EY rejects plan to split audit and consulting units
April 11 (Reuters) – Accountancy firm EY has called off a plan to break up its audit and consulting units, putting the brakes on a proposed overhaul of the businesses that was meant to address regulatory concerns over potential conflicts of interest.
The company, which is one of the big four accountancy giants, announced its plans for a split in September after regulators expressed concerns that the audit arm would not be doing its job fairly to its client if it also hired EY as a consultant.
But the plan, codenamed “Project Everest,” met with resistance from some of EY’s partners. The company said the US executive committee decided not to go ahead with the split.
Had the split been ratified, it would have been the biggest overhaul of the accounting sector since the 2002 collapse of Arthur Andersen, the auditor embroiled in the Enron scandal whose fall reduced the Big Five to the Big Four.
The UK audit and accounting regulator, the Financial Reporting Council, had asked the Big Four firms in 2020 to separate audit as a stand-alone business in the UK by June 2024.
EY’s latest move was first reported by the Financial Times.
Reporting by Niket Nishant in Bengaluru; Editing by Devika Syamnath and Shinjini Ganguli and Anil D’Silva
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