The EY split has been placed on pause by the firm, as EY US auditors campaign for a larger slice of the tax practice post-divide.
In a partner call on Wednesday, Julie Boland, current US chair and managing partner, and future CEO of the audit business post-split, said that the deal needed to be reworked, the Financial Times reported.
The ‘Tax and Law’ business segment has historically brought in a large chunk of revenues for the firm and the tax services were planned to account for 14 percent of the audit side of the business globally.
But, as the two sides of the business form, pressure on EY’s global chair and CEO Carmine Di Sibio will no doubt increase to bump up this figure. This is estimated to rise to between 20-25 percent, according to the Financial Times.
Since EY leaders first unanimously agreed on a global partner vote to divide the business last September, it was hoped that new audit and advisory branches would remove operational challenges and conflicts of interest, preventing the potential for future business failures and freeing up EY consultants and tax practice from the pressure of independence regulations.
Alongside raising up to $20bn additional revenue, a big benefit of the proposed split is the potential for EY to make standalone offerings to large technology firms.
EY has been strengthening various parts of its audit and advisory branches in the run up to the separation, making more acquisitions over the past two years than in the last decade, and most recently has alliances with Polygon, TaxBit, Databricks, EXL, ifb SE, Alteryx, Auditboard and Shopify to name a few.
A spokesperson from the firm had shared with ERP Today last year that “we firmly believe that we can embrace the changing landscape”, but as the split saga has continued, the so-named ‘Project Everest’ has surely proven to be a trickier route than the unanimous vote anticipated.
As EY deliberates, this is no doubt good news for PwC, as it continues to poach partners from EY in the hunt for an additional 500 partner-level hires, targeted in the next 15 months.
Though contacted, PwC has declined to comment on the EY split news and its hiring progress.
In a statement shared with ERP Today, an EY spokesperson said, “As part of our deliberation and due diligence in connection with the proposed transaction, we are engaging in a dialogue with the largest EY country member firms to determine the final shape of the transaction.
“This transaction is complex and will be the roadmap for re-shaping the profession, so it is important we get this right. We remain committed to the strategic rationale that underpins Project Everest and believe that a deal can and should be done.”
