EY refused to split into two parts

EY decided not to divide its business into two parts – audit and consulting, reports Reuters. This decision was made by the company’s leaders after the American division refused to participate in the project. EY announced about the intention to separate audit and consulting into separate structures in September last year. At the same time, the idea itself, called the Everest project, has been discussed by EY top managers since May 2022. It was assumed that EY will retain the audit business in the current company, and the consulting business will be separated into a separate structure, which will become public.

The heads of 15 regional offices of EY, including the American and British ones, spoke in favor of separation by the fall. Further, 13 thousand EY partners had to vote on the issue of separation. At this stage, the process stalled: the American partners refused to support the plan, believing that the company would have to spend too many resources to make up for the loss of the audit department from the mass transfer of employees to the new structure.

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.

Kirill Sarkhanyants