Peter Carroll, BDO Simpson Xavier:PETER CARROLL'S appointment as managing partner of BDO Simpson Xavier, the country's fifth-largest accountancy firm - just below the "big four" practices - was apt given the current climate.

He was promoted from head of audit, a position he held since 1994. Not since the early 1990s have auditors cast as close an eye over clients' balance sheets as during the present financial crisis.

Carroll succeeds corporate financier Paul Keenan and, just as Keenan's background suited BDO's expansion with the growth of the Irish entrepreneurial sector in recent years, Carroll's grounding as an auditor will serve BDO well at a time of careful scrutiny and tough decisions among its clients.

Trying to value assets in a rapidly falling market has been "a real challenge" for auditors, says Carroll, particularly on companies whose banks are putting them under pressure. These firms might be breaching bank covenants, he says, and so their compulsion to sell assets is "much more acute".

"It may well be, as in previous times, that we may have to reserve our position because the world is reserving its position on what the value of something is when there is no market," says Carroll.

The 44-year-old accountant, one of several partners in their mid-40s at BDO Simpson Xavier, says he remembers "recessionary times and the need to be decisive and act fast". "I have seen some of the pain," he adds.

He joined BDO in 1986, four years after the practice was founded by Anthuan Xavier and David Simpson, both of whom still act as mentors to the firm.

Carroll recalls standing in the Supreme Court two years after joining the practice, helping to defend a legal challenge against its appointment as liquidator of a construction company.

The current crisis isn't that different to the difficult times endured in the early 1990s, he says. "There is the same sense of uncertainty. There is a sense of people feeling not in control of their businesses, which is a critical point. That sense of making an investment and taking risk has just been sapped out of the system."

Carroll believes many companies have moved from denial to an acceptance that it could be three years before matters improve.

"We are seeing the end of denial because people realise that the global credit crunch is more than a six- to 12-month phenomenon. It is going to take some time for the financial system to right itself."

Carroll believes companies need to bare their souls to the banks and the shareholders which help keep them in business, and they must act quickly to keep costs down and manage their cash flow.

"I have a saying that you can't be accused of over-communicating - constant communication is necessary just to make people aware because the market has changed dramatically," he says.

Carroll believes that the companies which are less than up-front will face severe consequences. "Anybody who gives their banks surprises or holds back information is in danger because banks will find it very difficult to deal with them."

Carroll has plenty of experience liaising with big-name clients during his time as head of audit.

The Dundalk man is particularly proud of BDO's involvement in saving the old MF Kent business from insolvency in 1994 right through to its flotation as the engineering group Kentz in February.

As for his own business, Carroll says the firm's 42 partners spoke at length about costs at their last meeting, but the firm will still look to expand, particularly in financial services and technology. It will also continue launching Business Expansion Scheme funds.

The practice is growing its workforce too. It admitted 10 partners last year and will continue its graduate recruitment programme, hiring between 30 and 35 recruits this year. However, he says the intense "battle for talent" among accountancy firms had "eased off".

The practice employs 350 people in its offices next to the St Stephen's Green shopping centre in Dublin, and a further 70 in Limerick. A Galway office opened last year with two partners and 15 staff, though the practice ended its association with Cork practice JB O'Sullivan Co last year.

Carroll says he prefers opening offices from scratch, rather than alliances with existing practices.

The firm's Belfast office, which has the name BDO Stoy Hayward above its door, brings the firm's staff in Ireland to about 600.

Carroll says annual fee income for the year to February 2009 will be down slightly from this year's €72 million due to the loss of the Cork practice and the conversion of sterling income from the Belfast office to euro, though preliminary figures show that fee income has risen between 5 and 7 per cent in the Dublin and Limerick offices.

Carroll still has an eye on possible acquisitions across Ireland. "In the next 12 to 18 months we will be looking for opportunities in corporate recovery and tax - those kind of areas where we can grow or develop," he says.

"There is a lot of merger activity in the lower tier. There is the big four and ourselves, and Grant Thornton is becoming a strong competitor. Outside that, in terms of the mid-tier, we don't compete head on with any of those firms where we have anything to fear."

Carroll says BDO wants to avoid acquisitions involving succession issues where a partner or group of partners are approaching retirement and are seeking a buyer. "We wouldn't go out and do an acquisition just to get a client list - it is about the people," he says.

Previous takeovers include Hargaden Moore in 2001 which brought corporate finance veteran David Hargaden, who has advised electronics payment firm Alphyra (now Payzone) and IT services company, Calyx, into the practice.

Carroll believes smaller practices will want to merge with bigger rivals as they can't afford the resources needed to compete.

"With changing times more firms may consider it an option, because the economies of scale will come into play and that is where the top six firms have an advantage. We have cracked the nut in terms of economies of scale and we can justify having a strong complement of people in IT, marketing and HR," says Carroll.

He also believes regulators will want advisory and audit roles to be spread around other firms below the big four of PricewaterhouseCoopers, KPMG, Deloitte and Ernst Young, creating more work for the next tier down.

The firm also has an advantage over smaller rivals - it has been tied to an international accountancy network ever since Simpson Xavier merged with BDO in 1995.

With a firm growing from a strong entrepreneurial and private business practice, Carroll can focus on the job at hand - helping clients through harder times.