EY halts plan to split audit, advisory firms

British financial services giant EY has admitted that it was forced to stall a project to split its audit and advisory units amid opposition from its US branch.

The move, agreed upon in September, aimed to accelerate growth and avoid conflicts of interest, but required the approval of EY’s 13,000 worldwide partners.

According to EY’s global management, the company’s US executive committee “decided not to move forward” with its plan, dubbed “Project Everest”.

“Given the strategic importance of the US member firm to Project Everest, we are stopping work on the project,” it said in a note.

EY’s global executive said it remained “committed to moving forward with creating two world-class organisations that further advance audit quality, independence, and client choice”.

At the same time, it conceded that separating its businesses came with challenges, including giving both organisations the capabilities to compete effectively in the market, and that more time was needed to make necessary investments.

A vote on the split on a country-by-country basis was originally scheduled to conclude by early 2023 but was delayed on several occasions.

Britain’s audit sector, dominated by the “big four” comprising EY, Deloitte, KPMG and PwC, has come under increased scrutiny and faced criticism for their failure to foresee a series of high-profile bankruptcies in recent years.