EY working to spin off its audit business in biggest shakeup of any Big Four firm in two decades
EY is working on splitting its business in two, to separate out its audit and advisory operations.
The accountancy firm is planning the biggest shakeup to the Big Four in two decades, by spinning off its audit business into a separate firm, according to the Financial Times.
EY’s plans come as part of ambitious efforts to escape the conflicts of interest that have dogged the accountancy sector for years.
The world’s biggest accountancy firms – PwC, EY, Deloitte, and KPMG – have faced growing criticism that their businesses selling advice to major companies undermines their objectivity when auditing those same firms.
An EY spokesperson told City PM that “as the most globally integrated professional services organization, we regularly conduct scenario planning and review EY businesses on a global basis to determine that we have the optimal strategy, structure and footprint to focus on delivering high quality audits and exceptional service to all clients across EY service lines. “
“We routinely evaluate strategic options that may further strengthen EY businesses over the long-term. Any significant changes would only happen in consultation with regulators and after votes by EY partners. We are in the early stages of this evaluation, and no decisions have been made.”
The efforts come after the UK government this month set out plans for a major shakeup of the UK audit sector, in the Queen’s Speech.
The Big Four have come under growing scrutiny over the past decade following a series of major accounting scandals, involving major listed companies including collapsed construction contractor Carillion and café chain Patisserie Valerie.
The plans saw the government outline its ambitions to replace the Financial Reporting Council (FRC) with a new, more powerful regulator called the Audit, Reporting and Governance Authority (ARGA).
The legislative agenda also set out plans to force the Big Four accountancy firms to share their audit work with smaller, challenger auditors.
In March, the US Securities and Exchanges Commission (SEC) also launched an investigation into conflicts of interest in the Big Four.