EY has scrapped plans to break up its audit and consulting businesses after months of internal disagreement and opposition from executives in the US.
The plan, codenamed Project Everest, would have represented the biggest shake-up to the accounting industry in more than two decades.
EY’s 18-person global leadership team, which approved the plan last September, sent partners a note on Tuesday saying the firm would now pursue a different deal.
Project Everest was championed by global chief executive Carmine Di Sibio as a way to free both sides of the business from conflict-of-interest rules that prevent consultants from selling many of their services to a firm’s audit clients. The independent consulting and tax advisory businesses would have been floated on the stock market.
Under the break-up plan, consultants would have received shares in the new business worth up to nine times their annual pay, while audit partners would have been handed cash windfalls of up to four times their annual earnings.
However, leaders of the US firm were unconvinced that cutting EY’s tax business down the middle was wise, and that the remaining audit-focused firm would be financially strong enough to maintain audit quality.
EY has spent hundreds of millions of dollars on Project Everest, with more than 2,000 of its staff engaged in the planning. Doubtless EY's clients will end up footing the bill, one way or another!
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