The British audit giant EY, which had formalized a plan to spin off its consulting business in September, announced on Tuesday the abandonment of the project due to the opposition of its American subsidiary, but keeps the idea of separation in sight. “The US executive committee has decided not to continue with the design” of this plan called “Everest Project” and, “given the strategic importance” of the EY branch in the United States to carry it out, “we stopped work on the project” , said a note from the global management of the group.
This proposed split had been approved in September by EY management. But the group had yet to seek the green light from its thousands of associate partners. It originally expected a vote between late 2022 and early 2023. EY wanted to separate its audit business from consulting so it could win contracts in either business without having to worry about potential conflicts of interest.
“A heated dispute over how much of the tax activities should remain on the audit side of the company”
The group’s global leadership “remains committed to moving forward with the creation of two world-class organizations that further promote audit quality, independence and client choice,” it said in its note, signed in particular by the CEO of EY Carmine Di Sibio. But the executives acknowledge that the deal presents challenges to “give both organizations the capabilities they need to compete effectively in the marketplace,” and that the group “needs more time to make the necessary investments to prepare the companies for a separation.” “.
Doubts over whether the deal would go ahead arose in early March, when the Financial Times revealed that the project had been “put on hold” due to “a heated dispute over how much of its tax business is expected to remain on the audit side.” The firm.” EY had simply indicated that it had entered into “a dialogue with the most important national (components) of EY to determine the final form of the transaction”, while the votes on this project had been delayed several times. “We always knew that the Everest Project would be a difficult journey; We listened to the views of partners globally as we moved down this path,” leadership added Tuesday.
The audit sector is in the crosshairs of the British government, pointed out for not having seen emblematic bankruptcies coming in recent years. London clarified its plans to reform the sector last year, but the text is long overdue and whether the executive particularly plans to break the dominance of the “Big Four”, of which EY is a part, had come under fire for revising its ambition to lowers it
Source: BFM TV
