Strategic Plan: Kevin Arnold Executive Director

Purpose To explain the background and outline the most significant elements of Nexia International’s Strategic Plan.

Strategic Plan – Background

Purpose  Understand where Nexia is currently positioned in terms of its strengths and weaknesses  Establish a vision of where we want to be in 3-5 years time  Identifying a clear set of measurable, achievable objectives and tasks  Identify and provide resources to achieve them

Strategy sub-group appointed by Board  Norbert Neu (Chairman, Germany)  Tom Marino (Director, USA)  Jeremy Boadle (Director, UK)  Henry Tan (Director, Singapore)  Kevin Arnold (Executive Director, UK)  Roy Hoffman (Advisor, USA)

Process: 2009  Strategy Sub-group made initial presentations to March’09 & May ‘09 Board meetings  June 09 – Sep 09: Members completed Strategic Planning Questionnaire  09 Annual Conference Prague: Delegates reviewed Questionnaire results

Process: 2010  Feb - Apr: SWOT Analysis  Strategy sub-group prepared Summary Paper - reviewed at May Board meeting  Summary presentation made at regional conferences-comments received.  June – October: Strategic Plan prepared & approved by Board – more refinement.  November Annual Conference: Strategic Plan launched

Process: 2010  Many comments and suggestions received.  Input from Specialist Committees.  6 different drafts produced.  Process responsive to the views of members.  Now your plan.

Underpinning Themes –Help members grow their business-organic growth. –Increase international referrals. –Improve members’ benefits-the reasons for joining-and staying!.

Consists of:  Mission Statement.  Vision Statement.  7 Strategic Objectives.  49 Tasks.

Outline:  Strategic Objectives.  12 Tasks.

Mission Statement “ Nexia International is a leading worldwide network of independent, high quality firms. We provide clients with the highest standards of national and international audit, accounting, tax and advisory services in a cohesive, personal and customised manner”

Strategic Objective: 1 Encourage members to develop an international focus to their practice and provide them with appropriate resources to apply a consistent Nexia approach to cross border engagements

Tasks Provide guidance to members in developing, expanding and enhancing international dimensions to their practice and leveraging the Nexia brand in their marketplace

Tasks Develop a portfolio of marketing resources, templates and guidelines that enable Members to implement consistent Nexia brand messaging on cross border engagements and answer the question: “Why Nexia?”

Strategic Objective: 2 Ensure the full commitment of Members to Nexia’s strategic objectives.

Tasks Produce a Charter for Members which will outline the expectations/obligations required of Nexia Members including the requirement to: Develop/maintain a strategic plan to build their international practice. Promote and communicate Nexia International activity throughout their practice. Communicate and collaborate with other Members in accordance with stated service standards.

Does Your Firm Have a Strategic Plan to Build its International Practice? Region% Yes Asia Pacific65.2% Europe43.3% Middle East/Africa50.0% North America59.4% South America28.6% By Region Revenue% Yes <1 Mio.51.2% <5 Mio.40.4% < 10 Mio.61.1% < 20 Mio.53.3% <50 Mio.40.0% <100 Mio.75.0% <250 Mio.50.0% <500 Mio.100.0% By Revenue 18

Or Firms must ‘Walk the Talk’ What can you do for Nexia?

Strategic Objective: 3 Ensure that Nexia maintains a strong presence in key strategic markets and identify opportunities to extend and enhance international coverage where appropriate

Do You Feel Nexia is Well-Represented Geographically? Region% Yes Asia Pacific95.7% Europe95.5% Middle East/Africa81.3% North America90.6% South America92.9% By Region Revenue% Yes <1 Mio.92.7% <5 Mio.91.2% < 10 Mio.88.9% < 20 Mio.93.3% <50 Mio.100.0% <100 Mio.100.0% <250 Mio.100.0% <500 Mio.100.0% By Revenue 21

Tasks Direct particular member firms to target cities in which there is a need for a member, making them responsible for recruiting there. If necessary, being prepared to fund selective recruitment.

Tasks Develop a Charter for Umbrella Groups which would outline the Board’s expectations. Hold a centrally funded Umbrella Chairmen’s meeting at least once every two years.

Strategic Objective: 4 Raise the level of confidence between members by benchmarking and monitoring required standards of performance in relation to membership obligations

What Does Your Firm Need From Nexia? Scale: 1=Disagree Strongly 5=Agree Strongly 25

Tasks Ensure that there is a rigorous set of procedures and guidelines governing Nexia’s internal operations and its interaction with Members

Some Possible Operating Procedures Criteria for Membership. Responsibilities of Contact Partners. Permission to incorporate Nexia as part of firm’s name. International referral work between firms. Guidelines-reviewers of potential new members. QCR procedures. Staff Exchange procedures.

Some Possible Operating Procedures Criteria for Membership. Responsibilities of Contact Partners. Permission to incorporate Nexia as part of firm’s name. International referral work between firms. Guidelines-reviewers of potential new members. QCR procedures. Staff Exchange procedures.

Some Possible Operating Procedures Expenses. Unbudgeted expenditure. Conference concessions. Independence monitoring. Describing relationship to Nexia: use of Logo. Board of Directors nomination and election procedures.

Some Possible Operating Procedures Roles and responsibilities: Regional Chairmen. Umbrella Group Chairmen. Umbrella Groups. Tax Committee. Audit Committee. Communications/Marketing Committee. Regional Committees.

Nexia Operating Procedures Greater transparency. Approved by Board of Directors. Form the basis of our Compliance requirements.

Already Completed Membership Criteria. Membership Compliance/ Performance Management. Roles & Responsibility of Contact Partners. Un-budgeted expenditure.

Tasks Develop, implement and maintain a system for monitoring and reporting member compliance

Obligations of Membership Category One: Failure to comply will lead to Board review. Each case considered on merit but the board retains the right to expel the firm from membership. Category Two: Important but do not impact upon other Member Firms to the same degree as Category One.

Category One Obligations Payment of Fees QCR Acceptance Nexia Annual Survey (return) Membership Criteria (ongoing compliance) Effective Communication/Rapid response to referral requests Complaints-(Satisfactory resolution) Conference Participation

Category Two Obligations Web Site & Stationery Compliance Web Site Directory Input to Nexia Publications (As applicable) Updating “Doing Business In..” (As applicable)

Non Compliant Firm Procedure Data base established and performance record reviewed regularly by Executive Director and Regional Chairs. Performance record reviewed each year by Board of Directors, regular non-compliance could lead to expulsion.

Non Compliant Firm Procedure Data base established and performance record reviewed regularly by Executive Director and Regional Chairs. Performance record reviewed each year by Board of Directors, regular non-compliance could lead to expulsion. Purpose: –Encourage –Raise quality –Confidence Building between Member firms to increase referrals.

Performance Management-Where do we stand?

Husband of The Year Award Third Place Greece

Husband of The Year Award Second Place Mexico

Husband of The Year Award First Place Ireland

Husband of The Year Award Honourable Mention USA

Performance Management What do we expect from members? How are we performing?

Performance Management-Where do we stand? (Assume 245 firms) Payment of Fees – 15 firms aged debtors. Annual Confirmation – 65 firms did not reply-some never. World Directory- 80 firms did not reply World Tax Overview – 18 countries did not reply.

Performance Management-Where do we stand? (Assume 245 firms). Fee Income Survey - 41 firms did not reply-some never. World Survey Returns – 11 firms did not complete questionnaire. Conference Participation - some firms have never attended an International Conference and do not attend regional meetings.

Why is it important? Defines quality in broader sense. Objective basis to assess performance and encourage improvement. Sends a message from the board. Develops confidence between members.

Strategic Objective: 5 Encourage greater communication and interaction both between member firms and with Nexia.

Tasks Support Regional/National Marketing and Business Development seminars on a regular basis. Encourage attendance by members at conferences and meetings outside their geographical area to improve awareness and referral activity.

Strategic Objective: 6 Encourage referral business flows across the network and support collaboration between members

Tasks Identify and exploit subsidiary relationships of key international clients to create potential business opportunities for Members in those specific markets

Tasks Explore and develop technological solutions to provide Member profiles/contact data via PDA devices.

Strategic Objective : 7 Encourage greater knowledge sharing opportunities amongst Members through the continued development of international technical committees, specialist interest groups and technical training initiatives.

Tasks Create an International Education, Training and Secondment Committee in order to develop and coordinate the ‘softer’ benefits of membership.

Tasks Create an International Education, Training and Secondment Committee in order to develop and coordinate the ‘softer’ benefits of membership. Volunteers needed!

Tasks Continue to facilitate member firms’ access to accounting and audit learning including a ‘core’ competency study course and recognised qualification in IFRS; IFRS updates via various means including web-based learning; regular webcasts; materials available on the Nexia International website; and the Audit Forum held in conjunction with the Nexia International annual conference.

Tasks Consider the creation of an IFRS Help Desk.

Tasks Consider and encourage the appointments of regional/national Executive Directors/assistants where appropriate. Consider and review the level of secretariat support required to facilitate and improve greater knowledge sharing and specialist committee delivery.

Strategic Plan – Some Realities Characteristics of ‘competitor’ Networks: Fee Income. Global Structure. Full time employees.

Strategic Plan – Some Realities Characteristics of ‘competitor’ Networks: Fee Income.

Strategic Plan – Some Realities Fee Income: BDO – 5,026 million. (No 5) GTI – 3,592 million. (No 7) BT – 3,128.(No 8) Nexia – 2,110 million. (No 10).

Strategic Plan – Some Realities Characteristics of ‘competitor’ Networks: Fee Income. Global Structure.

Strategic Plan – Some Realities Global Structure: BDO/GTI and BT – Regional Committees/national structures with secretariats; regional /national marketing and technical organisations. Nexia – One regional committee, no national secretariats.

Strategic Plan – Some Realities Full time employees: BDO – Over 400. GTI – Over 300. BT – Approximately 35. Nexia – 8.

Strategic Plan – Some Realities Full time employees: BDO – Over 400. GTI – Over 300. BT – Approximately 35. Nexia – 8. Can we realistically overtake in 5 years?

Strategic Plan – Some Realities Full time employees: Crowe Howarth (No 9): 25 PKF(No 11) : 20 HLB (No 12): 22 DFK (No 20) : 14. Nexia – 8. (International plus Europe & Australia)

Strategic Plan – Some Realities Full time employees: Crowe Howarth (No 9): 25 PKF(No 11) : 20 HLB (No 12): 22 DFK (No 20) : 14. Nexia – 8. (International plus Europe & Australia) All have regional and some national secretariats.

Purpose  Understand where Nexia is currently positioned in terms of its strengths and weaknesses  Establish a vision of where we want to be in 3-5 years time  Identifying a clear set of measurable, achievable objectives and tasks  Identify and provide resources to achieve them

Strategic Plan – Some Realities Are we prepared to make the commitment and improve benefits to members?

Ambitious-Now Comes the Hard Bit! “Been tried before-won’t work”. Note use of the word: “Consider”; need your support. No plan survives contact. Let’s just do it!

Comments or Questions?

Main Responsibilities of Contact Partner Main point of contact for referrals. Acknowledge all communications from member firms promptly, but within at least 48 hours. Ensure all administrative requirements of the Association are met, especially: –Profiles. –Requests for information. Make arrangements when out of office. A vital link that underpins membership.