The Wall Street Journal detailed to day EY is considering splitting the firm into an audit firm and a services firm. Sarbanes-Oxley brought regulation to the public accounting industry with the founding of the PCAOB in July 2002…twenty years ago.
Two years ago the British regulator, the Financial Reporting Council (FRC), told KPMG, PwC, Deloitte and EY that it expects them to have separated their auditing divisions from the rest of their operations by June 2024. This appears to be the event that has moved EY to propose to their partners the breakup.
Is it a great idea to restrict the business models of the accounting firms? Event with increased regulation by the PCAOB the accounting industry still has behavior that is not helpful to the society…remember that PWC did not call out the liquidity issues at AIG as they were required, and the USA get the 2008 financial collapse.
Everyone that has an audit requirement needs to look at how well they are prepared to change audit firms. Audit Committees need to the at the risks that can be produced by the disruption of the audit industry and the direct effects on their organization.