seidman, Lawrence J. (Larry), 34, 70 appointed general partner, 43 Seidman, Louis, 2 Seidman, Maximillian L. (M.L.), xi, xiv, 3, 7 death of, 45 education and early working years of, 5 hiring Ben Grund, 30 influence of, 30 planning for post–World War II future, 41–42 stepping down as managing partner, 43 vision for the accounting profession, 10

Seidman, Philip K. (P.K.), xv, 33–34 appointed general partner, 43, 44 service during World War II, 41 Seidman, Richard H. (Dick), 41 Seidman & Seidman advisory practice at, beginnings of, 44 appointing five new general partners (1960), 43 bearing most of the BSIG operating costs, 70 becoming financial authority for the news media, 16 becoming an open general partnership, 56 branded with America’s middle market, 17, 22–23 building reputation as audit specialists, 28–31 company plane, 57 early focus on individuals and small businesses, 22 emerging from the Depression, 37 employees and families (1960s), 4 Equity Funding crisis, 60–61, 62 establishing national office and centralized computer center, 56 expansion of, 17, 42 fiftieth anniversary executive conference, 43–44 first nonfamily member as general partner of, 60 first nonfamily partner of, 43 growth of, 7 growing during the Great Depression, 28 hiring women during World War II, 41, 48 identification of, with furniture industry, 11, 14, 15–17, 22, 31, 32 Junior Advisory Group, 44 move to 80 Broad Street, 31 new approach to partnership (1960s), 45 offering clients collaborative relationship, 44 opening of, 2, 5–6 opening the Memphis office, 31–34 planning for post–World War II future, 41–42 promoting gender diversity, xv, 41, 48 rapid growth of, 28 recruiting accounting graduates, 45 reputation for innovation, commitment, and expertise, 19 reviewing procedures and techniques after McKesson & Robbins accounting scandal, 40 shattering the accountant stereotype, 28 shifting focus of, with changes in tax and securities laws, 22 transitioning to national firm, 59 viewed as premiere firm for tax planning, 22

Sellitti, Alan, 81 September 11, 2001, 82–83 Shirley-Bevan, Michael, 70 Simon, William E., xvii, 59 Sirotta, Doug, 83, 84 Sixteenth Amendment, passage of, xi, 5–6.

See also income taxes SOX. See Sarbanes-Oxley Act of 2002 Spencer, Robert L. (Bob), 19, 41, 43, 70 Spinetto, John, 45 Statue of Liberty, 31 Structured Ownership, 65

T

U W

tax code, increasing complexity of, xi tax planning, as growing part of firm’s business, 42 Taylor, Barbara, xv, 52, 84 technology impact of, on accounting profession, 64–65 limiting the need for travel, 73 Tempelaar, Aad, 70 Thorne, Mulholland, Howson & McPherson, 68, 70 Time Warner, 83 Total Involvement, 15–17, 44, 45 Tower, Christopher, 84 Truman, Harry S., xi USA PATRIOT Act, 83 Wares, David, 15, 44 Weaver, Monte, 33–34 Weisbaum, Jack, viii, xiii, xix, 16, 21, 79–80, 81, 84, 88 Wetstein, Gary, xviii, 61–63 Williams, Jack, 16 Wolak, Susan, 50 Wolfson, Weiner & Co., 60 Women’s Initiative, xv, 85 WorldCom, 85 World War I, resulting in increased business for Seidman & Seidman, 10 World War II, 41

99