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May 27, 2022updated 30 May 2022 10:14am

EY audit split rumours: how would it look in data?

By Joe Pickard

Rumours have circulated that EY is planning to split its audit practice from the rest of its business, but how would that look in data?

EY is currently the third largest network in the world by fee income, according to International Accounting Bulletin’s (IAB) World Survey 2022¸ with a total fee income of $39.96bn for FY21. This is $7.83bn ahead of its closest rival KPMG and $28.23bn ahead of the largest mid-tier network, BDO.

To put the sheer scale of EY’s audit practice into scale, if EY did split its audit practice, this business would still be the 5th largest network in the world with a total fee income of $13.5bn based on FY21 results.

Audit vs. Advisory

For a number of years now, due to increased regulation of audit and soaring advisory revenues, audit has somewhat been viewed as the poor cousin of the Big Four networks. While that might be a fair assessment when compared to the much more lucrative advisory practices, audit fee income is still very high. However, with a number of high-profile audit failures in recent years, across a number jurisdictions, pressure has increased on the Big Four to negate any perceived conflicts of interest between their audit and advisory work and further separate these two areas of business.

With business trying to navigate increasingly complex issues and uncertain markets, advisory fees are only likely to increase.

A spokesperson for EY told this magazine, “As the most globally integrated professional services organization, we regularly conduct scenario planning and review EY businesses on a global basis to determine that we have the optimal strategy, structure and footprint to focus on delivering high quality audits and exceptional service to all clients across EY service lines. 

 “We routinely evaluate strategic options that may further strengthen EY businesses over the long-term. Any significant changes would only happen in consultation with regulators and after votes by EY partners.

 “We are in the early stages of this evaluation, and no decisions have been made.”

A spokesperson for PwC commented: "We are fully committed to our strategy which we announced last year and don’t comment on our competitors.  Our view continues to be that access to a wide range of expertise and competencies is essential to serving our clients and all other stakeholders and delivering high quality services. We are always ready to respond to changes in the regulatory and competitive environment if that becomes necessary, but have no plans to change course."

This magazine has reached out to a number of other networks and regulators for comment and will update this story when comment has been received.

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