Ernst & Young (EY) is considering a split of its its audit and advisory operations worldwide, Financial Times reported, citing people with familiar of the knowledge of the plans of the Big Four accounting firm. A spinoff, if it happens, will create an audit-focused firm separate from the rest of the business, but the exact structure of the shake-up remains under discussion, the report said.
In an internal memo seen by Reuters, Chief Executive Carmine Di Sibio said EY is evaluating options to improve their audit quality, An EY spokesperson told Reuters the firm routinely evaluates strategic options, but the process is in its early stages.
"No such decisions have been made," Sibio said in the memo, while referring to the media coverage on plans to spinoff.
CEO Sibio said in the memo to the firm's partners that "with the changing competitive, regulatory and market landscape, work is ongoing to evaluate strategic alternatives".
The EY spokesperson said any significant changes would only happen in consultation with regulators and after votes by EY partners. EY employs more than 3 lakh people worldwide.
London-based EY is one of the Big Four accounting firms along with Deloitte LLP, PricewaterhouseCoopers and KPMG that audits companies, which also pay fees for consulting and advisory work.
The companies have previously drawn criticism from regulators over their conflicts of interest that undermines the ability to conduct independent reviews.
In the United States, the country's securities regulator is probing conflicts of interest at the nation's largest accounting firms, the Wall Street Journal had reported in March.
Citing sources, the Wall Street Journal report said that US regulators are carrying out a sweeping investigation of conflicts of interest at the largest accounting firms, asking whether consulting and other nonaudit services they sell undermine their ability to conduct independent reviews of public companies’ financials.
(With Agency Inputs)
Ey Considering Spinoff Of Audit Operations In Big Shake-up: Report | Mint - Mint
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