Today’s BDO AG Wirtschaftsprüfungsgesellschaft (BDO in the following) was founded on 28 February 1920 as Deutsche Waren-Treuhand-Aktiengesellschaft with headquarters in Hamburg by the following private banks and trading houses:
- M. M. Warburg & Co., Hamburg
- Mendelssohn & Co., Berlin
- Joh. Berenberg, Gossler & Co., Hamburg
- Conrad Hinrich Donner, Hamburg
- Levi, Cologne
- Münchmeyer & Co., Hamburg
- Sal. Oppenheim jr. & Cie., Cologne
- Schröder Gebrüder Co., Hamburg
- Vorwerk Gebr. & Co., Hamburg
The Supervisory Board was co-chaired by Max M. Warburg and Paul von Mendelssohn-Bartholdy, two of the leading figures in the banking world at the time. To ensure the desired international orientation of the company, the internationally renowned merchant banker August Lattmann was appointed as the first chairman of the board.
BDO acted as a trust organisation for lenders from other countries. Despite the lingering political tension between Germany and the victors, BDO’s lending business developed excellently. Parallel to its deposit account business, BDO developed activities in the field of auditing. Inter-company comparisons and harmonisation of bookkeeping and net cost accounting, in addition to assessing the economic status of the audited entity and preparing mergers and reorganisations, offered an increasing field of activity.
During the great depression of 1929, BDO was commissioned with important tasks due to its rationalisation and restructuring experience. BDO complied with the audit requirements resulting from Brüning’s emergency decree on mandatory auditing of joint stock companies and limited partnerships on a share basis in 1931. On 27 July 1932, BDO was recognised as an auditing firm and joined the professional association Institute of Public Auditors in Germany (IDW).
After Hitler seized power on 31 January 1933, the shareholdings in BDO were taken as an excuse to stop issuing audits to the enterprise. Several members of the BDO board did not conform to the racial ideology of the new rulers. In addition, BDO’s headquarters at An der Alster 85 was bombed out in 1943.
Following the currency reform, BDO finally saw a silver lining on the horizon. On the basis of the DM-Bilanzgesetzes (DM balance sheet act) of 21 August 1949, all companies were obliged to create a closing balance sheet in Reichsmarks, along with a profit and loss account, and an opening balance sheet in Deutschmarks (due date 21 June 1948). Reconstruction in West Germany, which had been destroyed by bombing, generated massive demand in all sectors and industries of the economy, which led to a huge demand for auditing and consulting services.
The robust economy of the 1950s ensured stable and continuous growth.
In 1954, BDO was admitted as a tax consulting company. This gave clients a single source for consultancy and tax advisory.
In 1958, BDO had concluded an exclusive correspondence agreement with Peat Marwick Mitchell (PMM) and took a 20% shareholding in the German subsidiary of PMM in 1959. Cooperation was terminated in 1963 by mutual agreement.
In 1961, Hans-Heinrich Otte was appointed to the board of directors. In 1969, he became chairman of the committee, and from 1992 to 2006, he held the office of chairman of the board. In 2006, Hans-Heinrich Otte was appointed honorary chairman of BDO in recognition of his services.
The first economic fluctuations were felt in mid-1960s. Politics responded with increased planning activities, and thinking also became increasingly cross-border, taking on pan-European dimensions. The auditing industry developed on a par with this. A total of three factors mainly defined the 1960s: increasing internationalisation, a shift of focus towards future-oriented corporate governance and the incipient triumph of electronic data processing.
The beginning of 1963 saw the merger with Treuhand AG (TAG), who generated just under the half of BDO’s turnover. The company name was changed to Deutsche Warentreuhand und Treuhand Aktiengesellschaft and shortened again in 1971 to Deutsche Warentreuhand Aktiengesellschaft.
Following this, established, smaller auditing offices were acquired with larger SMEs as clients.
BDO’s growth strategy was placed on two pillars at the beginning of the 1970s: organic growth and acquisition of other auditing offices in all parts of the Federal Republic. Organic growth was accelerated by increasing awareness of the BDO organisation. At the end of 1963, the international accountant organisation Binder Seidman International Group (BSIG) was founded in London, which joined BDO as a full member. In its founding memorandum, the organisation set itself the goal of applying the highest professional standards within the Group. Thanks to international cooperation, BDO was prepared for the internationalisation of the coming years.
In the early 1970s, the profession witnessed a wave of mergers in the international accounting industry, in which BDO took no part. The paramount goal for BDO has always been the independence of the company; this is an inviolable part of our corporate philosophy.
The merger between BDO and Kontinentale Treuhandgesellschaft mbH, Düsseldorf, on 1 January 1981, cemented BDO’s standing in the profession and strengthened its the nationwide presence. The company was renamed Deutsche Warentreuhand- und Kontinentale Treuhand-Aktiengesellschaft. Early in 1985, two more auditing firms with operations in niche sectors were adopted: Dr. Lauter & Fischer GmbH contributed excellent expertise in healthcare, and Dr. Schneider GmbH in statutory health insurance. BDO continued to expand by acquiring other regional auditing offices. Between 1970 and 2009, around 30 medium-sized auditing firms were taken over by BDO.
In the Federal Republic, the Bilanzrichtliniengesetz (Balance sheet policy act) of 1985, which radically redesigned German balance sheet law in the wake of the harmonisation of European financial reporting, saw the demand for auditing and consulting services skyrocket.
The company name was again shortened in 1985, and a logo was prepended: DWT Deutsche Warentreuhand Aktiengesellschaft.
In the 1980s, auditing and consultancy firms experienced a further wave of mergers. Following mergers, the ‘big eight’ became the ‘big six’. The international consolidation also led to mergers at a domestic level.
The BDO brand now preceded the company name.
The fall of the Berlin Wall in November 1989 marked the end of the Cold War and the implementation of an market-oriented economic system. In the course of German reunification, the Treuhandanstalt was commissioned to privatise the former East German enterprises subordinate to it in the summer of 1990. As of 1990/1991, BDO provided consultancy on the privatisation of former state-owned companies, audited Deutschmark opening and conversion balance sheets and supported West German clients in corporate acquisitions and foundings in the new federal states.
Parallel to the changes in eastern Europe, the EU single market was completed in western Europe and monetary union implemented. Companies seeking to enter the US capital market were forced to draw up financial statements in line with US GAAP. In addition to this, IAS/IFRS increasingly gained importance outside of Europe. However, increasing internationalisation was not limited to the field of auditing. Since the mid-1990s, publicly traded clients have been supported in all aspects of financing and investment structuring. Also, tax consultancy focused increasingly on issues of the tax burden in Germany and abroad. Following the introduction of the Gesetz zur Kontrolle und Transparenz im Unternehmensbereich (KonTraG) (Law on control and transparency in businesses), the rules for internal risk monitoring in the enterprise were tightened in 1998.
In January 2001, the 4th amendment of the Wirtschaftsprüferordnung (WiPrO) (Chartered accountants ordinance) introduced external quality controls for auditors. In May 2006, the EU Commission adopted a reform of the Audit Directive, which again increased independence and quality assurance requirements in auditing. Under the impression of stricter government regulation, the weighting of BDO’s business divisions has shifted since 2000: tax consultancy and special offers in our advisory have seen strong growth. The contribution of auditing to overall turnover has dropped accordingly from 87% in 1970 to 54% in 2009.
On 1 January 2011, BDO mergered with AWT Horwath GmbH, headquartered in Munich, whose Munich and Chemnitz offices now also trade under the BDO name. At the start of 2016, a merger with ARBICON ZINK KG in Oldenburg, saw the founding of BDO ARBICON at what is the BDO’s 26th location in Germany. In 2018 this was followed by the founding of BDO DPI AG in Leer, the latest addition and 27th office location.
With over 1,900 employees across 27 different locations, BDO today is one of the leading companies for auditing and audit-related services, tax and business law consulting, and advisory in Germany.
In the year 2020 BDO is celebrating the anniversary of the foundation of its predecessor Deutsche Waren-Treuhand-Aktiengesellschaft in 1920 and proudly looking back on 100 years of dedicated client service in Germany