PKF International

Farringdon Place
20 Farringdon Road
London, EC1M 3AP
United Kingdom
Telephone: (44) 20 7065 0000
Fax: (44) 20 7065 0650
Web site: http://www.pkf.com

International Association
Incorporated: 1969
Employees: 13,500
Sales: $1.2 billion (2005)
NAIC: 541211 Offices of Certified Public Accountants; 541213 Tax Preparation; 541214 Payroll Services; 541219 Other Accounting Services; 541611 Administrative Management and General Management Consulting Services

PKF International is a worldwide network of accounting and professional advisors. The group promises local knowledge and personalized service backed by international resources and quality standards. PKF is made up of about 380 member firms operating in more than 100 countries. Together, its constituent firms, which are legally independent, make PKF International a global leader in business advisory services. Rather than compete with the Big Four for clients among the multinationals, PKF focuses on serving mid-size companies and has developed specialties in areas such as the hospitality, healthcare, and sports industries.

FORMING THE ASSOCIATION IN 1969

PKF International was formed in 1969 as an association of four member firms in the United Kingdom, Canada, the United States, and Australia. Worldwide fees were about $15 million. The group would be known as the Pannell Kerr Forster International Association until January 2000, when it adopted the name PKF International (it also had used the name Pannell Kerr Forster Worldwide).

Over the next three decades, PKF would grow from four member firms to more than 380 from countries all over the world. In 1987, PKF signed up Fiduciaire Expertise Conseils (FEC) as its representative in France. It was replaced seven years later, however, after failing to take the brand beyond Paris, its sole base of operations. An eight-member group trading as PKF France was formed in 1994 to replace FEC. The new group was led by Janny Marque & Associés.

PKF ranked as the world's tenth largest accounting business in 1991, with 272 offices and 8,000 employees. It was restructuring due to consolidation in the industry.

U.K. ORIGINS

The U.K. member of the original quartet was then known as Pannell, Fitzpatrick & Co., a name it adopted in 1967. It traced its origins back to August 1869, when accountant William Henry Pannell set up W.H. Pannell & Co. in London after a seven-year apprenticeship with Hart, Brothers & Co. Pannell took on his articled clerk, William Hardy, as a partner in 1885. One of the firm's early clients, African Lakes Corporation Limited, would still be with the firm more than 100 years later.

In 1942, Pannell & Co. was combined with Crewdson, Youatt & Howard and Lewis, Hardy & Co. to form Pannell, Crewdson & Hardy. In 1948, the firm opened its first overseas office in Belize. It was merged yet again, with Fitzpatrick, Graham & Co., in 1963. Pannell Fitzpatrick & Co. took the name Pannell Kerr Forster in September 1980. This practice was followed at the same time by Harris Kerr Forster & Company in the United States. In 2000, the firms adopted the styling "PKF International."

Pannell Kerr Forster in the United Kingdom was quick to follow the top tier accounting firms in publishing annual financial reports in the mid-1990s. The firm announced plans to merge with Robson Rhodes in 1999 amid a trend for consolidation among Britain's mid-tier accounting firms. The Robson deal was called off, however, due to differences in the firms' approaches to international business, reported the Financial Times. While PKF members were all essentially mid-tier companies, Robson's RSM International network was seeking to compete with top-tier firms for multinational clients. PKF instead was focusing on niche markets such as healthcare.

The U.K. firm exceeded £100 million ($145 million) in fee income for the first time in 2001, noted the International Accounting Bulletin. It was ranked eighth in the country with about 30 offices, but still considered a mid-tier firm, a description that suited its representatives. Corporate finance was the fastest growing part of its business. Assurance and advisory work accounted for about 40 percent of the total, followed by consultancy. It was developing specialties in consulting for several industries, including hospitality, sports, professional services, healthcare, construction, e-commerce, and the public sector.

In 2005 the U.K. firm became PKF (UK) LLP, a limited liability partnership. This happened in spite of an increase in regulatory burdens for LLPs. PKF UK had 1,500 employees in 27 offices in 2005.

U.S. ORIGINS

The U.S. member of the original four to form the association was Harris, Kerr, Forster & Co. It dated back to 1911, when Scottish immigrant Errol Kerr set up Harris, Allan & Co. in New York City with his London-based partner, William Harris. The firm's original quarters were in Madison Avenue's famous Ritz-Carlton Hotel, which was just opening and was Kerr's first U.S. client. This was the beginning of the firm's longstanding specialty in hotels. Harris Allan eventually became Harris, Kerr & Cook, and merged with W.J. Forster & Co. to form Harris, Kerr, Forster & Co. in 1933. William J. Forster had started his namesake firm in New York in 1923.

Pannell Kerr Forster Consulting was spun off in a late 1991 restructuring. It would be based in San Francisco, while the audit, tax, and general business accounting operation remained based in New York City. PKF Consulting started off with 125 employees and offices in nine U.S. cities. Its CEO Patrick Quek told the San Francisco Business Times the consulting business had revenues of up to $15 million. There were other PKF consulting operations elsewhere in the world, mostly in Commonwealth countries. The U.S. consulting business was known for a hotel industry survey it had been publishing since 1936.

At the time of the consulting spinoff in 1991, several PKF accounting offices were closed, including the one in Denver, which had opened in 1962. It had been Denver's tenth largest accounting firm, with 35 employees. The U.S. accounting operations still had 11 offices and 400 employees, a spokesperson told the Practical Accountant. PKF also sold its healthcare-related business in New Jersey, New York, and Philadelphia to Ernst & Young.

COMPANY PERSPECTIVES

Our member firms are independent, local, "home grown" organizations and proud of it. They choose to belong to PKF International, to be subject to the standards this requires, and to prove they are worthy of the standard. And they enjoy the relationships and opportunities that international association brings. However they are truly local, and understand the real meaning of doing business in their country. When you want to establish your business in their country, they are the ones who can make sure you get off on the right foot, in a fashion that will be welcomed. We operate in a global marketplace that when successful, recognizes diversity. Through your local PKF firm you can achieve the best of both-a true understanding of the unique local culture, matched with a global perspective and organization.

A fast-growing U.S. member had been added, Houston's Pannell Kerr Forster of Texas, P.C. The increasing complexity of filing returns following the tax reform of the mid-1980s prompted a wave of consolida-tion, and PKF Texas added some smaller firms in the Dallas area.

The U.S. firm was enjoying several years of double-digit growth around the turn of the millennium and was quickly developing a client list among local technology companies in addition to its traditional hospitality business. An official told the Practical Accountant that it and other mid-tier firms had been helped by the exit of scandalized accounting giant Arthur Anderson from the Houston market, while reform measures such as Sarbanes-Oxley resulted in the remaining Big Four farming out more projects to smaller firms. PFK Texas had revenues of $9 million in 2002.

AUSTRALIAN AND CANADIAN ORIGINS

Australia was represented by Wilson, Bishop, Bowes & Craig among the original four members of the association. In the 1960s, PKF's Australian member, then G.T. Hartigan & Company, had developed a thriving audit business, notably for Mirror Newspapers, which later evolved into Rupert Murdoch's News Corporation. By 1987, the Australian Pannell Kerr Forster had gross fee income of AUD 25 million. It had become one of the first Western accounting firms to open offices in China, an official told Business Review Weekly.

PKF's Melbourne office merged with that of rival Nelson Wheeler in 1988, helping to push PKF's Australian revenues beyond AUD 50 million a year. It then had more than 700 employees in the country, including about 80 partners.

In 2001 a proposed merger between the Australian member of PKF and Investor Group was canceled. PKF Australia Limited was nevertheless becoming a leading mid-tier accounting firm in its home market. It was beginning to be thought of as an alternative to Australia's "Big Four," according to the Australian Financial Review. PKF's Sydney office merged with that of the Rowlands firm in July 2003 as PKF Australia looked to add on smaller offices in the country, an official told Business Review Weekly.

Campbell, Sharp, Nash & Field was the original Canadian member of the association. In 1991, Pannell Kerr MacGillivray, then PKF Worldwide's representative in Canada, merged with Grant Thornton International's Doane Raymond to form Doane Raymond Pannell. Pannell Kerr MacGillivray's consulting arm was spun off at the same time. The newly merged firm, Canada's sixth largest accounting practice, retained its affiliation with Grant Thornton while becoming a "correspondent" of PKF Worldwide.

PKF INTERNATIONAL IN 2000 AND BEYOND

PKF International had revenues of $766 million in 1999. It had operations in about 100 countries. The group got a big boost when Polaris North America joined the organization in January 2003.

PKF International streamlined its structure and management in 2005. It was grouped into four regions, which each elected representatives for the International Board of Directors. The regions were divided into Africa; the Americas; Asia Pacific (including India); and Europe/Middle East (including North Africa). PKF then had more than 380 member firms operating in 119 countries. Annual revenues were about $1.2 billion.

PRINCIPAL DIVISIONS

Africa; Americas; Asia Pacific; Europe/Middle East.

PRINCIPAL COMPETITORS

BDO International; Deloitte Touche Tohmatsu; Ernst & Young; Grant Thornton International; KPMG; PricewaterhouseCoopers.

KEY DATES

1869:

The W.H. Pannell accounting firm is established in London.

1911:

The precursor to Harris, Kerr & Co. is formed in New York City.

1969:

Accounting firms in the United Kingdom, Canada, United States, and Australia join to form the Pannell Kerr Forster International Association.

1980:

The U.K. and U.S. firms are renamed "Pannell Kerr Forster."

1991:

The U.S. operations are restructured; PKF Consulting is spun off.

2000:

The association becomes known as PKF International.

2003:

PKF International nearly doubles operations with the addition of Polaris North America.

FURTHER READING

"Accountancy Firms Join Hands," Accountancy, March 6, 1991, p. 12.

"Australia's Investor Group Scraps US$25 Mln Merger with PKF," Asia Pulse, June 25, 2001.

Boreham, Tim, "The Audit Choice: Big Firms Do Think Small," Business Review Weekly, February 16, 1990, p. 109.

"Businesses Leasing on Large Scale; Firms Take Offices in Midtown and Downtown Areas of Manhattan," New York Times, February 22, 1933, p. C38.

Dobbie, Mike, "Pannell Specialises in Getting On with It," Business Review Weekly (Australia), April 10, 1987, p. 127.

Dunstan, Barrie, "Merger Creates Accounting Giant," Australian Financial Review, January 18, 1988, p. 20.

"Ernst & Young Gets Pannell Kerr Health Unit," Philadelphia Business Journal, December 16, 1991, p. 4.

"Errol Kerr, Long in Accounting, 73," New York Times, April 19, 1951, p. 31.

Gillette, Bill, "PKF Aims to Expand Services, Number of Offices," Hotel & Motel Management, September 16, 1996, pp. 3f.

"Growth Despite Soft Economy," Practical Accountant, April 2003, pp. 34f.

Kelly, Jim, "Accounting Firms Urged to Reform; Growing Pressure to Use Single System for Reporting Financial Results," Financial Times (London), December 23, 1996, p. 6.

――――――――, "Pannell Kerr and Robson Rhodes to Merge," Financial Times, March 9, 1999, p. 28.

――――――――, "PKF and Robson Scrap Merger," Financial Times (London), April 26, 1999, p. 24.

Lynch, Damien, "PKF Claims Edge Over Mid-Tier Rivals," Australian Financial Review, February 4, 2005.

――――――――, "PKF Ready to Help Blow the Whistle," Australian Financial Review, August 13, 2004, p. 58.

"Medium-Sized Firms—PKF Posts Improved Fee Income Figures," Accountancy, December 6, 1999, p. 7.

Meyerowitz, Stephen A., "Marketing the Professions," New York Times, November 24, 1985, p. F19.

"A New Beginning," International Accounting Bulletin, December 23, 1999, p. 6.

"Pannell Fitzpatrick & Co.; Harris Kerr Forster & Company," The Times (London), September 1, 1980, p. 24.

"Pannell Kerr Forster Replaces French Firm," European Accountant, December 1994, p. 4.

"PKF and Robsons' Merger Is Off," Accountancy, May 5, 1999, p. 5.

"PKF Enjoys Steady Growth," International Accounting Bulletin, November 30, 2000, p. 4.

"PKF's Fee Income Exceeds £100m," International Accounting Bulletin, November 15, 2001, p. 2.

Preston, Darrell, "Tannery Accounting Firm Succumbs to Merger Trend," Dallas Business Journal, November 6, 1989, pp. 1f.

Rauber, Chris, "Pannell Kerr's Split Opens Slot for Hotel Adviser," San Francisco Business Times, December 13, 1991, p. 12.

Smith, Gerd, "Pannell Kerr Closes Up Shop; Ex-Employees Open New Firm," Denver Business Journal, January 31, 1992, p. 4.

Stevens, Michael G., "Practice Innovators," Practical Accountant, September 2001, pp. 24ff.

Strauss, Marina, "Two Major Accounting Firms Merge; 11 Partners Eschew Mega-Deal, Get 'Back to Basics' and Form Regional Practice," Globe and Mail (Canada), January 22, 1991, p. B8.

Thomas, Tony, "Why PKF Joined Investor," Charter (Australia), May 31, 2001, pp. 28-32.

"UK Accountancy Firms That Are Thinking of Becoming Limited Liability Partnerships (LLPs) Could Be in for Some Expensive Surprises," International Accounting Bulletin, October 16, 2001, p. 9.

Walters, Kath, "Rowlands Joins PKF," Business Review Weekly (Australia), July 10, 2003, p. 72.