The final summit assault proved too steep for EY's «Project Everest» by which the firm wanted to split its auditing and consulting businesses, after internal squabbles.
With the separation of auditing and consulting, EY wanted to give the two entities more freedom and open up growth opportunities. The split was intended to remove the restrictions that automatically arise from conflicts of interest in client relationships in one sector or the other.
In addition, the spin-off plan would have meant high compensation for the consultants and partners of the respective national companies, with talk of up to nine times their annual salaries.
Management at EY USA, the largest and most important unit of the group, argued for months about the plans. There were doubts about the financial strength and viability of the audit unit, resulting in a planning hiatus last month.
Project to be Halted
The global executive committee announced «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,» according to an internal memo obtained by finews.com.
A separate statement from the Swiss branch will not be forthcoming, a spokeswoman said.
Measures will now be taken based on what has been learned from last year's work, she said. It also said it remains «committed to moving forward with creating two world-class organizations that further advance audit quality, independence, and client choice.»
Project Everest was initiated in 2021 by global chief executive Carmine Di Sibio and agreed to by the leadership team last fall. After that, each company would have had to approve the project.
The statement also said «We believe the organization must have the strategic flexibility to execute a new transaction in the future,» which could suggest a sale of individual units.
