Accounting for Inbound Investment Bridging the GAAP

1/20/2010 - Alan Denis is Chairman of Morison Cogen in Philadelphia, and will be participating in China Business Boot Camp Philadelphia.  He offers some insight into the relationship Philadelphia has with China and how Philadelphia is well positioned to foster strong business relationships with companies in China.




TCBN: So, Alan, when I visit morisoncogen.com it’s a good introduction to what certainly is a well respected and well known Greater Philadelphia-based CPA firm that offers the typical suite of services, accounting and audit, financial planning, wealth management and such. It isn’t immediately clear or obvious that the firm has such deep China experience, and yet you do. You were drawn into international work some time ago through one of your larger global clients, and subsequently became quite active in China. I wonder if you could explain more about the services Morison Cogen offers there now.

DENIS: Sure Michael. Through our increasing involvement in Morison International with Hong Kong member Morsion Heng, we participated in approximately fifteen China engagements in recent years. In addition to providing basic audit and tax services, we have the infrastructure to support due diligence for private equity firms, looking at deals throughout the People’s Republic. In addition to having three member firms in eight major cities in China, including Shanghai, Beijing, Guangdong, Tianjin, and Hong Kong, we have several native China speakers on our staff.

Through our internationally SEC and PCAOB registered practice led by Lou Esposito, who’s going to speak at China Business Boot Camp Philadelphia, we’re able and experienced in assisting Chinese companies seeking access US public capital markets, whether via reverse merger into public shells or by direct listing on US exchanges. We also assist local companies based in Delaware Valley with their activities in China.

TCBN: I know Lou is going to speak, as you said, at the Boot Camp, but not to steal his thunder, but as head of Morison Cogen, I want to ask you what challenges do you find when assessing the books of Chinese firms that are preparing list on capital marketing in the US?

DENIS: Suffice it to say there are numerous challenges that are best left to auditors who are extremely familiar with and completely unfazed by normal accounting practices of Chinese enterprises. There’s a long bridge to cross, if you will, from the usual and customary practices of the Chinese-owned business operating in China to the level of clarity and assurance required under GAP or IFRS. That is expected when you’re accessing anonymous pools of capital the public listing represent. There needs to be a highly China-qualified local auditor willing to do some very hard work on the ground, and a US-qualified auditor able to culturally connect and committed to quality control. We bring these resources and have successfully used this model over and over.

TCBN: I know that you’re going to be participating in our China Business Boot Camp in Philadelphia, and we certainly appreciate your support and participation along with Lou’s. As you look at Philadelphia business related to China business, what type of strengths do you see Philadelphia or Greater Philadelphia area has to offer, and what do you hope to see come out of Boot Camp this February?

DENIS: Philadelphia has an extremely well developed business infrastructure to support both inbound and outbound China ventures. Although no longer a manufacturing center per se, Philadelphia has a well established business base that buys, sells, and distribute goods that once were made here, but now are made in China.

Philadelphia has a vibrant and diverse economy and important sector strengths such as pharmaceuticals, heath care, and technology. There’s a lot of weath here too. We have excellent and sophisticated legal, accounting and investment banking and educational infrastructure, not to mention close proximity to both New York and Washington, DC. I would hope to see those involved with China business - or wanting to be involved in China business - to attend. The realities of doing business in China are just not the same as those in the United States - structurally and culturally. As I understand it, the strength of The China Business Network is its ability to connect people who have meaningful China experience and needs for their mutual benefit.

TCBN: I’ve been speaking with Alan Denis, chairman of Morison Cogen, a Philadelphia-based CPA firm with extensive experience in the China market and readying Chinese companies for accessing capital markets in the US. We look forward to seeing you at the Boot Camp in February, Alan, and we appreciate you having some time to share with us today.

DENIS: My pleasure, Michael.



Alan J. Denis, J.D., CPA is Chairman of Morison Cogen LLP and its Tax Services Group. He serves a diverse clientele of public and privately held clients in many industries such as: manufacturing, distribution, leasing, technology, logistics, telecommunications, real estate, and financial products. He received a bachelor of arts degree from Franklin & Marshall College in 1968 and a juris doctor degree from Fordham Law School in 1972. Mr. Denis also attended the N.Y.U. Stern School of Business graduate program.