Ernst & Young could separate its audit practice from the rest of its business and is weighing whether to restructure the firm as part of a routine review of its global business, an assessment that comes as European regulators eye tougher oversight after a string of accounting scandals.
“We are in the early stages of this evaluation, and no decisions have been made,” EY’s global arm said Thursday in a statement to Bloomberg Tax. “Any significant change would only happen in consultation with regulators and after votes by EY partners.”
Such a move—which would be the largest shake-up in the accounting industry since Arthur Andersen’s collapse 20 years ago—marks a major departure from the Big Four firm’s traditional operating model that generated $13.6 billion in audit revenue last year alone. EY and its largest competitors continue to face regulator and shareholder fallout after repeated audit failures around the world, and EY affiliates now face suits over audits for Wirecard AG in Germany and NMC Health in the UK.
EY along with Deloitte, PwC, and KPMG also face increasing pressure from US regulators to prevent lucrative consulting work from weakening their auditors’ objectivity and their ability to protect the needs of investors.