BDO USA recently appointed a new chief operating officer as well as a new chair who will oversee the firm's efforts to improve its audit practice and technology, as well as its implementation of an employee stock ownership plan.
Last month, the Top 10 Firm announced the appointment of assurance principal Mark Ellenbogen, who will succeed Steve Ferrara as COO, effective July 1, 2024. Ferrara retired after a 33-year career with the firm. With over 30 years in public accounting and more than two decades at BDO USA, Ellenbogen has played a major role in the growth of BDO's audit and assurance practice and worked alongside Ferrara and BDO USA CEO Wayne Berson when
"They're big, big shoes to fill," Ellenbogen said of Ferrara. "Steve's been in his role for 12 years. He's played a pivotal role in the continuous growth of our firm and I certainly intend to continue to do that as I step into the role. One of the goals I have is to strengthen the foundations of the firm in the areas that I'm responsible for, and to do that in a way that supports the next leg of our growth journey. Our ESOP transaction is a big part of Steve's legacy, and obviously a big part of our future. I definitely look forward to being able to continue to work to drive change and innovation in the industry."
BDO also announced last month the election of a new chairwoman, Natalie Kotlyar, who has more than 25 years of experience at the firm. She currently serves as national managing principal of BDO's retail and consumer products industry group. Kotlyar succeeds Kelly Johnson, who served as BDO's first woman board chair since 2019.
"It's almost about a year since we have been an ESOP," said Kotlyar. "We're coming up on our one-year anniversary. It really is an innovative and forward way of thinking for the industry. It really allows BDO to share the value of BDO with all of its 10,000 employees, not just the principals, all over the United States. It's a real differentiator for us as a firm in the marketplace, and it helps us become the employer of choice from a retention and attraction of employee perspective."
Ellenbogen is taking more of a wait and see attitude when it comes to the impact of the ESOP on BDO's recruiting efforts. "There's definitely a lot of interest," he said. "It seems like we're slowly starting to realize the benefits of that, and there's definitely a lot of outside interest in the firm now that we've done that."
Improving audit quality
BDO is looking to improve its audit quality after its most recent
"We're disappointed with our results," said Kotlyar. "We're implementing several strategies to help us move into the right direction. Recently, we've set up the AQAC, the Audit Quality Advisory Council, and I am a member of that as well. And we have two external, independent members of that council. We really believe that they bring a strong background, a different perspective."
Ellenbogen is bringing his audit expertise as BDO's new COO. "I was on the audit side most of my career until I started this transition," he said. "We're very focused on audit quality."
Technology and AI
The firm is also improving its technology and tax services. BDO recently elected Kirstie Tiernan as a new board member and John Marquardt for his fourth term. Tiernan is a practice leader in BDO Digital and has been instrumental in developing BDO's data and artificial intelligence practice and leading client-facing AI initiatives. Marquardt is the tax managing principal for the central region and leads the firm's tax sector for the retail and consumer products industry group.
"I'm super excited about where we are in terms of digital innovation," said Kotlyar. "We recently were awarded the 2024 Microsoft Partner of the Year Award from Microsoft for demonstrating excellence and innovation and implementation of customer solutions based on the Microsoft strategy and technology. We also have a new board member, Kirstie Tiernan, and she leads our BDO's data and artificial intelligence sector. I think that she will really be an enormous leader for us in this space."
Ellenbogen plans to expand BDO's AI expertise as well. "Everyone wants to talk about AI," he said. "That's the latest thing. I plan to continue to be very focused on innovation. As a firm, both enterprise wide and then within the different business lines, AI is something we're looking at. We're developing our strategy. We're taking a measured approach for sure. I think it's very easy to spend a bunch of money to come up with something. But I think we're trying to, on the one hand, see what others are doing and see what makes sense. We're trying to learn from companies like Microsoft and Oracle and others, as opposed to trying to invent or reinvent the wheel ourselves. We have an innovation group, and they're working through our continuous innovation strategy, and then specifically within there as a component, what exactly we can do with AI, and how we can leverage those tools to improve ourselves as an organization."
The firm has been working with OpenAI and its ChatGPT technology to offer an inhouse version called ChatBDO, while also helping clients who are also leaning more on AI programs.
"We see a lot of our clients are either using it or learning or entering this space," said Kotlyar. "We are actually looking at it twofold. One is from our clients' perspective, and from BDO's perspective. We're helping our clients with their data and artificial intelligence while at the same time we are implementing that for ourselves as a firm to assist our employees in managing their day-to-day operations, whether it's in [Microsoft] Copilot or ChatGPT. We have inhouse ChatBDO. It is clearly certainly making an impact. I believe that we are just at the beginning of the digital innovation that we can have coming up."
Expansion strategy
BDO may also be expanding further in terms of mergers and acquisitions. "When Wayne [Berson] became CEO and Steve [Ferrara] became chief operating officer, I think we were in either 12 or 14 of the top 25 markets," said Ellenbogen. "Part of the expansion strategy from a geography perspective was to get all 25 of the top 25 markets, and I think we're in all but one, Portland. From a geographical perspective, I think we've done a good job covering the map."
BDO may still grow its footprint further in the U.S. as well as bulk up parts of its services.
"Probably the biggest thing is just continuing the good work that Steve's done," said Ellenbogen. "He worked with Wayne to take our firm from one level to another level that we're at now, and I'd like to continue that. I think the ESOP is a big part of that. And I'm excited to be able to continue our efforts in that regard. I was pretty involved in the creation of ESOP. It's Steve's legacy, but I was very much part of the team that was working on it. I am chair of the Governance Committee of our board of directors so I was very involved in the governance aspects and then even in the analysis that we did and the transaction itself. I feel like I'm pretty well positioned to continue that and I've been working with Steve now since May of last year, almost 14 months into transition. Continuity of leadership is very important to us. We've had consistent leadership for 12 years. I think Steve's been very generous in allowing me to shadow him for 14 months, and hopefully I can continue the work that he's been doing and maintain the vision that served us pretty well over the last 12 years."
Kotlyar aims to bring more of her experience with the retail industry to the firm. "Retail is all about customer experience, client service, attracting new clients, client retention, which really translates very well to what we do as a professional organization," she said.
The firm is still adjusting to its new ESOP structure. "We're in the process of digesting and going through the ESOP and transitioning that," said Kotlyar. "It really is a sign of the firm because we embrace change. Whether that change comes from becoming an ESOP, whether that change comes from the overall industry or whether it's from a technology perspective, that really just underscores who we are as a firm. We pivot, and we believe that we're making the right decision for our employees and for our clients."
