EY is considering a global audit spinoff amid growing regulatory pressure, according to media reports.
EY and other Big Four accounting firms — PwC, Deloitte, and KPMG — have long been slammed for their lack of independence in their auditing of company accounts from which they also generate income with consulting, tax, and advisory services.
According to media reports, EY’s CEO Carmine Di Sibio said in a memo that no decisions have been made regarding to the audit spinoff.
An EY spokesperson was cited by Reuters as saying that the firm routinely evaluates strategic options but the process is in its early stages.
A spinoff will see an audit-focused firm separate from the rest of EY’s other businesses, but the exact post-split structure remains under discussion, a Financial Times report says.
The Big Four players in the past resisted the idea of audit spinoff spinning off their audit arms, arguing that providing consulting services to auditing clients helped them providing better audits.
When it comes to its legal structure, EY is a network of independent national firms paying to use the common brand and systems.
These firms employ about 310,000 people across more than 150 countries.
A decision on the spinoff would require a vote of the almost 4000 partners from these independent firms. However, some of these independent national firms might opt to keep their auditing arms without any spinoff.