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EY to spin-off global audit in Big Four shake-up

The exact structure of the shake-up is being discussed, and any overhaul would require a partner vote and broad agreement from the individual national member firms that form EY’s global business

EY is reportedly working to split its audit and advisory businesses into two separate operations worldwide, according to the Financial Times.

The options for a restructuring of its global operations are currently still being discussed by senior partners at EY. The plans envisage an audit-focused firm being separated from the rest of the business, which would retain experts in areas such as tax to support company audits.

EY said the firm is in the early stages of this evaluation, and no decisions have been made. The proposal is reportedly an attempt to escape the conflicts of interest that have dogged the industry and brought regulatory action from the UK to the US.

The Financial Times said this is the biggest shake-up of a Big Four accounting firm in two decades.

An EY split would result in two separately owned businesses and would reportedly be a “much bigger change than the more limited operational separation of the Big Four’s UK audit and advisory functions”, which was agreed after corporate scandals at retailer BHS and outsourcer Carillion. 

The exact structure of the shake-up is being discussed, and any overhaul would require a partner vote and broad agreement from the individual national member firms that form EY’s global business.

The firm’s leaders are trying to find an exact structure that “works for everyone”, and the process could take “many months” and it is not yet certain that a dramatic restructuring would proceed.

EY told Accountancy Today: “As the most globally integrated professional services organisation, we regularly conduct scenario planning and review EY businesses on a global basis to determine that we have the optimal strategy, structure and footprint to focus on delivering high quality audits and exceptional service to all clients across EY service lines.

“We routinely evaluate strategic options that may further strengthen EY businesses over the long-term. Any significant changes would only happen in consultation with regulators and after votes by EY partners.”

It added: “We are in the early stages of this evaluation, and no decisions have been made.”

EY employs 312,000 people in more than 150 countries, and is structured as a network of legally separate national member firms that pay a fee each year for shared branding, systems and technology.

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