Written By As one of the “Big Four” accounting firms, EY has been at the forefront of providing audit and consulting services to clients all around the world. However, recent years have seen increased scrutiny from regulators over conflicts of interest arising from offering both types of services under the same roof. To address this issue head-on, EY has announced plans to separate its Consulting and Audit businesses. In this blog post, we’ll take a closer look at what this means for EY’s future as well as how it will impact their clients and employees alike. So buckle up – because we’re about to dissect one of the most significant changes in the accounting industry!
EY to split into two companies
EY plans to split into two companies, one focused on consulting and the other on audit. This move has been in the works for some time, but the COVID-19 pandemic has accelerated the timeline. The consulting business will be called EY Advisory and the audit business will be called EY Audit.
This move is a response to increased scrutiny from regulators and investors after a string of high-profile scandals involving major accounting firms. The hope is that by splitting off consulting services, EY will be able to focus more on its core competency of auditing.
There are some concerns that this move could backfire, as it could make EY less competitive in the consulting space. And it’s not clear yet how the two companies will work together on projects where both services are needed. But overall, this seems like a positive move for EY and its clients.
Reasons for the split
As one of the Big Four accounting firms, EY has long been a powerhouse in the industry. However, in recent years, the company has come under scrutiny for its business practices. In particular, EY has been criticized for its close ties to the consulting industry.
In response to this criticism, EY announced plans to split its consulting and audit businesses into two separate entities. This move is designed to address concerns about conflicts of interest and increase transparency.
There are several reasons behind this decision. First, EY believes that this split will allow each business to focus on its core strengths. Second, it will create more choice for clients who want to use EY’s services. Third, it will allow EY to better compete against other accounting firms.
Fourth, and perhaps most importantly, the split will help EY improve its reputation. By separating its consulting and audit businesses, EY hopes to show that it is committed to ethical business practices and conflict-free advice.
The split is scheduled to take place in 2020. It remains to be seen how successful this move will be in addressing the concerns of EY’s critics. However, it is clear that the company is taking steps to improve its image and position itself for future success.
What will each company do?
EY plans to spin off its consulting business in order to focus on audit services. This move comes as the Big Four accounting firms are under increased scrutiny for their role in corporate scandals and mismanagement.
The new company, to be called EY Consulting, will be led by managing partner Julie Teigland. It will comprise about two-thirds of EY’s workforce and generate annual revenue of $7 billion. The remaining EY audit business will be headed by CEO Mark Weinberger.
The split is intended to help EY move away from the potential conflicts of interest that can arise when an accounting firm provides both consulting and auditing services to the same client. It also allows EY to focus on its core competencies in each respective area.
EY’s decision to spin off its consulting business follows a similar move by rival PwC, which announced plans to do the same last year. Both firms are seeking to distance themselves from the reputational damage caused by Recent high-profile corporate scandals such as those at Enron and WorldCom.
How will this affect employees and clients?
As EY looks to the future, the firm has announced plans to separate its Consulting and Audit services. This move will have a number of implications for employees and clients.
For employees, the separation will mean more opportunities to specialize in either consulting or auditing. This will allow employees to develop deeper expertise in their chosen field, and ultimately provide better service to clients. The separation will also create new career paths for employees, as they will be able to move up within their respective fields.
For clients, the separation of Consulting and Audit services will provide more choice and flexibility. Clients will be able to choose which service they want to use, and can mix and match services as needed. This separation will also allow EY to better tailor its services to meet the specific needs of each client.
The future of EY
Ernst & Young LLP (EY) recently announced its plans to spin off its consulting business in an effort to separate its audit and consulting services. This move comes as the result of increased scrutiny from regulators, clients, and investors following a string of corporate scandals involving major accounting firms.
While the future of EY’s consulting business is uncertain, the firm is confident that this separation will allow it to focus on its core strengths in auditing and provide more clarity for clients and investors. EY is also hopeful that this move will create more opportunities for growth and innovation within the firm.
