Big Four firm EY has axed its plan for a split of its auditing and consulting arms, reports the Wall Street Journal. This decision marks a sudden shift from the original plans set out by the firm, which spent more than $100m (£80m) on the split of its audit and advisory arms.
According to the report by the Wall Street Journal, the move was halted thanks to a decision taken by the firm’s U.S. heads, who refused to go ahead with the plan for a split.
The Accountant reached out to EY for commentary, and received access to the internal note circulated to its partners by the EY Global Executive, which went as follows: “We have a shared vision and belief around the forces affecting our professions and the strategic value that separating EY brings to partners, people, clients and stakeholders. The Global Executive (GE) remains committed to moving forward with creating two world-class organizations that further advance audit quality, independence and client choice.
“However, we have been informed that the US Executive Committee has decided not to move forward with the design of Project Everest. Given the strategic importance of the US member firm to Project Everest, we are stopping work on the project.
“We acknowledge the challenges with separating some of our businesses that have the deepest technical expertise in a way that gives both organizations the capabilities they need to compete in the market effectively. We also recognize that we need more time to make the necessary investments to prepare the businesses for a separation.
“As a result, the GE along with the US Executive Committee and other member firms, in consultation with the Global Governance Council (GGC), 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. In parallel, we will also consider how a future organizational separation will serve the interests of all of our businesses, offer enhanced client service, test any interdependencies between the businesses and ensure that we have the right capabilities in both organizations. In addition, any separation plan must further enhance audit quality.
“We believe the organization must have the strategic flexibility to execute a new transaction in the future. In the immediate term, we will continue to focus on EY clients, people, and businesses – providing exceptional client service and driving long-term value for all our stakeholders.
“We have an outstanding organization that has been performing exceptionally well as we enter the final quarter of FY23. The strength and resilience of EY is a testament to the work you do every day with clients and people.
“We always knew Project Everest would be a challenging journey; we have listened to the views of the partners globally as we have shaped this path forward. We take great pride in the courage all of you have shown in boldly leading the professions and thank you for your support. There are many opportunities in front of us as a global organization. We are united in creating long term value for EY people, clients and society. This unifying goal creates a significant runway for us to move forward together.
“Thank you for the patience you have shown as we go through this process. EY is in a strong position, and this is thanks to your hard work and dedication.
“Please look out for an invitation for a global all-partner webcast tomorrow, where we will further discuss next steps and devote time to answer your questions. For any questions you have in the meantime, please reach out to your Country Managing Partner.”
The Accountant will continue to update this story.