Ernst & Young will split into consulting and audit
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Audit and consulting company EY – formerly called Ernst & Young – on Thursday, September 8, announced about plans to split into two parts. EY should split into an audit and consulting company. The heads of 15 regional offices of EY, including the American and British, spoke in favor of separation. Now 13 thousand EY partners must vote on the issue of separation. Voting will take place from November to January. In addition, the separation must be approved by the regulators of several countries. It is reported that EY wants to keep the audit business in the current company, spin off consulting into a separate company that will go public. EY operates in more than 150 countries and has 312,000 employees.
For the first time about EY plans to split wrote Financial Times in May. Recently, the companies of the Big Four, which, in addition to EY, include Deloitte, KPMG and PwC, are increasingly reproached for the fact that their income from both activities – audit and consulting – leads to a conflict of interest and insufficient quality work. Such criticism escalated after several scandals, including those related to the bankruptcies of the tour operator. Thomas Cook and a German fintech company wirecard. Back in 2020, the British regulator demanded from the “big four” to distinguish the audit business.
It is not known whether other Big Four companies will want to follow the example of EY. In June, The Wall Street Journal wrotethat Deloitte is considering such a possibility, but the company said that this is not the case.
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