| Type | Limited Liability Partnership (LLP) |
|---|---|
| Industry | Accounting Professional Services Tax Consulting |
| Founded | 1910, as Seidman and Seidman |
| Headquarters | Headquarters in Chicago, Illinois |
| Products | Professional Services |
| Revenue | $659 million USD (FY 2008) |
| Employees | 3,020 as of June 30, 2008 |
| Website | bdo.com |
BDO USA, LLP is the United States Member Firm of BDO International, a global professional services network. BDO International is the largest global accounting and consulting network outside of the Big Four.
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BDO USA, LLP was founded as Seidman and Seidman in New York City in 1910 by Maximillian L. Seidman. At that time the accounting profession was in its infancy, with fewer than 2,200 practicing CPAs in the United States. Shortly thereafter in 1913, the 16th Amendment to the United States Constitution allowed income tax to be levied on individual Americans for the first time. M. L. Seidman saw the potential of the accountant's role to provide tax services to individuals. By 1917, Congress enacted the first revenue bills and the U.S. entry into World War I created the need for corporate income and excess profit taxes. At the same time, federal spending rose to $18.9 billion with 58 percent of the federal revenues provided from income taxes. M.L. Seidman and his siblings, who joined him in his new accounting firm, seized the opportunity to provide tax services to businesses in addition to individuals.
An era of expansion began. Fostered by the federal government's conversion of furniture and woodworking companies to aircraft production for the war effort, the firm opened an office in Grand Rapids, Michigan in 1917. Seidman and Seidman quickly established itself as a leader in serving the furniture industry by developing the first effective furniture plant costing system. Today, BDO Seidman's Furniture Industry practice remains in the industry.
In 1925, the firm rapidly expanded, opening offices in Jamestown, Illinois and Rockford, Illinois, followed by Chicago in 1921, and Gardner, Massachusetts in 1924. In 1922, J. S. Seidman joined the firm as a founding member.
The 1930s brought another new beginning for the accounting profession. In 1933, Congress passed the Securities Act, requiring public corporations to have financial statements included in registration statements and periodic reports reported on by independent CPAs. A year later, the Securities and Exchange Commission was created to administer the new legislation.
In 1950, L. William Seidman joined the firm and ultimately became its managing partner before leaving for government service, most notably as Chair of the FDIC.[1]
The firm continued to grow and by the 1960s, truly became a national firm. On April 1, 1968 the firm was converted into a national general partnership. This marked the beginning of a new era of expansion. Over the years to the present, the firm established many offices throughout the United States. Founding Partner Keith Beresheim was instrumental in helping BDO grow its practice and become a national tier firm.
Today, BDO USA, LLP has 37 offices and more than 400 independent Alliance firm locations nationwide. During this timeframe, BDO International was created and has grown to become the fifth largest accounting and consulting network in the world with 626 Member Firm offices in over 110 countries.
In February 2009, BDO USA, LLP launched the firm’s first-ever national advertising campaign: "PEOPLE WHO KNOW, KNOW BDO”. This sustained three-year program, which encompasses television, print and digital media, will position BDO USA as the firm of choice, emphasizing the technical knowledge, global reach, partner involvement and responsiveness the firm brings to its client relationships. [2]
BDO has been involved in a number of engagements which resulted in major litigation and press attention.
A Miami subsidiary of a Portuguese bank Espirito Santo relied on audits from BDO Seidman, which certified audits for E. S. Bankest accounts totaling some $225 million, of which only $5 million represented legitimate income, a Banco Espírito Santo lawyer, Steven Thomas, said." [3] In August 2007 a jury in Miami awarded Espirito Santo $521.7 million--$170 million in compensatory damages and nearly $352 million in punitive damages--over allegedly negligent audits that BDO conducted on a corrupt Espirito Santo subsidiary…But in a 20-page ruling, a three-judge appellate panel unanimously concluded that the 2007 trial was wrongly bifurcated into separate sections and that jurors were forced to determine BDO's liability too early in the case.[4] The Florida appeals court's ruling seriously undermined Espirito Santo's claim that BDO should reimburse the bank for $140 million in debenture notes that it had sold its clients while making another $30 million in loans to a subsidiary as part of a shareholder agreement. One of those noteholders testified for Espirito Santo at trial that they relied on BDO's audit opinions, which the trial judge deemed sufficient to sustain the claims of other investors. But the appeals court found fault with that reasoning, ruling that Espirito Santo would have to call every noteholder if it wanted to argue that each one relied on BDO's audits before buying notes sold by Espirito Santo."
A group of DC government employees had embezzled funds by fradulently issuing real estate tax refund checks to their friends. BDO Seidman was the independnet auditor of the DC government's financial records. On November 21, 2007 Reuters wrote “Washington, D.C., officials should fix problems identified in an audit that found the city mishandled millions of dollars, according to Delegate Eleanor Holmes Norton, who represents the U.S. capital in Congress…. The audit, conducted by accounting firm BDO Seidman, LLP, found that financial reporting for the city's school system and Medicaid programs did not match their financial statements, making both areas vulnerable to fraud….Altogether, auditors found more than 160 instances where the city failed to comply with conditions for spending federal money, primarily by misreporting funds and mismanaging cash." As of November 2007, it was estimated that over $30 million were scammed by Washington, DC tax officials since 1999. At the height of the scam, half of the property tax refund checks were fraudulent. The average legitimate check was less than $10,000 while the average scam check was over $300,000. "The scandal may also singe BDO Seidman, a private audit firm that gave [Washington DC CFO Natwar] Gandhi its seal of approval earlier this year. Its auditors were paid millions to go over the city’s books and gave Gandhi’s office an unqualified opinion." In 2010, a mentally ill woman, who was not a DC employee was able to exploit a security loophole in DC's financial systems to file tax returns claiming $19.1 million in refunds.[5]
On December 13, 2006, Monster.com filed a $339.6 million restatement of its financial results from 1997–2005 related to intentional fraud in the company's stock option practices. BDO Seidman served as the independent auditor of Monster.com, but it has not been named as a party in either civil or criminal litigation. BDO auditors were provided falsified documents with incorrect option grant dates by Monster employees, but the lack of a complete set of records regarding the company's option grants could, and quite possibly should, have been discovered and identified as a major red flag at some point during the six-year period in which the backdating took place. As a result of the undiscovered fraud, in 1999 and 2000 Monster reported a profit when, in fact, the company lost nearly $40 million.[6]
On December 16, 2008, in connection with the Bernard Madoff scandal, the New York Law School filed a lawsuit against J. Ezra Merkin, Ascot Partners, and its auditor BDO Seidman, after losing its $3 million investment in Ascot. The lawsuit charged Merkin with recklessness, gross negligence and breach of fiduciary duties.[7][8]