EY abandons plan to separate audit and consultancy arms

EY has abandoned the plan, codenamed Project Everest, to split up its audit and consulting businesses after months of internal disagreements from US executives, The Financial Times has reported. 

The announcement comes as EY’s 18-person global leadership team, which approved the plan last September, reportedly sent partners at the firm a note to say it would now pursue a different deal.

The FT said that if Project Everest had been set in motion, it would have meant the “biggest shake-up to the accounting industry in more than two decades”. However, EY operates as a global network of member firms and any split would have needed to be approved on a country-by-country basis.

Project Everest was championed by global chief executive Carmine Di Sibio as a way to “free both sides of the business from conflict-of-interest rules” that prevent consultants from selling many of their services to a firm’s audit clients. 

The FT said that while consultants would have received shares in the new business worth up to nine times their annual pay under the break-up plan, leaders of the US firm were unconvinced that cutting EY’s tax business down the middle was wise and decided that remaining audit-focused would be financially strong enough to maintain audit quality. 

Di Sibio also indicated last year that private equity firms had expressed interest in a deal for parts of the business.

EY’s executive committee said: “We always knew Project Everest would be a challenging journey and will begin taking actions based on what we have learned from the work done over the past year — actions that will both benefit our businesses today and better prepare us for a new transaction.”

EY has been contacted for comment.