In September 2022, Ernst & Young (EY) announced its plans to opt for a split of audit and accounting units as several regulators voiced concerns
Accounting and consulting firm Ernst & Young (EY) has reportedly called off plans to split its audit and consulting units. As per updates, the proposed breakup, which was meant to address regulatory concerns, has been cancelled over potential conflicts of interest.
As per a Reuters report, EY is considered to be one of the ‘Big Four’ accounting giants. In September 2022, Ernst & Young announced its plans to opt for a split of the units as several regulators voiced concerns “that the audit arm would not do its job fairly for its client if it also employed EY as a consultant.”
However, the plan reportedly faced resistance from some EY’s partners, especially from its U.S. Executive Committee. The report also mentions that the entire splitting plan was code-named ‘Project Everest.’
If one looks back, the UK auditing and accounting regulator, the Financial Reporting Council, back in 2020, had asked the ‘Big Four’ firms to separate auditing as a standalone business in Britain by June 2023, the report adds. Hence, on these lines, even EY had plans to split its auditing and consulting unit.
Commenting on the EY split, the publication’s report adds, “...It would have been the biggest overhaul in the accounting sector since the 2002 collapse of Arthur Andersen, the auditor that was mired in the Enron scandal and whose downfall reduced the Big Five to Big Four.”