Ernst & Young splits into separate audit and advisory businesses

theguardian.com:

Bosses at “big four” accountancy firm Ernst & Young have decided to move ahead with a radical break-up plan to separate its audit and advisory businesses, which will now be put to a vote by its 13,000 partners.

Voting at EY, which has offices in more than 150 countries and employs 312,000 people globally, is expected to begin on a country-by-country basis towards the end of this year and conclude early next year.

It will be the biggest shake up of one of the UK’s big four accounting and consultancy firms – EY, KPMG, PwC and Deloitte – in decades and comes after a series of high-profile corporate collapses, including Carillion and BHS, that raised questions about their audits.

The industry has come under pressure for a major overhaul to tackle potential conflicts of interest to avoid future accounting scandals and business failures.

The leaders of EY’s 15 biggest member organisations including those in the UK and US, which account for 80% of its $45bn (£39bn) annual revenues, unanimously decided to put the split to a partner vote.

“EY’s strategic review of its businesses has progressed, and EY leaders have reached the decision to move forward with partner votes to separate into two distinct, multidisciplinary organisations,” the firm said.

Its leaders hope the audit and advisory arms can grow faster once they have been separated, as the break-up will remove conflicts of interest and operational challenges.

EY’s chief executive, Carmine Di Sibio, has said a global split could bring in an extra $10bn a year for the consulting arm in advisory fees from big technology companies, as the firm is currently barred from selling advice to audit clients.

The proposed split has received support from Sir Jon Thompson, the chief executive of