The leading global professional services organization, Ernst & Young (EY) said on Thursday that it is planning to split its audit and consulting units into two companies.
Carmine Di Sibio, EY’s global chairman and chief executive, said in an interview, “This is something that will change the industry.”
The plan would also lead to big payouts for some of its partners. EY operations in China are not part of the split.
Voting at Ernst & Young, the proposed split must be approved by the more than 10,000 EY partners who work in 140 countries.
It is expected to begin on a country-by-country basis towards the end of this year and conclude early next year.
The firm, in an announcement on Thursday, said its top leadership had decided to “separate into two distinct, multidisciplinary organizations.”
If the plan is approved, EY will operate as two separate companies — one doing mainly auditing work and the other doing consulting and advisory work.
“EY’s strategic review of its businesses has progressed, and EY leaders have reached the decision to move forward with partner votes to separate into two distinct, multidisciplinary organizations,” a statement said.
“The next steps include ongoing engagement with partners to provide them with more information in advance of the voting process”, a statement said.
“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,” the statement added.
On the other hand, the competitor companies have a different opinion. Deloitte, KPMG, and PwC have all said, “They plan to keep consulting and auditing under one roof. These other Big Four firms hope to exploit EY’s focus on its restructuring to poach clients and employees, according to people familiar with the matter.”
The Four accounting firms, comprising EY, Deloitte, KPMG, and PwC, have been under regulatory scanner over concerns their advisory services could undermine their ability to conduct independent reviews.