EY shelves restructure plan after US staff object

Accountancy firm EY has shelved plans for a major breakup of operations after an internal row over what the new business would look like.

The plan, known as Project Everest, was set up last year in response to anger over conflicts of interest among major accountancy firms between their audit and advisory businesses.

However, according to media reports, EY’s global executive committee confirmed the plans had been blocked by US staff expressing concerns over where tax experts would sit within the new proposed structure.

“The global executive remains committed to moving forward with creating two world-class organisations that further advance audit quality, independence and client choice,” a note to staff signed by EY’s global executive committee said.

“However, we have been informed that the US executive committee has decided not to move forward with the design of Project Everest. Given the strategic importance of the US member firm to Project Everest, we are stopping work on the project.

“[We] will begin taking actions based on what we have learned from the work done over the past year – actions that will both benefit our businesses today and better prepare us for a new transactio.”

Concerns have been raised by lawmakers and regulators that accountancy firms seeking to win major consultancy deals may be at odds with the need to challenge the same clients when scrutinising their financial accounts.

The UK industry regulator, the Financial Reporting Council, ordered EY's auditing operations be ringfenced from the rest of its businesses. However, EY decided to the roles completely.

Reporting by Frank Prenesti for Sharecast.com