US partners are struggling to divide up staff

EY company building

The company wants to split into independent auditing and consulting companies.

(Photo: dpa)

Dusseldorf The planned split of the auditing and consulting company EY will be further delayed. According to industry circles, the reason for this is internal conflicts about the staffing of the future independent units. Specifically, the question is how many tax consultants should switch to the remaining business of auditing accounts.

The British “Financial Times” (“FT”) first reported on the internal dispute. She quotes from a video call in which the American EY country manager Julie Boland informed the US partners about the delay a few days ago. According to her, the plans for the division of the company have to be revised again.

EY initiated preparations for the global demerger in the summer of 2022. The “Everest” project provides for the separation of all consulting business from the traditional business with the auditing. An independent consulting group is to be created under a new name, which is to be listed on the stock exchange. Irrespective of this, the examination units will continue to work under the EY name.

According to original plans, the project should be ready by summer 2023. But there have been numerous delays. The coordination in the partnerships of the national companies planned for the end of last year was postponed to April 2023 and the starting point for the separation was postponed to November 1st, as the Handelsblatt reported in December.
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Even then, the details of the separation proved to be difficult, especially the financial and human resources of both units. According to the circles, those who will be responsible for the new EY audit company in the future have shown themselves to be dissatisfied with the package – above all Julie Boland, who is to lead this unit in the future.

Auditors need tax expertise

Boland wants significantly more tax consultants to remain in the auditing business, not only in America, but above all in the other large national companies. Reason: Without sufficient international expertise in the tax segment, EY would hardly be competitive in the final examination. Competencies in this area are important for high-quality testing and are required by customers.

So far, the tax experts have worked in an integrated manner at the four major companies PwC, Deloitte, KPMG and EY. They advise customers who do not check them and vice versa. The “Big Four” can thus better utilize large teams of tax consultants.

The quarrels at EY now show how complex and conflictual a split in the “Big Four” is. The consultants are keen to transfer as much capacity as possible to their future independent consulting group. The examiners have contrary ideas. It’s not just about tax issues. Experts in cyber security or white-collar crime (forensics) are also in demand in both services.

So far there are no indications that EY’s demerger plans could founder on these issues. But the schedule is difficult to keep. A few weeks ago, global EY top manager Andrew Baldwin named April or May as the date for the decisive partner votes. This is likely to continue to change.

Because especially in the USA, the distribution package must be finally negotiated by then. It is then considered a kind of blueprint for coordination and implementation in other large national companies.

More: EY is cutting hundreds of jobs in Germany

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