Case Studies

Cerebra restructured the finance functions of a foreign fund’s subsidiaries in Turkey

SITUATION

Our client was managing the subsidiaries of a fund (Fund) that were established in Turkey. These subsidiaries consisted of two shopping malls in two different cities, a residence project and several companies holding land in their assets.

The accounting and reporting processes for these subsidiaries were being managed under the supervision of a real estate investment management company by two accountants on the company’s payroll. After our client decided to end their relationship with the real estate investment management company, uncertainties arose regarding the execution of these processes, and they faced difficulties in determining the appropriate course of action. They were seeking guidance on this matter.

  • The real estate investment management company was managing/controlling two accounting staff working on the payroll of the Fund’s subsidiaries, but after the termination of the relationship, there would be no one to manage/control these people. Should a new manager and/or CFO be hired? What would be the amount of the cost to be incurred?
  • During this process, the need for US GAAP reporting arose for our client, and neither of the two accountants had knowledge in this area. Who would handle this reporting?
  • The accounting of the companies was being kept in Oracle, the accounting software owned by the real estate investment management company. After the relationship ended, the records needed to be transferred to accounting software that our client would purchase. Which software would be acquired? What would be the incurred cost?
  • The companies did not have an office for their accounting staff. Should a new office be rented? What would be the incurred cost?

OUR SOLUTION

Cerebra met with our client’s manager in July 2013, and during the meeting, the problems were thoroughly discussed and identified.

Following discussions with the company management, Cerebra proposed to carry out all accounting and reporting processes of the subsidiaries. Cerebra proposed the followings:

  • Hiring these two accounting staff, who know the history of the companies well,
  • Establishing a team of six people, consisting of these two former Company employees, a CPA manager, a Reporting and Advisory Manager and assistants to support them, in order to provide with the services related to accounting, issuing sales invoices, reporting, tax compliance, payment management and execution of financial affairs related tasks together with third parties such as banks / lawyers / sworn tax advisors, under the umbrella of Cerebra,
  • Preparing US GAAP reports,
  • Transfering the accounting records of the companies from Oracle to Logo which was being used by Cerebra,
  • Moving the addresses of the companies to the premises of the Cerebra’s group company.

These suggestions offered by Cerebra were evaluated in detail in the first meeting with the Company management. The Cerebra team made detailed analysis of the companies subject to the process in a short time. As a result of the data received from the Company management and the analysis made, the proposals were presented to the Company management. After the Company management’s acceptance of our proposals, the above suggestions were implemented, and services were provided for approximately 5 years until these companies were removed from the Fund’s portfolio.

OUR IMPACT

Thanks to the solutions we offered, we saved the Fund from the following costs:

  • Office rental cost,
  • Payroll cost of two accounting staff,
  • Cost of new reporting staff,
  • Cost of accounting and finance manager and CFO to manage these staff,
  • Cost of purchasing/installing a new accounting software.

We provided the following benefit to our client, that manages the Fund’s subsidiaries:

  • We eliminated the possibility of having problems with the companies they manage in Turkey and not being able to fulfill their obligations to the Fund,
  • We ensured that they work with a business partner they can trust as an independent and competent company,
  • By incorporating the two accounting employees they had worked with for many years into our team, we ensured the continuation of their employment and relationships,

With our competence in US GAAP reporting, we enabled our client to manage Fund’s subsidiaries properly.

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