Reference no: EM132770393

Question

This mini-case reports events as they occurred. The email exchanges in both cases are reported verbatim, except for the names, which have been changed.

AFTER HAVING HAD SEVERAL email exchanges with his Mexican counterpart over several weeks without getting the expected actions and results, Johannes van den Bosch was getting a tongue-lashing from his British MNC client, who was furious at the lack of progress. Van den Bosch, in the Rotterdam office of Big Five Firm, and his colleague in the Mexico City office, Pablo Menendez, were both seasoned veterans, and van den Bosch couldn't understand the lack of responsiveness. A week earlier, the client, Malcolm Smythe-Jones, had visited his office to express his mounting frustration. But this morning he had called with a stream of verbal abuse. His patience was exhausted. Feeling angry himself, van den Bosch composed a strongly worded message to Menendez, and then decided to cool off. A half hour later, he edited it to "stick to the facts" while still communicating the appropriate level of urgency. As he clicked to send the message, he hoped that it would finally provoke some action to assuage his client with the reports he had been waiting for.

Message for Pablo Menendez Subject: IAS 1998 Financial statements Author: Johannes van den Bosch (Rotterdam) Date: 10/12/99 1:51 p.m. Dear Pablo, This morning I had a conversation with Mr Smythe-Jones (CFO) and Mr Parker (Controller) re: the finalization of certain 1998 financial statements. Mr SmytheJones was not in a very good mood. He told me that he was very unpleased by the fact that the 1998 IAS financial statement of the Mexican subsidiary still has not been finalized. At the moment he holds us responsible for this process. Although he recognizes that local management is responsible for such financial statements, he blames us for not being responsive on this matter and informing him about the process adequately. I believe he also recognizes that we have been instructed by Mr Whyte (CEO) not to do any handholding, but that should not keep us from monitoring the process and inform him about the progress. He asked me to provide him tomorrow with an update on the status of the IAS report and other reports pending. Therefore I would like to get the following information from you today:
• What has to be done to finalize the Mexican subsidiary's IAS financials;
• Who has to do it (local management, B&FF Mexico, client headquarters, B&FF Rotterdam);
• A timetable when things have to be done in order to finalize within a couple of weeks or sooner;
• A brief overview why it takes so long to prepare and audit the IAS f/s;

Are there any other reports for 1998 pending (local gaap, tax), if so the above is also applicable for those reports. As of today I would like to receive an update of the status every week. If any major problems arise during the finalization process I would like to be informed immediately. The next status update is due January 12, 2000. Mr Smythe-Jones also indicated that in the future all reports (US GAAP, local GAAP and IAS) should be normally finalized within 60 days after the balance sheet date. He will hold local auditors responsible for monitoring this process.

Q1: What explains the behaviour of British MNC Client Mr SmytheJones the best?

Q2: What is the main reason behind delayed response and inefficiency in preparing the financial statements on time?

Q3: If you were van den Bosch how would you approach the situation?