Accounting firm EY cancels plan to split audit and advisory departments

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Accounting firm EY has called off its ‘Project Everest’ plan to split up its audit and advisory departments. BBC reported.

The company, formally known as Ernst & Young, announced they were “suspending work on the project” as its US arm decided not to continue, the BBC reported.

The Big Four – Deloitte, EY, KPMG and PwC – dominate the global accounting market share.

The plan came as regulators called for sweeping reforms in the industry over conflicts of interest and poor working practices, the BBC reported.

Had the deal gone through, it would have been the biggest shakeup in the accounting industry in more than two decades.

Officials initially expressed concern that the company’s audit department would not be able to treat its client fairly, who also used its consulting services. EY’s announcement ends a years-long battle to gain internal support to split the units.

“We recognize the challenges of separating some of our companies that have the deepest technical expertise in a way that gives both organizations the capabilities they need to compete effectively in the marketplace,” said an internal note released by the BBC. seen. “We also recognize that we need more time to make the necessary investments to prepare the companies for separation.”

The project cost the Big Four more than $100 million (£80.3 million) according to the Wall Street Journal.

Earlier this month, German accounting watchdog EY fined and banned EY from handling wirecard’s audits, the insolvent electronic payment processor. It owes creditors nearly $4 billion after admitting €1.9 was never on its books as part of a global fraud operation. The ban prohibits EY from auditing certain companies for two years, the BBC reports.

In 2021, UK regulators called for the dominance of the Big Four to be reduced after high-profile accounting failures such as Carillion and British Home Stores (BHS). PwC, the former accountant of the US retail chain, was fined a record $8 million after signing accounts that the financial watchdog, the Financial Reporting Council (FRC), called “incomplete, inaccurate and misleading” in its report on the aftermath of the collapse. mentioned, BBC reported.

In the US last year, the Securities and Exchange Commission (SEC) EY charged $100 million, the largest ever fine against an accounting firm for employees who cheat on their CPA ethics exams and mislead their research.

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