Proposed ‘Project Everest’ To Split Its Business Called Off By Accounting Firm EY

The accounting firm EY has abandoned its proposal to split up its consulting and auditing businesses.

The company, which was once known as Ernst & Young, declared it was “stopping work on the project” after its US arm made the decision not to proceed.

The Big Four accounting firms—Deloitte, EY, KPMG, and PwC—control the majority of the market share worldwide.

The proposal came at a time when regulators demanded significant sector improvements due to conflicts of interest and subpar working conditions.

The merger, internally referred to as “Project Everest,” would have caused the biggest upheaval in the accounting sector in more than 20 years had it been approved.

After a year-long campaign to garner internal support for the division, EY has announced its decision.

“We acknowledge the challenges with separating some of our businesses that have the deepest technical expertise in a way that gives both organisations the capabilities they need to compete in the market effectively,” according to an internal note seen by the BBC.

“We also recognise that we need more time to make the necessary investments to prepare the businesses for a separation.”

Large accounting firms have drawn the ire of financial watchdogs in the US, the UK, and Europe who contend they cannot fairly act as an auditor of customers who also use their consulting services.

According to the Wall Street Journal, the project cost the company more than $100 million.

Germany’s accounting watchdog fined and suspended EY earlier this month for managing audits for the bankrupt electronic payment processor Wirecard.

After acknowledging substantial sums never existed on its records as part of a global fraud scheme, the business now owes creditors approximately $4 billion.

For a period of two years, EY is not permitted to conduct or accept any significant new audit engagements.

UK regulators called for a reduction in the Big Four’s dominance in 2021 as a result of high-profile business failures like construction firm Carillion and department store chain BHS.

The Financial Reporting Council levied a record £6.5 million penalties against BHS’ auditor PwC.

After discovering that EY’s auditors had cheated on the exam required to gain and maintain their Certified Public Accountant license, the US Securities and Exchange Commission (SEC) penalized the company $100 million last year.

It was the harshest punishment imposed on an auditing company that was also charged with deceiving investigators.

The director of the SEC’s enforcement office at the time, Gurbir Grewal, remarked at the time: “It is simply absurd that the very people who are accountable for catching client wrongdoing cheated on ethics examinations of all things.

“And it’s equally shocking that Ernst & Young hindered our investigation of this misconduct.”

He added: “This action should serve as a clear message that the SEC will not tolerate integrity failures by independent auditors who choose the easier wrong over the harder right.”

“EY admits the facts underlying the SEC’s charges and agrees to pay a $100 million penalty and undertake extensive remedial measures to fix the firm’s ethical issues,” according to US regulators.

(Adapted from

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