The Big Four accounting firm EY are only one step away from restructuring the firm. Their audit and advisory services would be separated as a result of the restructure. All that remains is for the 13,000 EY partners throughout the world to vote in favour of or against the split. It would be the biggest change in the accounting industry in decades.
First of all, in case you’re unfamiliar, the Big Four accounting firms are PWC, KPMG, EY, and Deloitte. They are the top accounting firms worldwide, providing tax, consulting and auditing services in over 150 countries. In 2021, they earned a combined worldwide revenue of $167.2 billion.
EY managers have finally accepted a plan to split their audit and advising businesses after months of discussion about a split in the audit and advisory services. The plan would potentially see the audit division retaining the EY name and the advisory division becoming its own company with a new name. However, it will not be as easy as it may sound. The distribution of the tax division, which is essential to both the audit and consultancy services, is one of the key concerns of the split.
So why are they splitting? The primary goal of the division is to prevent conflicts of interest from limiting the growth of the audit and advisory divisions. This stems from when one division is not allowed to work with the clients of the other division. The split would open up many more potential clients to the new advisory company and would help the advisory sector’s expansion.
A statement released by EY on the 8th of September states:
“EY leaders have reached the decision to move forward with partner votes to separate into two distinct, multidisciplinary organizations. We expect this phase to continue through the end of the year, with voting expected to begin on a country-by-country basis in late 2022 and conclude in early 2023.”