EY evaluating strategic options to improve audit quality – Reuters

The logo of Ernst & Young is seen in Zurich, Switzerland November 13, 2020. REUTERS/Arnd Wiegmann/Files

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May 26 (Reuters) - Ernst & Young is evaluating options to improve their audit quality, Chief Executive Carmine Di Sibio said on Thursday in an internal memo seen by Reuters, at a time when the Big Four accounting firms are often blamed for their lack of independence.

The memo was sent in response to a report by the Financial Times that said the accounting firm is planning to split its audit and advisory operations worldwide. (https://on.ft.com/3LPvNie)

"No such decisions have been made," Sibio said in the memo, while referring to the media coverage on plans to spinoff. An EY spokesperson told Reuters the firm routinely evaluates strategic options, but the process is in its early stages.

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A spinoff, if it were to take place, will create an audit-focused firm separate from the rest of the business, but the exact structure of the shake-up remains under discussion, the FT report said.

London-based EY is one of the Big Four accounting firms along with Deloitte LLP, PricewaterhouseCoopers and KPMG that audits companies, which also pay fees for consulting and advisory work.

The companies have previously drawn criticism from regulators over their conflicts of interest that undermines the ability to conduct independent reviews.

In the United States, the country's securities regulator is probing conflicts of interest at the nation's largest accounting firms, the Wall Street Journal had reported in March. (https://on.wsj.com/3tUMVMq)

CEO Sibio said in the memo to the firm's partners that "with the changing competitive, regulatory and market landscape, work is ongoing to evaluate strategic alternatives".

The EY spokesperson said any significant changes would only happen in consultation with regulators and after votes by EY partners.

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Reporting by Mehnaz Yasmin in Bengaluru; Editing by Devika Syamnath and Arun Koyyur

Our Standards: The Thomson Reuters Trust Principles.

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EY evaluating strategic options to improve audit quality - Reuters