Ernst & Young (EY) is considering a division of its audit and advisory functions around the world, the Financial Times reported, citing people familiar with the Big Four accounting firm’s plans. A spinoff, if this happens, would create an audit-focused firm separate from the rest of the business, the report said, but the exact structure of the shake-up is being discussed.
In an internal memo seen by Reuters, Chief Executive Carmine Di Sibio said that EY is evaluating options to improve its audit quality, with an EY spokesperson telling Reuters that the firm regularly evaluates strategic options. But the process is in its early stages.
“No such decision has been made,” Sibio said in the memo, referring to the media coverage on the spinoff’s plans.
CEO Sibio said in a memorandum to the firm’s partners that “with the changing competitive, regulatory and market landscape, work is on to evaluate strategic options”.
An EY spokesperson said any significant changes would only happen in consultation with regulators and after a vote by EY partners. EY employs over 3 lakh people worldwide.
based in london EY Deloitte LLP is one of the big four accounting firms, along with PricewaterhouseCoopers and KPMG, that audit companies, which also pay fees for consulting and advisory work.
Companies have previously criticized regulators over their conflicts of interest that undermine the ability to conduct independent reviews.
In the United States, the country’s securities regulator is investigating conflicts of interest at the nation’s largest accounting firms, the Wall Street Journal reported in March.
Citing sources, the Wall Street Journal report said that US regulators are conducting a comprehensive investigation into conflicts of interest at the largest accounting firms, asking whether they sell consulting and other non-audit services that are public. undermine their ability to conduct an independent review of the financials of companies.
(with agency input)