April 11 (Reuters) – Accounting firm EY has scrapped a plan to spin up its audit and advisory units, halting a proposed overhaul of its business that was supposed to address regulatory concerns about potential conflicts of interest.
The firm, which is one of the Big Four accounting giants, announced its plans to split in September after regulators expressed concerns that the audit arm would not do its job fairly in the interest of its client if it also used EY as an advisor.
But the plan, codenamed “Project Everest,” has met resistance from some of EY’s partners. The company said its US executive committee had decided not to proceed with the split.
Had the split been ratified, it would have been the biggest overhaul in the accounting sector since the 2002 crash of Arthur Andersen, the scandal-wielding Enron auditor whose downfall reduced the Big Five to the Big Four.
The UK’s auditing and accounting regulator, the Financial Reporting Council, had asked the Big Four in 2020 to separate auditing as an independent company in Britain by June 2024.
The latest EY move was first reported by the Financial Times.
Additional reporting by Nikit Nishant in Bengaluru; Editing by Devika Syamnath, Shinjini Ganguli and Anil D’Silva
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