The new MGI Clive Bennett What were going to talk about How the - PowerPoint PPT Presentation

The new MGI Clive Bennett

What we’re going to talk about • How the network was created – the debate • The Chicago AGM decisions • How MGI Worldwide will be organized • Join MGI Worldwide or stay in the alliance? • MGI quality review process • Using the brands • MGI Worldwide means better business

How the network was created

The debate LatAm, Montevideo, May 2013 Is MGI already a network?

The debate Europe, Brussels, June 2013 What are the legal and liability risks?

The debate Sydney 2013 (AGM) Must we be hybrid?

The debate Miami 2014 What would a hybrid MGI look like?

The debate Berlin 2014 How will the network operate?

The Chicago AGM, October 2014 Members decide

Chicago The IC’s Plan Agreed by 100 votes to 19

Chicago The hybrid structure the alliance the network All members quality reviewed No quality reviews New MGI network brand Non-MGI brand Many MGI branded firms Brand investment

Chicago Network management International Committee Decisions Technical Committee Technical supervision and opinions External Adviser Technical Manager Technical advice Support & administration

Chicago Costs USD ¡ First ¡year ¡ From ¡2017 ¡ From ¡main ¡budget ¡ ¡ ¡ ¡ ¡ ¡ ¡External ¡adviser ¡ 96 ¡000 ¡ 48 ¡000 ¡ ¡ ¡ ¡ ¡ ¡ ¡Technical ¡Manager ¡ 0 ¡ 100 ¡000 ¡ ¡ ¡ ¡ ¡ ¡ ¡Other ¡costs ¡ 72 ¡000 ¡ 47 ¡000 ¡ TOTAL ¡from ¡main ¡budget ¡ 168 ¡000 ¡ 195 ¡000 ¡ From ¡annual ¡network ¡fee ¡ (=$800 ¡p.a.) ¡ ¡ ¡ ¡ ¡ ¡ ¡Onsite ¡reviews ¡ 0 ¡ 104 ¡000 ¡ TOTAL ¡from ¡network ¡fee ¡ 0 ¡ 104 ¡000 ¡ TOTAL ¡COSTS ¡ 168 ¡000 ¡ 299 ¡000 ¡

How will be organized?

Key changes since the AGM • Network Liaison Committee (NLC) created • Reduce spending from main budget. – SWAT-UK replaces external adviser (Brian Smith). – No Technical Manager. • Longer period for first sign-up phase. • Completely separate network and alliance brands

Network governance International Committee Decisions Members’ views Management CEO Technical Committee NLC Technical supervision and opinions SWAT-UK Technical support, process and administration

Network Liaison Committee (NLC) • One member from each Area – not the IC Member. • Communicates members’ views to centre – IC, TC, CEO. • Communicates main network decisions to members. • Three of its members selected by IC to form Technical Committee (TC).

Network Liaison Committee Africa Juané Schreuder Asia Deepak Goil Australasia David Fong Europe Michael Grüne Latin America Luis Uncal MENA Mohamed Boumesmar North America Sharon Gregor UK & Ireland Roger Isaacs

Technical Committee Africa Juané Schreuder Asia Deepak Goil Australasia David Fong Europe Michael Grüne Latin America Luis Uncal MENA Mohamed Boumesmar North America Sharon Gregor UK & Ireland Roger Isaacs

What does the TC do? 1. Advises the International Committee – Network regulations – Procedures and processes – The operation of the network – Relevant technical issues – Disciplinary matters regarding member firms – Quality of member firms

What does the TC do? 2. Analyses and decides: – How well members have implemented quality controls – Reviewers for on site review – On site review programme – Member review scores – Improvement plans, where needed

What is SWAT-UK? • One of the UK’s largest suppliers of accountancy/audit training and compliance reviews. • Replace roles of Brian Smith + Technical Manager. • Will manage: – Self assessment questionnaires – Audit independence system – On site reviews – First analysis of reviews

Revised budget USD ¡ First ¡year ¡ From ¡2017 ¡ From ¡ From ¡main ¡budget ¡ ¡ ¡ ¡ ¡ ¡ ¡External ¡adviser ¡ 27 ¡000 ¡ 0 ¡ ¡ ¡ ¡ ¡ ¡ ¡SWAT-­‑UK ¡ 59 ¡000 ¡ 70 ¡000 ¡ ¡ ¡ ¡ ¡ ¡ ¡Technical ¡Manager/support ¡ 0 ¡ 20 ¡000 ¡ ¡ ¡ ¡ ¡ ¡ ¡Other ¡costs ¡ 70 ¡000 ¡ 40 ¡000 ¡ TOTAL ¡from ¡main ¡budget ¡ 156 ¡000 ¡ 130 ¡000 ¡ -7% -33% From ¡annual ¡network ¡fee ¡ (=$800 ¡p.a.) ¡ ¡ ¡ ¡ ¡ ¡ ¡Onsite ¡reviews ¡ 0 ¡ 104 ¡000 ¡ TOTAL ¡from ¡network ¡fee ¡ 0 ¡ 104 ¡000 ¡ TOTAL ¡COSTS ¡ 156 ¡000 ¡ 234 ¡000 ¡

Branding 1. The Network

Branding 2. The Alliance

How to join

Taking the decision Does ¡our ¡ Do ¡we ¡use ¡ No firm ¡want ¡ No the ¡MGI ¡ to ¡join ¡the ¡ prefix? ¡ network? ¡ Yes Yes Complete ¡sign-­‑up ¡ Change ¡firm ¡name ¡ process ¡ Enhance ¡use ¡of ¡MGI ¡ Replace ¡all ¡references ¡ brand ¡in ¡marke[ng ¡ to ¡MGI ¡with ¡ ¡ Prepare ¡for ¡quality ¡ review ¡ (2 ¡years) ¡

Documents to complete Business ¡informa[on ¡form ¡ Ques[onnaire ¡about ¡quality ¡systems ¡ Audit ¡independence ¡register ¡ Sign ¡and ¡return ¡network ¡agreement ¡ Deadline: 15 September

Network costs • One-off joining fee $500 – After 15 September 2015 = $1000 • Annual fee $800 – pays for review visits – Only from 1 July 2017 • These costs in addition to usual international and area fees.

Read the Network Regulations

Self assessment quality questionnaire

Audit independence register

Membership agreement

The quality review process ANNUALLY ¡ Self-­‑assessment ¡ques[onnaires ¡ EVERY ¡THREE ¡YEARS ¡ Receive ¡MGI ¡peer ¡review ¡visit ¡ Review visits start in 2017 Two years to develop quality assurance systems

The quality review process Objective Firms must meet MGI quality standards – ISQC-1 (IFAC international quality standards for audit and non-audit). – Non-technical quality – response time, transparency, language capability, website, communication.

Self assessment questionnaire 1 Fact finding Business information form + questions about your audit practice

Self assessment questionnaire 2 Your firm’s quality systems Part 1 General quality controls Part 2 Audit quality controls Based on ISQC-1

Self assessment questionnaire 3 Quality of specific files Check how audit quality controls are applied to specific audit files.

Self assessment questionnaire 4 Audit independence register Update register of cross border clients.

Discipline • Members must complete all questionnaires fully and on time. • IC will apply penalties to late submissions.

Quality review Phase 1: 2015-17 • TC will analyze self-assessment questionnaires submitted. • Firms will be advised where they need to improve. • Firms that do not show serious investment in quality will not be allowed to stay in the Network after June 2017.

Quality review Phase 2: from July 2017 • One on-site review every three years, planned by TC. • Reviewers compare self-monitoring questionnaire responses with reality. • Non-technical quality included. • Reviewers chosen from members by Technical Committee. • Review report analyzed by TC.

Quality review Classification by TC Level 1 Very good or excellent quality . Some minor deficiencies may need remediation. Level 2 Adequate quality . Reasonable quality assurance systems are in place but some significant deficiencies require remediation. Level 3 Poor quality . Quality assurance systems are substantially deficient and require significant effort and investment of resources to remedy.

Quality review Remediation Level 1 None needed. Level 2 Improvement plan agreed. TC may require follow-up review visit. Level 3 Improvement plan agreed. TC shall require follow-up review visit. If improvements not made, firm may be dismissed from Network.

Using the brands

Existing firms brands stay as * they are For now!

When you talk about membership of MGI you use

If you do not join the network • You must use • You CANNOT use the name of MGI in any name, logo or marketing. • If your company uses MGI, you must change the company name.

Reputation Profit Market share

Enhanced reputation • Proven quality at an international standard. • Forum of Firms quality guarantee (from 2017/18). • Local MGI brand = global MGI brand.

Powerful brand

Higher margins • Compete on quality against the big firms • More and bigger international clients • Global contracts – World Bank – European Commission development – United Nations – Global charities

More market share • MGI moves higher in the rankings – Worldwide – Regional • More business exchange – Worldwide – Within MENA