Shmuel Rosenblum is one of the founding partners of Rosenblum-Holtzman, CPA, one of the most highly respected accounting firms in Israel. The firm provides a very wide range of financial services to individuals, corporations and organizations, placing an emphasis on professional and personal service. In this interview, he tells us about the firm and gives in-depth explanations about the services it provides.
How did Rosenblum-Holtzman get started?
I partnered with Uri Holtzman, and we established the firm in 1981. We began our professional career at one of the leading firms in Israel (today part of Ernst & Young). Our vision was to create a firm that would offer clients personal and professional service, and not “mass production.” Our firm consistently maintains solid and respectful relationships with all the large accounting firms in Israel.
What services do you offer?
The range of services includes audits of annual financial statements, representation vis-à-vis tax authorities, local and international taxation issues, internal auditing, risk management, information security and consulting, SOX assistance, forensic accounting, business plans, arbitration, valuations, receiverships, trusteeships, due diligence, liquidations, and acting under court-appointment on various issues. Our firm specializes in serving small and medium-sized businesses, as well as family businesses owned and managed by olim chadashim with dual citizenship.
Which sectors of the market require your services?
Our firm offers a wide range of services to corporations (both public and private), private clients, professionals and non-profit organizations, and we operate in almost every sector of Israeli industry:
Industry, Commerce and Tourism – We provide auditing services, as well as professional and taxation advice for numerous clients in the industrial, commercial and tourism sectors.
Finance, Investments and Capital Markets – We operate a unique professional department that focuses on auditing and risk surveys in the financial, insurance and capital market investments fields.
Registered Associations and Public Entities – The Firm conducts audits for government entities and for government ministries that fund other entities. We also serve as external and internal auditor for registered associations and public entities.
Real Estate – Extensive experience in auditing accounts and assisting engineering audits for many significant real estate projects, involving construction-related aspects (tenders, quantity reports, work overruns, planning, etc.), aspects of maintaining and registering land, marketing, leasing and revenue-generating real estate collections.
Self-Employed/Professional Parties – The Firm operates a designated consulting department for the self-employed and professionals (doctors, lawyers, etc.) including services such as guidance, personal tax returns, capital declaration reports, representation vis-à-vis various authorities and bookkeeping services.
Trusteeships – Investor representation and trust management
What gives Rosenblum-Holtzman an edge over other accounting firms?
Throughout the years we have remained true to our vision: to consistently offer our clients personal and professional service. Upholding the firm’s reputation while keeping our clients’ information strictly confidential fosters trust and close relationships with both existing and new clients.
What’s the difference between using an internal and external auditor, and in which situations is each most appropriate?
An external auditor extends his opinion of the financial status of a company or a private business and acts as a company’s representative vis-à-vis the tax authorities. His job is focused on reviewing and auditing financial records and transactions in accordance with relevant applicable standards.
An internal auditor is a “tool” activated by management and the board, and whose work focuses on the operational side of a business: review and analysis of a company’s appropriate behavior with respect to compliance with the law, proper management, moral integrity, savings and efficiency, and whether these serve to achieve its goals. Additional responsibilities include review of a company’s assets and liabilities including bookkeeping, as well as the manner in which it safeguards its property and manages and invests its funds.
Foreign investors who would otherwise have no representation in Israel rely on internal auditors to maintain their rights over their investments here.
Why is an effective audit system crucial for a business?
Internal audit activity (rather than a system) that works specifically in line with the needs of an organization can help improve efficiency, reduce unnecessary expenses, assist in establishing procedures and guidelines for better management, reduce the chances of fraud-related incidents and aid managers to work in accordance with applicable laws and regulations. There is immeasurable added value in an effective internal audit.
Please explain in brief about the field of forensic accounting and its application. What type of establishments require this kind of service?
Forensic accounting is a special type of audit aimed at detecting and preventing embezzlement, fraud and financial irregularities. This auditing field is based on a unique combination of knowledge, practice, experience and special training and we have vast experience executing this type of audit both in Israel and abroad (for citizens or corporations with businesses abroad).
Members of our staff who deal with investigative and forensic auditing have over twenty-five years of cumulative experience. We maintain discretion and apply a “need to know” approach throughout the entire process, from referral through the various stages of the investigation, and confidentiality with respect to its results. For this reason, we strictly avoid any publicity regarding our activities.
Our firm provides expert opinions in a variety of areas, including evaluation and quantification of financial irregularities, financial disputes between partners, shareholders, creditor priorities and deprivation of minority shareholders, as well as special expert opinions for silent or inactive partners.
Are there any measures a corporation can take to prevent fraud and embezzlement and not merely react after it’s already transpired?
I don’t believe water-tight prevention is possible, but there are definitely several key steps that organizations can take to significantly reduce the chance of fraud or embezzlement:
- Establish proper procedures especially in processes directly related to funds like purchasing or payments (via signatory authorities).
- Create proper segregation of duties – Maximize the capabilities of computer systems already in use and compensate controls when necessary.
- Recruitment – At the end of the day, it all comes down to the people doing the job. Although all people came into this world as honest human beings, organizations must apply a cautious approach when recruiting personnel: request recommendations from prior employers, perform social network or other online searches, verify certification if necessary, etc.
Our firm has consulted for numerous corporations in risk assessment aimed at detecting loopholes and opportunities for misconduct and extending recommendations for improvement.
From experience, the cost of preventing a fraud is far lower than the cost of recuperating in its wake.
Is there anything a company can initiate at the outset to facilitate the auditing process later on?
For sure. Defining proper job descriptions for employees together with correlating authorizations in the organization’s information systems, setting proper procedures especially for key processes in the business, using updated information systems that are compatible with the scope of the organization – these are all a good start.
Many olim chadashim, especially from the western hemisphere, are involved in non-profit organizations (in the fields of charity, education, etc.). An internal auditor can advise and assist in avoiding problems.
How can your firm help local and foreign investors before they make an investment in Israel?
Our economic department provides professional consulting services in all areas, including corporate valuations, preparation of business plans, economic feasibility analysis, due diligence, preparation of expert opinions for legal proceedings, and more. The economic department staff has an in-depth understanding of each customer’s line of business and needs, which enables us to provide intelligent analysis of problems and issues while presenting feasible, efficient and effective solutions that take into account the organization’s constraints.
Additionally, the economic department extends corporate valuations and due diligence services to inactive investors and foreign investment funds which have made several investments in Israeli companies (for example, in the hi-tech, pharma and medical devices fields).
What do dual (Israeli and US) citizens have to be concerned about when filing taxes?
A dual citizen should be aware of the basic fact that US tax regulations are far broader than its Israeli counterpart. Numerous issues like the sale or purchase of an apartment or withdrawal of “tuition funds” have certain tax benefits or exemptions in Israel, while US regulations afford other benefits or none at all, and this is just an example in very general terms.
Financial institutions in Israel strictly adhere to FATCA regulations, a fact that demands careful attention.
Our firm is also an independent member of Morison KSI, a global association of professional service firms (accounting, auditing, tax and business consulting), with numerous member firms in the US and Europe. This membership provides our firm with direct access to accounting firms worldwide for assistance and consultation on any matter a client might face outside of Israel.
Is there any way to avoid double taxation?
This is a complicated issue that cannot be addressed casually. The most crucial issue to identify, based on the US-Israeli tax treaty, is which country has the “primary right” to a dual citizen’s revenues or income.
I highly recommend that dual citizens or olim chadashim consult with a professional accountant who has comprehensive understanding of tax matters before moving forward with any decision or action.
What’s your personal goal, having already achieved status as one of the most prestigious firms in Israel?
Maintain and strengthen our reputation. I believe it is a constant task to earn a reputation and this enables us to better serve and protect our clients’ interests.
Rosenblum Holtzman, CPA was founded in 1981. The firm provides a wide range of services to corporations, kibbutzim, non-profit organizations and private clients. These services include auditing annual financial statements, representing clients before the tax authorities, tax planning, internal auditing, information systems, risk management, information security, financial consulting, Sarbanes Oxley implementation and evaluating corporate governance. The firm has special expertise in forensic auditing and assisting in legal proceedings involving accounting and financial evaluations. With over 100 employees, Rosenblum Holtzman provides a top-tier professional service, with an emphasis on personal attention to each client.
Rosenblum Holtzman CPAs can be reached at 03-609-20-20 or through their website www.rhcpa.co.il.