As per the reports, Ernst & Young (EY) is considering separating its audit division from its advising business in order to improve long-term operations.
EY, one of the Big 4 accounting firms alongside PwC, Deloitte, and KPMG, constantly reviews strategic choices to further improve its businesses. However they are yet to reach a decision, and are still evaluating the options, reports say.
EY is a global network of member firms that are constituted as independent legal entities. It has over 300,000 people in over 150 countries.
According to the Wall Street Journal, the US Securities and Exchange Commission is investigating conflicts of interest at the country’s major accounting firms. Any restructuring of the firm would call for the votes of partners as well as the complete consent of different national member firms.
Accounting industry insiders believe that if the dissolution of EY’s businesses takes place, the other Big Four firms might feel pressurised to follow in EY’s footsteps.
Consequently.
If EY goes ahead with its decision to break off two of the businesses, it would result in the formation of two massive professional services firms.
The newly emerged firm might then provide consultancy and other advisory services. Regulators throughout the world have expressed worry about the impact of accounting firms’ increased dependence on audit quality sales of consultancy and tax services.
Apparently, Michael West Media – a news website specializing in investigative journalism in the areas of business, finance, tax, and energy.was the first to report on the possible breakup of the firm.
