The obligatory press release:

Dignari’s 300-strong workforce utilizes innovation at scale and data-driven strategies to advise US government clients. Since 2013, the company has been driving successful program implementations, designing high-impact solutions that maximize effectiveness, prototyping emerging technologies and using data science to improve performance measurement.

“We are excited about welcoming the world-class Dignari team to the EY Government & Public Sector practice,” said Doree Keating, EY Americas Government & Public Sector Leader. “We believe that blending EY US’s commitment to provide customers with mission-ready solutions and Dignari’s IAM capabilities in the homeland security space will offer a highly differentiated value proposition for our government clients.”

“For over a decade, Dignari has made a significant impact on furthering the federal government’s security mission with modern technologies,” said Gena Alexa, Dignari Founder and Chief Executive Officer. “These efforts can be scaled across local and state governments as well — and when combined with the power of the EY network will strengthen outcomes for both the public sector and the people it serves.”

Dignari salaries from Indeed if anyone’s curious.

According to the 2023 Top 100 Contractors report (the Excel sheet can be found here from SAM.gov) that lists the top 100 vendors for the US Government by dollars obligated each fiscal year, Deloitte ranks #26 with $3,711,875,824.60 obligated. Big D holds the distinction of being the only Big 4 firm on the list, ahead of Accenture at #34 but unsurprisingly behind Booz Allen Hamilton at #16. As Trump fans are currently beefing with Deloitte and calling for their government contracts to get cancelled faster than a B-list comedian tweeting on Ambien, now seems like a great time for the other firms to make big moves in what has historically been a space Deloitte dominates.

The Department of Defense is by far EY’s biggest government client according to data on USASpending.gov. For FY23, EY received $312,906,294 in DOD obligations. The next largest obligation amount is the General Services Administration (GSA) with a comparatively tiny $37,306,035.

Security powerhouse Dignari joins EY to accelerate mission enablement across the public sector [EY]

The post EY’s Growing Its Public Sector Practice With a New Acquisition appeared first on Going Concern.

Posts from the big4
community on Reddit

Well now Financial Times is reporting a bunch of people got swept up in a wave of CPE policing centered around their taking multiple courses at the same time during EY Ignite Learning Week in May. “We all work with three monitors. I was hoping to hear new ideas that I could bring to the table to separate myself from others,” said one of them to FT. Mission accomplished?

The recently shitcanned “did not believe they were violating EY policy and were just trying to take advantage of interesting sessions that ranged from ‘How strong is your digital brand in the marketplace?’ to ‘Conversing with AI, one prompt at a time’,” said FT.

As we know, the EY organization is extra sensitive to cheating after they received a record $100 million fine from the SEC in 2022. In that instance it wasn’t so much the cheating itself that got the SEC so worked up but the fact that EY knew of it happening and failed to inform the SEC of such when the SEC asked “are your people sharing answers?” Also that they weren’t just sharing answers on CPE, they were using an exploit that would give out a passing score even if you only answered one question right. “Many professionals acknowledged during the firm’s investigation that they knew their conduct violated EY’s Code of Conduct, but they cheated because of work commitments or an inability to pass training exams after multiple attempts,” read the SEC’s order. Hmm, we’re sensing a theme here.

Apparently the firm did warn staff not to take multiple sessions at once in this most recent case — some of the former EYers speaking out disputed this — but whether they did or not, staff were just demonstrating that go-getter culture of the Big 4. “EY ‘breeds a culture of multitasking’, said one of the axed employees to FT. “If you are forced to bill 45 hours a week and do many more hours of internal work, how can it not?”

“I know a partner who will do two [client] calls and switch their camera on and off depending on who he is talking to. If this is unethical, then that is unethical, too,” said another. Are we sure the partner isn’t overemployed?

Would giving people two weeks off to complete their required 40 hours of CPE perhaps begin to address this pervasive issue once and for all?

EY fires staff who took multiple online training courses at once [Financial Times]

The post Studious EY Employees Just Trying to Grind Out CPE Get F**king Fired appeared first on Going Concern.

A press release finally showed up this afternoon.

The real story is that EY’s headcount shrunk for the first time since 2010. They were sitting at 393,000 people as of June 30, 2024, down almost 2,500 (2,450, said FT) from June of 2023.

The year sucked so bad they resorted to bragging about how many badges their people earned in fiscal 2024. And the 192 million lives they’ve impacted [citation desperately needed, EY*].

In her first Value Realized letter as CEO, Janet Truncale acknowledged the terrible year they’ve but said she sees “a powerhouse organization in great shape.” She also said “we will continue to invest in EY people” despite how many people at EY US got ripped off on raises, bonuses, and promotions this compensation season. “We have a refreshed people proposition that focuses on the things EY people told us they care about the most: developing skills; being empowered to prioritize their wellbeing; and building an
inclusive and positive culture.” EY people told you that did they?

What even are these snapshots in the annual report? How many countries watched videos?

This is what we’re here for: revenue and growth by service line.

LOL at the small text under Preferred Auditor.

Total revenue of EY global in US currency: $51.2 billion, growth of 3.9% in local currency.

• Assurance: $17.3 billion, growth of 6.3% in local currency (5.8% in USD)
• Consulting: $15.6 billion, growth of 0.1% in local currency (unchanged in USD)
• Strategy and Transactions: $6.2 billion, growth of 2.3% in local currency (2.8% in USD)
• Tax: $12.1 billion, growth of 6.3% in local currency (6.7% in USD)

So single digit growth across the board. Poor consulting, that’s rough.

The EMEIA region (Europe, the Middle East, India, and Africa) saw the most growth at 6.9% while Americas grew by 2.7% and Asia-Pacific didn’t grow at all.

This news puts Deloitte in the lead of the Big 4 revenue race as expected:

• Deloitte: $67.2 billion
• EY: $51.2 billion
• PwC: TBD, next to report
• KPMG: TBD, last to report

Just gonna drop the whole report here so we have it for easy reference later if we need it. It was impossible to find on EY’s site earlier.

EY reports global revenue of US$51.2b for fiscal year 2024 [EY]

*This figure is related to the EY Ripples program. We’re still gonna need a citation.

The post EY and the Terrible, Horrible, No Good, Very Bad Year appeared first on Going Concern.

FT:

On a call with staff, EY-Parthenon bosses blamed a disappointing market for mergers and acquisitions and private equity activity, meaning advisory revenue growth has been slower than expected since the start of the firm’s fiscal year in July, according to people familiar with the discussion.

EY said the decision to delay start dates for a second year running was made “after careful consideration of the current M&A environment and our business needs” and that it would “ensure that our new joiners have the quality and breadth of assignments to ensure a successful start and strong professional trajectory”.

The firm will provide stipends ranging from $12,000 to $35,000 to those affected, depending on their original start date and whether they are joining with an undergraduate degree or an MBA, according to a person familiar with the figures.

Just last week, on the same day PwC began a big batch of layoffs, it was reported EY partners would be getting about two percent sliced off of their yearly compensation, money that will go back into the business to manage cash flow.

When EY compensation numbers came out in August, several people reported no raise, no bonus, and/or no promotion. To quote one manager who received a 2.4% salary increase and 0.88% bonus: “Balls in my throat.”

EY is certainly not the only Big 4 firm dealing with a significant slowdown in deals activity but it is the only Big 4 firm that burned a $500 million hole in its pocket to explore a split of audit and consulting practices that never materialized. After Project Everest crashed and burned, the firm went on to lay off 3,000 people immediately after (they claimed this axing of 5% of the workforce was totally unrelated to Everest) and forced out an unknown number of partners just before Christmas.

We expected EY’s FY24 revenue announcement to come out some time in September so obviously that’s late. Whether or not it’s an intentional delay is anyone’s guess.

EY delays start dates for graduates because of slowdown in deals [FT]

The post EY Tells 200 Grads Expecting to Start Soon to Hit the Bench Until Next Year appeared first on Going Concern.

US partners at EY have been told the firm will hold back some of their pay for 2024 after a tough financial year that has left the accounting firm’s leaders facing criticism from their rank and file.

The decision to defer around 2 per cent of partners’ annual compensation was taken to help the firm manage cash flow, according to people familiar with internal communications, and has compounded disappointment over relatively modest pay increases for the financial year that ended in June.

…

EY has also cut the proportion of expected profits for the current year that it pays partners in advance in monthly installments, deferring more than usual to be paid after the end of the fiscal year.

So we can safely assume those accounting tricks they were going to use to plug the giant hole left by Project Everest didn’t work out eh? Managing Partner Julie Boland apparently got an earful from partners on a recent webcast, partners being annoyed that they didn’t get the million-dollar payouts Everest cheerleaders promised and wanting someone to pay for this whole mess. Remember when Carmine said the firm was missing out on $10 billion in consulting cash due to conflicts of interest Project Everest would have liberated it from? Maybe they shouldn’t have named it after a mountain known for hosting hundreds of dead bodies belonging to brave and adventurous people who attempted to climb it.

Let’s update that old slide EY created to sell the Project Everest audit/consulting split to staff.

Related:

Anyone at EY who got boned on a promotion and/or bonus this year — and there were many — should at least feel somewhat better knowing partners got screwed a little too. Maybe.

Will the deferred pay make its way back into partners’ pockets when consulting warms up again? Nope. FT says they’ll have to wait until they retire or leave “since it will be added to the capital they are required to keep in the firm.”

EY revenue isn’t out yet, it’s either them or PwC due to report next after Deloitte. Our guess was PwC due to their recent layoffs which often accompany crunching of the final numbers for the year but who knows at this point. EY’s revenue results usually show up mid-to-late September and PwC in October. Clearly EY is deferring the matter.

What we do know is it’s safe to assume Deloitte has won the revenue race for FY24.

EY to hold back some pay from US partners after tough year [Financial Times]

The post Well F**k EY Partners Then I Guess appeared first on Going Concern.

While we await EY revenue numbers that should drop some time next month, sources inside EY are running to The Times to say partners are being warned of a second year of pay cuts ahead.

Partner pay at EY is set to fall for the second year in a row while senior staff will forgo a pay rise, in a sign that professional services firms are still battling a downturn.

Benoit Laclau, the firm’s managing partner who runs the consulting division for UK and Ireland, told senior managers and directors on a call last week that average partner pay would be down this year, according to EY sources.

But we already knew the partners have been warned, stories about it came out back in April. Prior to the end of EY’s fiscal year on June 30, EY UK & Ireland Managing Partner, Finance and Transformation, Stuart Gregory gave a presentation to the partners letting them know partner profit could drop as much as 15 percent this year. Based on prior year partner payouts, a 15 percent drop would be somewhere in the neighborhood of £646k ($865k USD), putting them only slightly above 2020’s low of £667k.

2023 was the first time EY UK partner profits had taken a hit since all that stuff happened with a certain virus we don’t talk about anymore. Partner pay at EY UK so far for this decade:

• 2024: ?
• 2023: £761,000
• 2022: £803,000
• 2021: £749,000
• 2020: £667,000
• 2019: £679,000

Earlier this month it was reported that many service lines at EY UK received pay cuts for raises this year.

The post EY UK Partners Warned Again Pay Will Suck This Year appeared first on Going Concern.

“When Anna joined this specific team, she was told that many employees had resigned due to the excessive workload, and the team manager told to her, ‘Anna, you must stick around and change everyone’s opinion about our team.’ My child didn’t realize she would pay for that with her life,” the email said.

A tweet by @kaay_rao — which is where we first saw the letter shared yesterday — has 3.2 million views as of publication time.

Heartbreaking news from EY Pune – a young CA succumbed to the work pressure and nobody from EY even attended her funeral – this is so appalling and nasty!!! pic.twitter.com/pt8ThUKiNR

— Malavika Rao (@kaay_rao) September 17, 2024

Social media reaction and media coverage since the letter dropped yesterday has pushed EY India into issuing a statement. “Anna was a part of the Audit team at S R Batliboi, a member firm of EY Global, in Pune for a brief period of four months, joining the firm on 18 March 2024. That her promising career was cut short in this tragic manner is an irreparable loss for all of us,” EY’s statement said [source: Economic Times]. She passed away on July 20.

“We are taking the family’s correspondence with the utmost seriousness and humility. We place the highest importance on the well-being of all employees and will continue to find ways to improve and provide a healthy workplace for our 100,000 people across EY member firms in India,” they said.

The statement, brusque and hollow even by corporatespeak standards, is not being well-received by the public so far.

EY’s response is a classic lesson on how to say nothing will change without saying nothing will change. pic.twitter.com/HuHIDScGLf

— Lavanya Mohan (@lavsmohan) September 18, 2024

More conversation in @kaay_rao’s replies.

Earlier: Mother Pens Letter Calling Out EY After Her Overworked Daughter Suddenly Passed Away at 26

The post EY Responds to the Viral Letter From Bereaved Mother of a Deceased Auditor, Social Media Calls BS appeared first on Going Concern.

She writes:

Anna would retum to her room utterly exhausted, sometimes collapsing on the bed without even changing her clothes, only to be bombarded with messages asking for more reports. She was putting in her best efforts, working very hard to meet the deadlines. She was a fighter to the core, not someone to give up easily. We told her to quit, but she wanted to learn and gain new exposure. However, the overwhelming pressure proved too much even for her.

Everything was new to her-the organization, the place, the language and she was trying very hard to adjust. You should show some consideration to new employees, Instead, the management Took full advantage of the fact that she was new and overwhelmed her with both assigned and unassigned work This is a systemic issue that goes beyond individual managers or teams. The relentless demands and the pressure to meet unrealistic expectations are not sustainable, and they cost us the life of a young woman with so much potential

She goes on to call EY out for being a “company that speaks of values and human rights” but that didn’t even send anyone from the firm to the funeral of a recent starter:

Anna’s death should serve as a wake-up call for EY. It is time to reflect on the work culture within your organization and take meaningful steps to prioritize the health and wellness of your employees. This means creating an environment where employees feel safe to speak up, where they are supported in managing their workload, and where their mental and physical well-being is not sacrificed for the sake of productivity.

No one from EY attended Anna’s funeral. This absence at such a critical moment, for an employee who gave her all to your organization until her last breath, is deeply hurtful. Anna deserved better, and so do all the employees who continue to work under these conditions. My heart aches not just for the loss of my child but also for the lack of empathy shown by those who were supposed to guide and support her. After her funeral, I reached out to her managers, but received no reply. How can a company that speaks of values and human rights fail to show up for one of its own in their final moments? Becoming a Chartered Accountant involves years of toil, hardship, and sacrifice-not only for the student but also for the parents. Years of my child’s hand work have been snuffled out by just four months of EY’s callous attitude.

The heartbreaking letter ends with:

I hope my child’s experience leads to real change so that no other family has to endure the grief and trauma we are going through. My Anna is no longer with us, but her story can still make a difference

Full letter below as shared by kaay_rao on Twitter.

Update: EY made a statement. “We are taking the family’s correspondence with the utmost seriousness and humility. We place the highest importance on the well-being of all employees and will continue to find ways to improve and provide a healthy workplace for our 100,000 people across EY member firms in India,” they said, unconvincingly.

The post Mother Pens Letter Calling Out EY After Her Overworked Daughter Suddenly Passed Away at 26 appeared first on Going Concern.

Meanwhile, EY China put out this press release:

EY Greater China Region (EY) joins hands with Yan Chai Hospital and Share for Good for joint charitable initiatives. A group of 25 volunteers took part in visiting and distributing mooncakes, sharing holiday blessings and warmth with more than 800 underprivileged children, seniors and families from multiple beneficiary institutions.

The Mid-Autumn Festival — also called the Moon Festival or Mooncake Festival — is celebrated every year on the 15th day of the 8th month of the Chinese lunar calendar, so sometime in late September or early October on the Gregorian calendar. Here’s a quick explainer from South China Morning Post for the unfamiliar:

The press release continues:

Jasmine Lee, EY Hong Kong and Macau Managing Partner, says: “My heartfelt thanks to the charitable organizations and volunteers for their support on this campaign and their charitable efforts. Their support and facilitation have enabled our series of activities to be held smoothly. Akin to the Mid-Autumn Festival full moon, mooncakes symbolize reunion and harmony, while the society serves as a whole, and we are all a part of it. On top of adding the festivities to the holiday through these activities, allowing everyone to welcome and enjoy the Mid-Autumn Festival, we witnessed the coming together of community resources and strength. More importantly, we hope to continue conveying the message of care and support to the underprivileged, and to encourage the spirit of community and charity, where everyone cares for each other and build a society of inclusivity and kindness.”

The firm has been known to hand out mooncakes to staff this time of year, too.

There, some nice news for once.

The post While PwC Begs Clients Not to Leave, EY Hands Out Cake appeared first on Going Concern.

On Saturday, Financial Times reported that due to a “market slowdown,” EY UK has gotten rid of a small number of partners and given out annual salary increases of 2.2% to its 4,400-person tax advisory business. It was six percent in 2023 and 10 percent in 2022. FT said bonuses would be smaller as well (£500 for junior staff — that’s $655 USD — to £4,000 for directors) and explained the math thusly:

Bonuses for EY employees are calculated using a “variable performance share price” system where each employee has a specified number of “shares” according to their rank, people familiar with the matter said. The number of shares is multiplied by the value of one share — a figure set by management each year — to determine what bonuses are paid out.

High performers would, as always, receive more though no number was given. EY brazenly told FT that its tax practice “continues to grow” and said that raises and bonuses “vary based on individual and business unit performance.”

FT said tax advisory usually does OK during market turbulence, or at least shouldn’t be suffering as hard as deals and consulting in this market.

The firm gave the same spiel about difficult market conditions last year, saying that due to rising costs and a difficult economic outlook, just about everyone would get a smaller bonus as it cut the raise and bonus pool by about 30%. The firm wouldn’t tell FT what raises and bonuses were for other service lines this year, hopefully some birdies with big flapping mouths are in reporters’ inboxes right now spilling those specifics.

After peaking at 11.1% in October 2022, consumer price inflation in the UK was down to 2% in the 12 months to June 2024 with services inflation at 5.7%. Taylor Swift was partially blamed for the higher-than-expected 2% increase (we’re not joking). Core CPI was at 3.5% as of June, officially making these raises a pay cut assuming EY UKers use energy and pay rent.

EY UK partner pay took a hit last year, dipping from £803,000 ($1.1 million USD) in 2022 to £761,000 ($997k USD) for the year ended June 30, 2023.

We’ve seen similar disappointment here on our side of the pond with some EYers reporting NO raise or bonus this compensation season. Y’all, they want you to quit. How many times do we have to say this.

EY cuts pay rises and bonuses for UK tax staff after slower year [FT]

The post The King’s EY Gives Out Pay Cuts For Raises appeared first on Going Concern.

EY Australia reported (unaudited) revenue of $2.81 billion ($1.86 billion USD) in FY24, down from $2.97 billion ($1.97 billion freedom bux) in FY23. For the mathletes counting along at home, that’s a 5.5% hit.

It was, said EY, “a year marked by challenging market in slowing economy.” And also that whole thing with PwC blowing up the consulting business over there because they wanted to double dip but let’s not give that dead horse yet another punch.

Unfortunately we can’t compare service line performance from FY23 to FY24 because the firm reorganized the business. Some parts of the risk business moved from consulting to assurance and parts of people advisory moved to consulting. All EY said in the press release is that the assurance business “saw strong growth” and tax “experienced another solid year.” And provided these numbers:

Revenue for the firm’s Assurance service line reached $0.71b, while Tax delivered $0.61b. Despite Consulting trending downwards, its revenue was $1.04b in FY24. Its Strategy and Transactions service line delivered $0.45b.

On hiring and partner promotions in FY24 EY said:

In the last fiscal year, EY Australia appointed 53 new partners, including 31 promotions to partner and 22 new partners hired. The firm also appointed 20 associate partners (including 12 promotions and 8 hires) and hired 658 graduates. Of newly promoted partners and associated partners, 32 per cent and 50 per cent are women, respectively.

“Notwithstanding the very tough market conditions, and a heightened focus on professional services more broadly, we’re extremely proud of what we’ve accomplished and thank everyone for their contribution,” said EY Regional Managing Partner and CEO Oceania David Larocca.

He also mentioned last year’s scathing culture report that was prompted by an auditor being found dead at the Sydney office in 2022. “A year on from the release of the EB&Co. report, we’ve made strong progress addressing the recommendations we accepted. We will continue to be transparent about how we’re progressing in our annual Value Realised Scorecard,” he said. “We acknowledge, however, that transformative culture change isn’t delivered overnight – nor will it ever be ‘job done.’ It remains a long-term, continuous investment to ensure we build upon a diverse, respectful workplace where our people feel they can belong, perform and thrive.”

Just a few months ago, down under EY’s culture was in the news again. More on that below:

Now we really can’t wait to see those global numbers!

EY Australia announces 2.81 billion in revenue, down 5.5% from previous year [EY]

The post Revenue is Down More Than 5 Percent at EY Australia appeared first on Going Concern.

The FRC explains the rule EY broke:

The Revised Ethical Standard 2019, which reflects the requirements of UK law, imposes restrictions on the amount of non-audit services that an audit firm may provide to a Public Interest Entity. The cap on non-audit work is 70% of the average of the fees paid to the audit firm over the previous three consecutive years. The cap applies at both Network level (i.e. members of the global EY network) and at Firm level (EY UK). EY UK tested the fee ratio at Network level but not at Firm level, and so accepted and carried out non-audit work in breach of the 70% fee cap. This breach was not intentional or dishonest.

EY was the auditor of record for Evraz from the time it was listed on the UK stock exchange in 2011 until late 2022 when the UK government imposed sanctions on Russia due to their invasion of Ukraine.

As for what exactly happened:

In early 2021 EY accepted an engagement by Evraz to carry out non-audit work in connection with a proposed disposal of the Evraz Group’s coal-related interests. These were principally held through a Russian company, PJSC Raspadskaya. It was proposed that this company would demerge from the Evraz Group and that a dividend in kind would be paid as part of the demerger. The proposed disposal was known as Project Gemini.

EY’s non-audit work in connection with Project Gemini related to the provision of working capital reporting, assistance with correspondence with the Financial Conduct Authority (“FCA”), and a comfort letter in connection with the information in the circular that was prepared to support the demerger.

The average of the fees paid to EY UK for its audits of Evraz in the three consecutive financial years prior to it carrying out work on Project Gemini was $400,462. 70% of this figure is $280,323. The total fees for EY UK’s non-audit services on Project Gemini that were subject to the 70% cap amounted to $535,000 and therefore exceeded $280,000 by a significant margin.

For their sins, EY received the following financial and non-financial wrist slaps:

• A financial sanction comprising: i) £121,305 in respect of disgorgement* of profits earned on fees in excess of the fee-cap; and ii) an additional £200,000 component. The additional component has been discounted for admissions and early settlement to £130,000, such that the total financial sanction is £251,305.

*The disgorged sum represents the profits on non-audit work that EY earned from Evraz plc, over and above the fee cap, which it would not have earned had it complied with the Ethical Standard, and which the FRC has now required EY to give up as part of the financial sanction imposed.

Non-financial sanctions as follows:

• A published statement in the form of a reprimand.
• A root-cause analysis report to be prepared and presented to the FRC identifying the reasons for the breach and actions taken since, including in response to the wider issue around EY’s handling of the approval and assessment of non-audit services, identified in the FRC’s 2023 Audit Quality Inspection and Supervision Report.
• Any further remedial action proposed by the FRC to be implemented as necessary.

“The Ethical Standard sets clear limits on the value of non-audit services an auditor can provide. Its aim is to uphold high standards of auditor independence and ensure public confidence in audit,” said Claudia Mortimore, Deputy Executive Counsel at the FRC. “In this instance, EY’s systems and controls failed to ensure compliance with the Ethical Standard which led to the fee-cap being breached. In addition to the financial sanctions announced, EY is required to report to the FRC on the reasons for the breach and to provide assurance that appropriate measures are in place to avoid any future recurrence.”

We’re sure they’re very, very sorry and won’t ever get caught doing do this again.

The post EY UK Gets Hit With a Weakass Fine for an Ethics Conflict appeared first on Going Concern.

Exhibit A:

Exhibit B:

While one might feel compelled to handwave these posts as a skill issue specific to the people who posted them (that certainly could be the case), the FY25 EY compensation thread is enlightening to say the least. Some highlighted comments from the consulting side, where the majority are reporting single-digit salary increases:

• M1->M2 with a 2.4% salary increase, 0.88% bonus: “Balls in my throat”
• A2 (no promotion) with a 2.13% salary increase, $1000 (1.04%) bonus: “”
• M3->M4 with a 0% salary increase, 2.93% bonus: “Rethinking life choices”

On the assurance side, you have majority double-digit salary increases, plenty of promotions, and zero crying emojis.

This S3 in consulting with a 0% salary increase and a 0.74% bonus gets it: “They want us to quit.”

Craig here gets it too:

This is a back door to way to reducing headcount without firing people. If you aren't getting a raise and have met all production goals, then they are indirectly telling you "you're fired".

— Craig Hausz, CPA (@CPATaxTeam) August 5, 2024

Repeat after me: They want you to quit.

They want you to quit.

They want you to quit.

Headlines about mass layoffs are ugly and make clients skittish. Why do that when they can just discourage people right out the door? It seems pretty obvious that’s what’s happening here.

To be clear, they’re doing layoffs too. Guess that attrition is still way too low.

For fiscal 2023, EY US reported 12 percent revenue growth from FY22 for total revenue of $21.5 billion. No specifics yet on just how bad the year ending June 30, 2024 ended up being.

The post Comp Season PSA: If You’re Disappointed, It Might Be Because They Want You to Quit appeared first on Going Concern.

CPA Journal has published an intriguing deep dive into Big 4 revenue, specifically how the firms started making more money in advisory than audit or tax in the last 10+ years. You should go read it if this is at all interesting to you but we’re just going to focus on two charts because the Going Concern audience, and its editorial team, have the attention span of squirrels that got into a case of Red Bull.

Covered in the article are several events over this 23-year period that put upward or downward pressure on Big 4 revenue, things like the collapse of Arthur Andersen dumping all those clients on other firms, Sarbanes Oxley, the 2008 financial crisis, and PCAOB paper-pushing.

Writes The CPJ:

Over this period, audit revenue declined while advisory service revenue increased. Overall, the revenues of the Big Four have increased from $28 billion (2000) to $79 billion (2022); this represents a 183% increase over 23 years. The increase in overall revenue was interrupted by a decrease in total revenues from 2004 to 2006, during which time the firms (except for Deloitte) sold off their advisory service practices. The 2008 financial crisis contributed to the leveling off of revenues from 2009 to 2010. Contributions to revenue from advisory services were the lowest (14%) in 2005, while assurance and tax services were 62% and 24%, respectively. This sharply contrasts with 2022, when advisory service revenues were 51%, and assurance and tax service revenues were 27% and 22%, respectively.

And now, Exhibit 2.

Exhibit 2 shows that Big Four advisory service revenues grew from $11 billion (2000) to $40 billion (2022); this represents a 274% increase over 23 years. Revenue from advisory services was temporarily constrained by the enactment of SOX, which prohibited auditors from providing advisory service to assurance clients. In response, the Big Four sold off their advisory service practices one by one, except for Deloitte, which did not do so due to market conditions. Deloitte’s failure to divest may have provided an example of how advisory services may be sold to non-audit clients without violating SOX. Therefore, as the non-compete agreements with their former advisory arms expired, the other three firms began to replicate the success of the Deloitte business model. Advisory service revenue doubled from 2010 to 2015 and has continued to increase rapidly since then, leading to a concern about the impact of advisory services on public accounting firms (Alyssa Schukar, “Big Four Accounting Firms Come Under Regulator’s Scrutiny,” Wall Street Journal, March 15, 2022). Since 2014, total advisory revenues have exceeded total assurance revenues for the Big Four by 50% or more and growing. Deloitte is the clear leader in advisory revenue, followed by PwC, EY, and KPMG.

Here’s a link to that WSJ article should you care to peruse it.

During the period analyzed, cumulative assurance revenues at Big 4 firms doubled — from $11 billion in 2000 to more than $21 billion in 2022 — and tax went from $7 billion in 2000 to $18 billion in 2022, an increase of 168%.

They go on to analyze the individual firms’ revenue by service line, go check it out if you want.

The post Who Wants to See How Much Big 4 Revenue by Service Line Has Changed Since SOX? appeared first on Going Concern.

Law.com has them at #5 in revenue after Kirkland & Ellis, Latham & Watkins, DLA Piper, and Baker McKenzie. A few sources, some of them at least a couple years old, say Dentons does lead the global law syndicate in size by headcount. Still others, many of which appear suspiciously aligned with ChatGPT’s dialect, contradict this claim. Our former sister site Above the Law has a story from 2023 detailing how Dentons became the world’s largest law firm in 2015 and it wasn’t from hiring 6,000 lawyers (Vault calls it “the Pac-Man of law firms“). Anyway, splitting hairs here.

How about that press release:

Dentons, the world’s largest global law firm, today announced that its Global Board of Directors and Global Advisory Committee have elected Kate Barton as the Firm’s next Global CEO. Barton will join Dentons from EY, where she has had a highly distinguished 35-year career in a variety of executive leadership roles, most recently as Global Vice Chair. She will succeed Elliott Portnoy, the founding Global CEO, who has served since the Firm’s launch in 2013.

As one can imagine would happen over a 35-year tenure, Barton held numerous positions since starting out as an intern in 1985. New England Tax Managing Partner, Northeast Sub-Area Tax Managing Partner, New York Office Managing Partner, Americas Vice Chair, Tax, Law and People Advisory Services, Global Vice Chair – Tax, Law and People Advisory Services, and her most recent title of Global Vice Chair.

The handover period begins in September and her first official day is November 10.

Do we want to read the obligatory corpospeak quotes? We do.

“Kate has extensive experience in leading a complex and global professional service organization and has an outstanding skillset in managing people, processes and systems. Her successful client service experience, coupled with her thoughtful approach to integration, make her the ideal individual to lead our Firm,” said Elliott Portnoy, Global CEO. “She has my unqualified support, and I am confident she will lead Dentons from strength to even greater strength and success.”

Reflecting on her appointment, Kate said, “I have watched Dentons redefine the legal services landscape with its pioneering business strategy and client offerings. Under Elliott’s leadership, this Firm has differentiated itself with its polycentric approach and integrated cross-border and multidisciplinary client engagements, proving that uniting and operating as one firm is far more impactful. I am looking forward to working with Elliott on a transition and to collaborating with Dentons’ accomplished regional leadership to continue challenging industry norms and adapting to the ever-changing world of technology and innovation faced by law firms and professional service firms around the world in order to deliver excellence for the benefit of our people and our clients.”

Well that sure was a spectacular corporate meat beating.

The post ‘The World’s Largest Global Law Firm’ Snags a Longtime EY Veteran appeared first on Going Concern.

It was a given that Carmine, an enthusiastic promoter of the Project Everest plan to split audit and consulting practices, would probably make an exit after the much-hyped plan was shelved last April. What wasn’t known was who would slide in to take his place though Global Managing partner, Brit, and extreme Everest fanboy Andy Baldwin was considered a strong contender. This came as a shock to us as we expected him to shuffle off into the sunset or get shoved under the bus when Everest collapsed but no. Had he secured the role, he would have been the first non-American to lead the global firm.

“Andy is the favorite by a large margin, but things can get weird in a hurry,” said one person in the inside of the race to replace Carmine to Financial Times in August.

“The global executive [committee] has put the firm through the wringer and we need significant, maybe even wholesale, change,” said another to FT. “Andy needs to wear this debacle. He needs to be held accountable for pushing so hard and listening so little.”

“We need to reinstitute the ban on senior management retirement extensions that clog up the pipeline and hinder the development of future leaders,” said still another. 57 years old at the time, Baldwin griped about potential age discrimination were he to be passed up for the role. “Baldwin warned people involved in the selection process that UK discrimination laws bar taking age into consideration without a specific business reason, according to people familiar with the conversation. He was unhappy that age was considered so prominently in the process, they said,” wrote FT in a story about the leadership race published in November. Some people on the global executive committee expressed concern that Baldwin would reach mandatory retirement age of 60 before the end of the four-year CEO term. Plus they had a reason other than age to pass him by: the $500 million hole Everest burned in the global firm’s pocket.

Janet Truncale, meanwhile, is in her early 50s so she can squeeze out at least one term. In “Inside the race to lead EY after bungled break-up plan” (August 2023), FT threw her in toward the bottom as a highly unlikely contender:

Other mooted candidates included two Americans: Janet Truncale, who runs EY’s financial services business in the Americas, and Ryan Burke, who heads the firm’s practice serving private businesses. Truncale is seen as an ally of the global executive committee in its long-simmering tensions with other members of the US leadership, making it unclear if she could win Boland’s support, said several people familiar with the matter.

That’s then-EY US Chair Julie Boland, the person most likely to get thrown under the bus after Everest failed. See: EY Split Update: There’s a Battle Royale Going Down This Week. She was in support of the split as a concept but had concerns about the details and her dad was one of the many retirees holding up the split over concerns their pension payouts could be affected. See: Legal Liabilities and Pensions Are Holding Up the EY Split.

But none of that matters now. It’s a new era for the global EY organization and as of today, they have a new captain at the helm. Just days before her first official day she issued a proclamation that the ghost of Everest is to be exorcised from EY once and for all (sorry, Andy). At the same time, she introduced EY’s new catch phrase: All in.

Today we launched the new EY global strategy – All in – which sets out a bold ambition to create new value for EY clients, people and stakeholders.

All in is not just a business strategy, it captures an attitude and way of working – combining the multi-disciplinary skills of the 400,000 person strong EY workforce to anticipate and navigate a changing world – so that EY clients and EY people can shape the future with confidence.

Predictions for the next four years are welcome in the comments. Best of luck, Janet. And we don’t mean that in the assy “you’re inheriting a pile of hot garbage” way. We would have meant it that way if Baldwin got your spot though.

The post It’s the Dawn of a New Era at EY Today appeared first on Going Concern.

As former cheerleaders of Project Everest make their hasty exits, Carmine Di Sibio’s successor made a strong statement to EY people yesterday that a split of audit and consulting practices is not on the menu. Her comments sound a lot like what was said by Deloitte Global CEO Joe Ucuzoglu about his firm’s superior “multidisciplinary private partnership model” when the Green Dot and P-Dubs were busy rebuking the EY split plan in its early stages. You know, before the whole thing fell apart.

FT has the deets:

EY’s new global chief executive Janet Truncale has ruled out an immediate revival of the Big Four accounting firm’s plan to split in two, unveiling an alternative strategy that involves slimming down its central bureaucracy.

Truncale told the firm’s 400,000 staff in a memo on Thursday seen by the Financial Times that the business would “recommit to working together as one organization” and that her new leadership team planned to simplify the way the firm operated.

“There is huge power in our global scale and connectivity. So looking ahead, we’re going to recommit to working together — with EY clients, our ecosystems, and each other — as one organization,” she wrote.

Oh and there’s gonna be a new strategy in town now that Vision 2020 is four years behind us. Are you ready?

“All in”

Wise choice not to put a year on it.

Here’s what Truncale, whose first official day of work as EY Global Chair and CEO is July 1, said in a press release issued yesterday:

Today we launched the new EY global strategy – All in – which sets out a bold ambition to create new value for EY clients, people and stakeholders.

The world’s organizations face issues that are more complex and inter-connected than ever before. The All in strategy will ensure that EY’s globally integrated, multi-disciplinary network continues to lead through a rapidly evolving AI and technology-driven era.

In the last decade, EY has experienced extraordinary success and market leading growth, doubling in size to achieve US$50b in revenue. The All in strategy is about shaping EY’s next US$50b through purposeful growth – making intentional, future-focused investments in areas where we are uniquely positioned to lead – such as transformation, managed services and sustainability. All alongside an unwavering commitment to audit quality.

We will also build an even stronger organization by creating new ways to collaborate across EY’s vast geographical footprint and continuing to invest in the market-leading sector capabilities organizations need to address their most pressing issues, augmented by the accelerated adoption of AI.

All in is not just a business strategy, it captures an attitude and way of working – combining the multi-disciplinary skills of the 400,000 person strong EY workforce to anticipate and navigate a changing world – so that EY clients and EY people can shape the future with confidence.

How do we feel about that? A little plain, no? And lacking in the punniness of PwC’s New Equation.

New EY chief rules out reviving plan to split Big Four firm in two [Financial Times]

The post EY Is All In on Pretending Like Project Everest Never Happened appeared first on Going Concern.

Q: You’ve been driving AI transformation at EY, and you have been watching it reshape the broader world of tax services. How is it changing your industry?

A: I’m seeing whole companies shift to an “AI first” mindset. People are using AI as a digital assistant that sits alongside the other productivity tools they use every day. Tax and finance professionals are automating routine tasks, which frees up critical time for more strategic activities. AI is also helping with those strategic activities by summarizing information, identifying anomalies, and highlighting key themes. We’re already seeing up to 14 hours a week in time saved from these basic productivity gains.

In response to a different question she adds:

EY research shows that the typical tax team spends somewhere between 40 and 70 percent of their time gathering and manipulating data. Tax teams also face increasing levels of complexity around regulation and real-time reporting, downward pressure on budgets, and increased costs of keeping the technologies they use updated. They’re responsible for about the same number of decisions and actions today as they were 12 years ago, but they need to base those on 50 times the amount of data. Then there’s the ongoing headache of the growing skills gap.

AI is already helping to solve many of these challenges. The ability to process vast amounts of data more quickly and more accurately is a game changer for tax return compliance and reconciliation. Our ability to analyze and interpret regulations combined with predictive insights from AI will also help us move to real-time forecasting and make strategic planning decisions based on greater insight into future tax implications.

Earlier this week, EY announced via press release they will “transform” the global sales operation by “equipping the workforce with Microsoft client management tools and AI capabilities.” This, they said, will position the EY organization as one of Microsoft’s largest customers worldwide when the Microsoft Dynamics 365 Sales implementation reaches at least 100,000 EY professionals across 700 offices and 150 countries by January 2025.

The post EY’s Vice Chair of Tax Says AI is Saving Professionals Up to 14 Hours a Week appeared first on Going Concern.

As head of the UK firm, the second largest in EY’s global network behind the US, Ball was an influential figure as the firm’s global bosses tried and failed to split its accounting and consulting arms globally. 

The 61-year-old was a strong proponent of the deal, codenamed Project Everest, which would have transformed the business model that has dominated the accounting profession for decades. 

In his note to partners, Ball said he would agree a transition plan with his successor but that he did not envisage a lengthy handover period. 

“The commitment I made was to navigate the UK business through the uncertainties that came after our separation discussions,” Ball said in the note, adding that the firm had needed to “regroup” after Project Everest was abandoned last year. 

Fellow Everest cheerleader Carmine Di Sibio — who got a retirement exception of his own as his time was coming up while Everest was still on the table — announced his exit last summer and will join the PayPal board effective July 1.

By all accounts, Ball intended at the time of his second extension to see the term through to the end of June 2025. But nah, he’s out.

Ball took home a cool £3.6 million ($4.6 million USD) in pay last year. Meanwhile, EY UK has made multiple cuts including laying off 150 people three weeks before Christmas 2023. Even partners have been suffering as their payouts shrunk from £803,000 (a little over $1 million USD) to £761,000 ($966k USD) in 2023.

Hywel Ball has called EY home since 1983.

The post Another Project Everest Cheerleader Bites the Dust appeared first on Going Concern.

According to a press release they put out yesterday, EY plans to invest a billion dollars over three years on talent and technology “to revolutionize the experience of early career accounting professionals and improve the attractiveness of the profession.” Let’s see what exactly they think that looks like:

This investment includes a significant increase in early career compensation, artificial intelligence (AI)-enabled audit and tax platforms, an innovative new “360 Careers” experience, outreach and support for college students, and enhanced wellbeing benefits.

Call us skeptical but this sounds like a lot of non-compensation stuff that could eat up a healthy chunk of that billion bucks. They did say the salary bump will put accounting “on par with other business majors” though:

EY US will increase early career compensation as part of a total rewards package that recognizes the value of a certified public accountant (CPA) career path. This investment will place the profession and accounting degree on par with other business majors and position EY US as a pay leader in an increasingly competitive US market.

No salary number was given so we’ll just have to keep an eye on the next few compensation seasons to find out just how much more they’re paying.

Added the firm:

EY US will continue to be a beacon for top talent, supporting professionals as they pursue a degree in Accounting and as they progress in their career, through:

• Pathways to CPA licensure, including the EY Career Path Accelerator, to remove barriers to entry and create a growing pool of future CPAs
• New EY 360 Careers experience for early career professionals starting in 2025, which will serve as a launch pad and accelerator to give campus recruits the essential skills they need to grow as leaders at the global EY organization, forge their paths as entrepreneurs or advance to prominent C-suite positions later in their careers
• Wellbeing enhancements to help professionals perform at their best, including dedicated coaching and wellbeing assistance for audit and tax teams during periods of peak performance

If you didn’t know, EY Career Path Accelerator is “an accessible, affordable, and relevant alternative for students to meet the 150 hours of education required for CPA licensure” meant for people who aren’t on the Master’s track. This is what’s currently on offer:

Says EY about the program, the Career Path Accelerator “offers hands-on learning through our EY internship, ensures participants receive the guidance they need to be successful, and equips students with the future-focused skills and subject-matter experience that they’ll need upon entering the workforce.” The program is administered by Hult International Business School.

Let’s wrap this up with the expected quote:

“Investors and global capital markets depend on a thriving accounting profession,” said Ginnie Carlier, EY Americas Vice Chair – Talent. “Our goal is to make EY US the most preferred place to launch an audit or tax career and become a springboard for future business leaders – for our own organization and leading public and private enterprises.”

EY US to invest $1 billion in compensation and technology to improve the attractiveness of the accounting profession [PR Newswire]

The post EY Promises to Increase Starting Salaries to Make Accounting More Attractive appeared first on Going Concern.

For some reason, we’re fascinated with Big 4 office spaces. Perhaps because we don’t have to work in them and can instead admire (or criticize) from a safe distance. There have been a few interesting ones in recent years, like Deloitte’s ‘future of work’ office in Edinburgh, Scotland and the building PwC is moving into in San Jose soon — just down the street from Winchester Mystery House — has some promise.

Today we’re checking out the EY Regional Shared Service Center (RSS) in Bulgaria’s capital city Sofia. At RSS they do talent, finance, risk, and communications processes for “a diverse clientele” from 29 EY countries throughout Central, Eastern, and Southeastern Europe and Central Asia. This ain’t your mother’s cramped Indian call center.

Those chairs appear to be the West Elm Humanscale task chair, did they really drop a thousand bucks a piece for those things? Business must be good.

“This new facility marks a new chapter in our journey. Today, we stand in an office that is a manifestation of our vision, determination, and perseverance. Not only will this make our daily office life more comfortable but most importantly it will provide a platform for people to share ideas, to innovate, to integrate and thus further transform and enhance our capabilities“, said Rafal Olejniczak, EY’s Regional Director of Operations during the opening ceremony.

Check this guy out. Why are Europeans so effortlessly cool?

Said the firm breathlessly of the new space:

The new office stands as a testament to EY RSS’s dedication to cultivating a culture that emphasizes the importance of quality and excellence in delivering key business services. The office’s contemporary design embodies the company’s progressive mindset. Its bright and spacious interior is suffused with natural light, creating a welcoming environment that stimulates intellectual activity, creativity and innovative thought. The layout of the office includes a mix of open-plan areas for collaboration, secluded spaces for concentrated work, and casual breakout zones, ensuring its adaptability to meet the diverse needs of its dynamic workforce.

Understanding that innovation thrives in diverse settings, RSS has meticulously designed its new headquarters with versatility at the core. The design allows employees to choose their optimal working environment, be it amidst the vibrant atmosphere of communal worktables, the comfort of lounge areas, or the quietude of soundproof pods.

Each area is equipped with cutting-edge technology that seamlessly integrates into daily workflows, allowing teams to collaborate effortlessly, whether they are in the same room or scattered across the globe. High-speed internet, smart conferencing facilities, and real-time collaboration tools ensure that every team member stays connected and engaged.

So they have phones and wifi, got it.

Perhaps it’s cause for concern that firms are sinking all this money into off-campus service centers in other countries (see this prescient 2013 article: Are Some U.S. Companies Preparing to Trim Their Tax Department Fat?) but let’s not worry about that today.

EY’s Regional Operations embarks on a new era of integration and innovation with the opening of its modern office [EY]

The post EY’s New Shared Service Center in Sofia Isn’t as Plain as a Bulgarian Pin-Up appeared first on Going Concern.

Today EY released the results of its 2024 Human Risk in Cybersecurity Survey and Gen Z workers who use work-issued laptops or computers for their jobs are feeling not so great about their scam-detecting skills:

Gen Z is losing confidence in their ability to recognize phishing attempts — one of the most common and successful tactics of social engineering attacks — and is most likely to admit to opening a suspicious link. And now, with the power of AI-generated phishing emails, spotting malicious links and content is getting even harder. Although they are a digital-first generation, only 31% of Gen Z feel very confident identifying phishing attempts, marking an alarming nine percentage point drop from 40% in 2022, and 72% said they have opened an unfamiliar link that seemed suspicious at work, far higher than Millennials (51%), Gen X (36%) and Baby Boomers (26%).

The boomers are lying.

More than half of millennials and almost two-thirds of Gen Zers surveyed are worried they’ll get fired if they leave the company door open to a breach.

Nearly two-in-three Gen Z and Millennial workers are particularly fearful about repercussions surrounding cybersecurity, including 64% of Gen Z and 58% of Millennials who fear they would lose their job if they ever left their organization vulnerable to an attack. Younger generations are also more likely to not fully understand what their organization’s process is to report suspected cyber attacks, even though their organization has a process in place (39% Gen Z and 29% Millennials vs. 19% Gen X and 15% Baby Boomers).

Although the numbers seem to show Zoomers don’t have faith in their scam-avoiding skills, more of them feel knowledgeable about cybersecurity than the last time EY did this survey in 2022 (86% vs. 75%). EY says this points to “opportunities to better equip younger workers to turn this knowledge into confidence by investing in upskilling and training that caters to their unique experience as true digital natives.”

The only other figure of note from EY’s press release is this one:

A vast majority of employees (91%) say organizations should regularly update their training to keep pace with AI, especially as AI’s role evolves in cyber threats; but only 62% say their employer has made educating employees about responsible AI usage a priority.

New EY research reveals cybersecurity fears are on the rise among US workers, with a vast majority concerned about AI in cybersecurity [PR Newswire]

*by “hacked” they mean “compromised,” usually through the owner being bamboozled by a fake log-in or using recycled passwords.

The post Note to Partners: Make Sure Your Interns and Associates Know How to Avoid Sus Links and Phishing appeared first on Going Concern.

Stuart Gregory, EY UK & Ireland Managing Partner, Finance and Transformation, supposedly gave a presentation informing fellow partners that profit per partner could go down as much as 15 percent for this fiscal year ending June 30.

Last year, partner profits at EY took a hit for the first time in three years, dipping from £803,000 (approx. $999k USD) to £761,000 (~$947k USD). So if they take a 15 percent hit, they’re looking at £646,850 ($804,290.06 USD as of publication time).

EY UK reported revenue of £3.8 billion, double-digit growth, and a “third year of market leading growth in the UK” when they released their revenue press release last October.

Added Sky News to their report:

Insiders at the firm cautioned, however, that his comments did not amount to a firm profit forecast, and said that trading in the first part of its final quarter had been robust, with a strong pipeline of business over the next ten weeks.

EY reported combined global revenues of $49.4 billion for FY23, up from $45.4 billion the prior year. Of Big 4 firms, they’re usually second to report revenue after Deloitte some time in the late summer/early fall.

EY warns UK partners of potential profit slide [Sky News]

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In that article we focused on the work side of an independent report EY Oceania commissioned itself after a young auditor was found dead at the Sydney office on a Saturday in August 2022. 46% of the 4,500 current and former staff surveyed for the report reported that their health had been negatively affected as a result of long hours and overwork, two in five people were considering quitting, and 31% of people at EY were working 51 or more hours in a week, at least one week out of every four. Worse, approximately one in ten (11%) were working 61 or more hours in a week.

What we breezed right by was this nugget:

• 15% of people have experienced bullying, 10% indicated they had experienced sexual harassment, and 8% of people experienced racism.

Interestingly, 78 percent of staff surveyed said they believed the firm could make meaningful change in relation to sexual harassment, 74 percent in relation to racism, and 70 percent in relation to bullying. Only 31 percent said they were confident EY Oceania could change a culture of long work hours and overwork. The other 69 percent are clearly in denial.

Fast-forwarding to current day. Last month, Stuff of New Zealand wrote about the mysterious departure of EY New Zealand chair, partner, and business development leader Braden Dickson due to a “historical behavioral matter.” What exactly it was was anyone’s guess but Stuff did some digging around. This might offer a clue later:

A couple days after the initial report, Stuff followed up with “Departure of top EY boss exposes concerns over culture.” All of what’s mentioned below will sound familiar to anyone who’s ever done time at a Big 4 firm regardless of continent.

One former employee, who spoke on condition of anonymity because “the accounting world is small in New Zealand”, described sexist and homophobic comments making staff uncomfortable.

“I recall one of the audit partners [who Stuff has chosen not to name] … saying things like ‘nothing worse than a team of females when it’s that time of the month’, or he would joke about someone being gay.

“It doesn’t give you any comfort that you could raise an issue.”

Multiple former staff have described the impact of tolerance of workplace affairs.

“When you’re a 21 or 22-year-old and that stuff is blatantly in your face with no effort to hide it, it creates this atmosphere of ‘anything goes’.”

It would lead to tension between the company’s partners because some disapproved of others’ behaviour.

Multiple former employees have raised concerns about an excessive drinking culture, under which staff would begin drinking at 5pm on a Friday and continue until midnight before often heading into town, and then “drag yourself back in on Saturday or Sunday or possibly both”.

“You’d work long hours, then socialise with workmates, and that was your life,” said one. “People outside the ‘big four’ didn’t understand what was going on.”

The former staff who spoke to Stuff hadn’t heard Braden Dickson left but said she was “not surprised.”

Stuff‘s initial reporting brought more people out of the woodwork, current and former staff who seemed eager but afraid to speak up. They then found out about a senior employee — service line and position not mentioned in the article — who got promoted after a serious sexual harassment complaint against him. “‘Big Four’ accounting firm under fire over sexual harassment” discusses this and many, many more incidents experienced by current and former EY staff. Women, specifically:

Another senior executive who was the subject of at least two separate complaints also continued to be employed, while the women who made the complaints left the firm.

“It sends a pretty clear message that revenue is more important to the partner group than the safety of women,” said one, “and given how recent these examples are, the sincerity of EY’s intention to meaningfully implement the recommendations included in [the review] seems questionable.

“I think the men who behave like this know that they would be more likely to be managed out for not meeting their revenue targets than for sexually harassing a junior employee.”

“‘Big Four’ accounting firm under fire over sexual harassment,” Stuff March 30, 2024

“In order to preserve their own incomes the partners will overlook even the most serious of indiscretions committed by their peers, provided said peers are still bringing significant revenues to the firm,” said another former EY staff who talked to Stuff.

Still another person talked about a partner they said was “a widely known predator but nevertheless a protected species.”

“He is well known to push heavy nights on the drinks and then grope, kiss and make sexual advances and even lick the junior colleagues in his teams — all in front of stunned onlookers who are powerless to intervene and scared into silence.

“Ultimately, all the partners care about is the revenue he brings.”

One woman who also left the firm called making a complaint “scary” and said she had to “sign a piece of paper saying I couldn’t talk about it.”

“The process is slanted in favor of the perpetrator,” said still another ex-EYer who made her own complaint. “They make you feel like a piece of [shit], like you’re doing something to that person that might ruin their career. But there was no consequence for him. The women go through this horrible process and get nothing at the end. Not [in terms of] money, which I couldn’t care less about. Justice, or a sense of relief, or anything.” That might explain why more than nine in ten of people surveyed for the independent culture report agreed that they always feel safe in their workplace (94%) and that people behave in a respectful manner towards others (92%).

There’s more if you choose to read the Stuff piece. They haven’t outright said Dickson departed the firm due to the same behavior mentioned in the article, only opened the floor to a discussion about culture and partners abusing their power to get away with appalling behavior as long as they’re bringing in clients.

The post EY Oceania’s Appalling Culture Is Back in the News With Gruesome New Details appeared first on Going Concern.

“We are very pleased about the planned addition of Carmine to our Board given his demonstrated record of championing innovation, extensive experience advising regulated financial companies, and keen understanding of what it takes for global companies to succeed,” said Alex Chriss, President and CEO, PayPal. “If appointed, Carmine will be helpful in sharing his expertise in driving transformation and profitable growth in markets around the world to help us revolutionize commerce globally.”

We implore you, just one time can you use actual language human beings use in these press releases? Pretty please?

The post PayPal Wants to Snap Up Carmine Di Sibio When He Leaves EY This Summer appeared first on Going Concern.

In his new role, Smith will be responsible for leading 14,000 people in FSO, almost six times as many people as he’s responsible for herding now as managing partner of tax.

The press release is the usual pap.

“I am proud to announce Shawn as my successor in FSO. Shawn is a highly seasoned leader with deep financial services market expertise,” Truncale said. “His innovative thinking and focus on the future, passion for clients, and commitment to next-gen talent development make him a strong leader who will continue to build on the strength and success of EY and FSO.”

“Now more than ever, financial services companies need a trusted partner to assist them in navigating unprecedented challenges and opportunities. From building consumer trust, making strategic investments in new technology like AI, to upskilling workforces and creating a more inclusive industry, FSO is providing the strategic council that helps businesses and economies all over the world prosper,” Smith is quoted as saying even though no one actually talks like this. “I am honored to be stepping into the role of Americas FSO Leader and excited to work with this exceptional team as we partner with our clients in defining and achieving their ambitions.”

EY names Shawn Smith as Americas FSO Leader [EY]

The post EY Taps a Loyal Soldier For the Next FSO Leader appeared first on Going Concern.

Thankfully people with big mouths regularly speak to Financial Times which is how we now know about a survey in EY’s strategy and transactions business that accuses leadership of being as transparent as a lead wall. Staff still around after the last round of cuts used words like “shocked,” “defeated,” and “insecure” to describe how they feel after watching their colleagues get culled like unnamed tributes from a distant district.

FT:

Staff in EY’s UK deals business have hit out at the company’s management for the way recent job cuts were handled, saying “trust is broken” and that employees feel “deflated” as sales in the department slump.

In a survey, employees at a division of EY’s strategy and transactions business criticised bosses for a lack of transparency and for allegedly misleading comments about a recent redundancy round dubbed “Project Century”, according to an internal presentation seen by the Financial Times.

Some staff accused managers of using messaging that lacked transparency, saying they were told that jobs were not “currently” at risk before the cuts were announced.

One respondent said: “Trust is broken and as soon as the market improves I would [sic] jump ship.” Another said: “Still in shock, lack of transparency resulting in [a] lack of trust, the floor looks disconnected.”

Net revenues for deals are down about seven percent between the beginning of EY’s fiscal year in July and this past January compared to the year prior and gross margins have dropped almost 14 percent per FT per what they saw in the above-mentioned presentation. In the 12 months to EY’s FY23 year end in June 2023, deals revenues were up eight percent to approximately £635 million (~$811 million USD). Worldwide, EY’s consulting business saw 21.6% growth between 2022 and 2023 for $16.1 billion of the $45.5 billion global revenue take.

“This was an informal poll completed by 70 people, or 0.3 per cent of our UK workforce,” EY told FT. Oh, well, in that case NBD then.

We included a link to the FT story in the Monday Morning Accounting News Brief yesterday and received this note from a reader (hey, reader):

I was part of EY government practice till they laid me off last September because my EY partner lost the federal client. I’ve heard rumors about other EY government contracts. Low morale at EY is far beyond the EY strategy practice.

When PwC Canada sneakily laid off several dozen people last year we heard similar sentiment from an employee who watched their colleagues quietly disappear. “A coworker I knew very well was terminated from his position recently. However, there was no communication from the company regarding the situation or the rationale behind the let-go,” they wrote. “The rest of the team continued to act as if everything was normal. This left us uneasy, unsure of who might be affected next. It felt as though we were regarded as disposable resources, easily discarded during economic downturns.

“I must express that the Canadian PwC leadership lacks empathy and transparency in handling layoffs, especially when compared to many other prominent companies in Canada.”

The job market may suck right now and consultants may be reluctant to quit because of it but people remember being treated like this when things are bad.

The post It Just So Happens Firing People Isn’t Good For Morale appeared first on Going Concern.

One post was this: In Honor of International Women’s Day, Let’s Recall Some Important Rules For Women In the Workplace. The “important rules” were bullshit from that sexist training seminar EY got in trouble for some years ago. Better known as the origin of the “waffles and pancakes” joke (attendees were told that “women’s brains absorb information like pancakes soak up syrup so it’s hard for them to focus” whereas men’s brains are like waffles and all the knowledge pools in all the books and crannies).

The 30-some leaders who attended the seminar — all of whom were women — were given a score sheet to rank themselves on feminine and masculine qualities. “Childlike,” ugh.

But there’s another post that I completely forgot about because it was ten years ago and I used to drink a lot at work back then: EY Got a Bunch of Old White Guys to Talk About Women in the Workplace

In that post, EY tweeted this:

Top tips from #EY’s male leaders on how to make the gender mix work #BBWW http://t.co/NcZDDKdW4w

— EY (@EYnews) July 1, 2014

Which led to the below PDF. EY’s link is dead now, as so many ancient links across the internet are, but we uploaded the PDF to Scribd at the time so here you go:

We’re happy to report EY is not pushing out male-centered content for this International Women’s Day.

Inclusion today. Inclusion every day.

Today we spotlight the stories of just a few of the remarkable women at EY who have been sharing their social equity experiences. https://t.co/F6I27Amm9N

Happy International Women’s Day #IWD2024 #UpliftSocialEquity pic.twitter.com/HCptwRTmEU

— EY (@EYnews) March 8, 2024

Happy International Women’s Day!

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While the consensus used to be that quitting during busy season makes you a tremendous piece of shit without exception, attitudes toward bailing at the worst possible time have changed over the years. It’s still frowned upon and considered rude but perhaps not the permanent reputation killer it once was. However, any would-be jumpers should know the colleagues they leave behind will continue to disparage them behind their back for years to come. YEARS. And you probably won’t be invited back.

Sometimes it’s worth it to stick it out. This applies strictly to high performers who care about these sorts of things and like to leave the door cracked open in case they want to return at some point. Like Marjorie Rollinson, the newest IRS hire.

Senate Finance Committee Chair Ron Wyden (D-OR) spoke very highly of her in this statement just before her confirmation as IRS chief legal counsel last Thursday:

First off, Ms. Rollinson has the right experience necessary to do this job at a high level. She has decades of tax and management experience, both in the private sector and in public service. In fact, after many years in private practice, she spent several years of the last decade in the IRS Office of Chief Counsel.

First she served as Technical Deputy Associate Chief Counsel and then as Associate Chief Counsel, both times on international tax issues. And trust me, you don’t earn those job titles without real expertise in tax law, down to the finest details that leave most of us scratching our heads. All this experience is a big reason why she got bipartisan support in the Finance Committee.

FIRST first she served a 26-year sentence at EY, exiting in 2013 as a principal. From there she went to the IRS, did five years, and returned to EY for a short stint of three years.

And now she’s back at the IRS.

“Marjorie Rollinson is an excellent pick for this job. She’s experienced, she’s highly qualified and she’s got the technical expertise. She’ll also be the first woman to serve in this role,” said Wyden in his remarks.

“The Treasury Department is pleased to see the Senate confirm Marjorie Rollinson to the key post of IRS Chief Counsel with bipartisan support,” said Treasury spokesperson Haris Talwar to Federal Times. “With decades of experience in the private and public sectors, including at the IRS, she will hit the ground running. As IRS Chief Counsel, Marjorie will play a critical role in ensuring the fair and effective implementation of our tax laws as well as in our efforts to modernize the IRS over the next several years.”

Be funny if PwC poaches her from the IRS eh?

The post The New Chief Legal Counsel at the IRS Really Sucks at Burning Bridges appeared first on Going Concern.

Of note, and barely mentioned in the press release, is Edwards’ prior gig:

Edwards joins Crowe from EY, where he began his career and most recently served as Americas, Consumer Industry Supply Chain Leader. In addition to his work with EY, he also served as a senior leader of supply chain improvement with General Mills. Edwards received his BBA from the University of Notre Dame and an MBA from Indiana University.

His LinkedIn is conveniently linked in the announcement:

Wow, that’s a direct yoink from EY. Nice.

“I am thrilled to join Crowe, a firm with an impeccable reputation built on culture and values,” Edwards allegedly said. “Every interaction I’ve had with people in the firm has demonstrated that the reputation they’ve earned is well founded and very real.”

Crowe LLP names Mike Edwards new managing principal of its consulting business [PR Newswire]

The post Crowe Poaches Someone From EY and Issues a Press Release appeared first on Going Concern.

Bracknell News:

Accountancy firm EY is responsible for carrying out the council’s annual external audits – examinations of its finances. But after long delays, EY announced in February that it will leave two years’ audit reports incomplete.

One angry councillor, Mike Smith, accused the firm of ‘downing tools and walking away’ from the job. He added: “Clearly something is catastrophically wrong.”

By law, every local authority has to have its finances audited by an external accountancy firm. But delays beginning during the coronavirus pandemic mean there is now a huge national backlog leaving years upon years’ worth of audits still to be completed.

The 2020-2021 audit was finally completed last year for which EY charged an extra £60,654 (about $77,000 USD) because the firm hadn’t gotten timely information on infrastructure assets and pension funds. The council complained about this, naturally.

The pension fund is managed by the neighboring Royal Borough of Windsor and Maidenhead and they, too, are having issues with timely information. Deloitte is still trying to finish their 2020-2021 audit and about ready to dip out. “If audits are not finished by the backstop date [in September], then the audit will be stopped, and the opinion modified on the basis that the work is not complete,” said Deloitte partner Jonathan Gooding at a meeting of the RBWM audit and governance committee just last week.

What’s funny is EY said they can’t complete the delayed audits for Wokingham now because the people who would do them are doing other things. Yeah, like other terrible government audits.

Councillor Stephen Newton asked EY to reconsider – pointing out that the government has recently given firms extra time to complete delayed audits.

But Janet Dawson from EY said the firm had already allocated its staff to other jobs and couldn’t move them back.

She said EY had expected to be able to complete the audits before Christmas, but hadn’t received sufficient information on how council-owned properties had been valuated. The Council disagrees, arguing the information it has given should be enough.

The firm will issue a disclaimer of opinion for the 2021-22 and 2022-23 audits it was unable to receive sufficient and appropriate evidence for.

While not cutting as deep as the accountant shortage here in the US (yet), the UK is dealing with its own dearth of accounting professionals, particularly in certain regions that are less attractive to young recruits fresh out of college.

In December 2023, audit watchdog Financial Reporting Council expressed “disappointment with the unacceptable delays in financial reporting and audit in the local government sector” across the country as it released a report that noted more than 900 incomplete local government audits in England at the end of September 2023. Because of this, the FRC’s ability to inspect higher risk audits had been severely restricted.

The FRC inspected just 10 audits this year – 6 NHS [National Health Service] and only 4 in local government – compared to its usual 20. With most local government audits incomplete, often for multiple years, the FRC said it had to significantly reduce inspections to allow audit firms to focus resources on clearing the backlog.

So basically the whole thing is buggered and EY was probably smart to walk away.

The post EY Gave a Hilarious Excuse For Walking Away From This Awful Municipal Audit Client appeared first on Going Concern.

As you may have heard, the United States Marine Corps recently received an unmodified opinion from EY. In any other sector this might prompt a hearty “who cares?” but for the Marines it’s a huge deal, the first of its kind for any branch of the military. And for real this time (we’ll get to that in a minute).

As you can imagine, the two-year process was no easy feat. Wrote Military.com of prior attempts:

In 2017, the Marine Corps became the first military service within the Defense Department to undergo a full financial audit, which at the time meant sifting through more than 4,300 sample items and 30,000 documents. Verifying similar items in a 2012 limited audit included a trip to Afghanistan. Ultimately, the service failed to pass either previous attempt.

This time around it was no less daunting:

In 2023, it meant going to more than 70 sites worldwide to look at thousands of real property assets; more than a million other operating assets, such as vehicle spare parts and weapons and communications systems; and more than 24 million rounds of ammunition — sometimes within Army and Navy stockpiles where the Marine Corps had property stored.

The ammo was just one checkbox among assets of $46.3 billion. “We had to have documentation for that asset, in addition to the auditors having to view those assets and count those assets,” said Gregory Koval, the assistant deputy commandant for resources, to Military.com in an interview. “So, not just numbers, not just systems, not just data, but they were actually evaluating what we have on hand, what we have on site, and if something was not there, we had to provide them with information to show where it was.”

From the DoD OIG’s press release:

The auditors considered the material weaknesses in determining the type and extent of audit procedures performed. The auditors used a substantive-based testing approach throughout FY 2022 and FY 2023. A substantive-based approach means that the auditors had to increase the amount of testing necessary because they were unable to rely solely on USMC’s internal control over financial transactions. This included the auditors examining specific transactions, account balances, and other adjustments made while preparing financial statements, as well as physically counting military equipment, ammunition, and other property – all designed to result in adequate audit evidence.

Inspector General Storch noted, “The two-year audit cycle of the U.S. Marine Corps was unprecedented for the Department of Defense. The U.S. Marine Corps staff, EY, and DoD OIG auditors performed a tremendous amount of work to complete the audit. I encourage the U.S. Marine Corps to continue the momentum of this unmodified (clean) opinion and focus on improving its internal controls to remediate the identified material weaknesses. These efforts will be important for the U.S. Marine Corps to improve audit efficiency and establish sustained financial reporting and operational readiness.”

If this announcement sounds familiar, it’s because the Marines were the first military branch to “pass” an audit before. After a big celebration in 2014 — then-Secretary of Defense Chuck Hagel famously told revelers at a Pentagon Hall of Heroes party “I know that it might seem a bit unusual to be in the Hall of Heroes to honor a bookkeeping accomplishment, but, damn, this is an accomplishment” — the opinion was rescinded and then promptly ragged on as just more piss poor work from Grant Thornton. Full story on that here:

This time the Marines contracted a real firm and here we are. Although the opinion is good, EY identified seven material weaknesses related to internal controls over financial reporting within the USMC so they have some homework to do. But overall it seems they’ve done the impossible. Impossible for the Pentagon anyway.

The post EY Gives the Marine Corps the Thing Grant Thornton Couldn’t appeared first on Going Concern.

The firm reported one instance of potential non-compliance with PCAOB Rule 3500T regarding firm personnel negotiating prospective employment with an audit client. This instance involved a member of an engagement team engaging in substantive employment discussions with, and accepting an offer of employment from, the audit client for an accounting role.

2022 PCAOB Inspection of Ernst & Young LLP (Headquartered in Toronto, Canada), Part I.C Independence [PDF]

The section on auditor independence is new to PCAOB inspection reports as of last year and has a lot of potential for LOLs. Everyone better review the rules now because we all know the auditors of auditors are looking for any petty thing they can ding firms for these days.

The post Shout-Out This Person Whose Jumping Ship Made It Into EY’s PCAOB Inspection Report appeared first on Going Concern.

Her comments are in response to recent reports that EY UK partners have been analyzing “anonymized ‘turnstile access’ data” and may be tying performance ratings to non-anonymized badge swipes.

Khaddage Bou-Diab believes the methods EY has adopted to encourage people back to the office are symptomatic of a wider cultural issue in global business.

Khaddage Bou-Diab said: “Right now, through their attendance monitoring, EY is showcasing exactly why people don’t want to return to the office. At the end of the day, monitoring turnstile data doesn’t create an environment employees would gravitate towards – and, because of it, these large firms, like EY, risk losing staff for good.”

She goes on to say that the work from home policy has “spiraled out of control” so she’s not exactly a champion of remote work here. “Given the knock-on effects of empty offices, namely decreased cross-department collaboration, productivity, innovation, and execution of deliverables, the C-suite needs to now take hold of the situation,” she said. Isn’t fostering an environment of paranoia and distrust the most effective way to achieve that?

This is not an HR problem, she said, rather it’s on leadership to set the tone. “It’s in their job description to create an organisation their employees want to be a part of,” she says of the C-suite. “But atmospheres dominated by control don’t quite fit that – they push staff into survival mode.”

Former EY leader warns against office attendance monitoring [Accountancy Today]

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Q. We’ve seen high-profile cases of AI-related layoffs. How do you protect employees as you roll out AI?

It’s the question we get all the time from our people. First and foremost, I say this: The robots are not coming for your jobs, they’re coming for your tasks.

And in most cases, they’re coming for tasks that you don’t want to do anyway. So much of the automation is for mundane, routine work that people don’t want to make the time for. IMF did a piece of research that found 60% of jobs in advanced economies will be impacted by AI. But keep in mind that it’s rarely entire functions or entire jobs; it’s pieces of jobs.

5 million applications to 140,000 hires: Inside EY’s billion-dollar investment in human-centric AI [HR Grapevine]

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EY piled more than $700mn of extra debt on to its global operating business to deal with the costs of the failed plan to spin off its consulting arm, according to newly filed accounts.

The figures, made public at the UK’s Companies House over the weekend, detail the financial impact of Project Everest, which collapsed in April after infighting at the Big Four accounting firm.

Shortly after the ambitious plan to split audit and consulting arms into their own businesses to free the firm from those annoying independence rules fell apart, it was reported by Wall Street Journal that EY planned to use “a combination of bank borrowing and accounting maneuvers to ensure that the dead-deal costs have ‘minimal’ impact on partner earnings.” And that wasn’t the only accounting magic EY leadership was doing to soothe partners worried about their payouts according to that WSJ piece:

EY put about $600 million into Everest before it fell apart — half of that was internal costs — and leadership said the firm saved about $400 million along the way that would have otherwise been spent on projects that were deferred while they worked out the deal. EY also intends to reduce the impact of the costs by writing them down over several years, rather than take them as a single hit to earnings, said WSJ.

What we didn’t know back then that we do know now is that, per FT, the firm’s debt increased 265.43% last year:

The firm’s borrowing soared to $983mn at June 30, 2023, up from $269mn a year earlier, as it expanded an existing floating rate credit facility and took out a second. The extra debt is designed to smooth the costs of Project Everest across more than one financial year.

That’s $714,000,000 for the mathletes counting along at home.

“It is common for a $50bn global organisation such as EY to maintain a modest financing facility on our balance sheet,” said the firm in a statement. “The financing facility has been utilized to support previous investments in new technology, managing cash flow and growing specific practices. The debt facility is being managed in line with our agreed financial position. The accounts for EYGS are signed off by our external auditor.”

_{*49.4 billion global organization.}

“As already communicated to our partners the costs incurred during Project Everest will be almost entirely paid down by July 1, 2024. There is no change to this position.”

You can see all the firm’s recent Companies House filings, including this one dated February 9, here.

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Once again EY is losing a client because someone over there just couldn’t resist banging them which leads us to wonder out loud: what is it with EY and hooking up with clients?

The Telegraph on why EY dropped UK grocery chain Asda:

EY has quit as auditor to Asda amid one of its senior partners starting a romantic relationship with billionaire chief executive Mohsin Issa, The Telegraph can reveal.

EY has confirmed that the partner in question has left the firm, and that she had never carried out any work relating to Asda’s audit. Filings show she resigned as a partner the day after EY resigned as Asda’s auditor. The firm said its exit was related to a restructure of the Issas’ businesses.

Via lawyers, the EY partner herself said she had done no work for Asda and had complied with all relevant policies. She said the firm had told her she had made all appropriate disclosures to its ethics and compliance teams throughout her career.

Well at least it wasn’t someone working directly with the client this time. In 2014, real estate investment trust Ventas had to fire EY when the company discovered an inappropriate relationship between an audit partner and the company’s former chief accounting officer and controller. That’s one person who held both titles, not a polyamory situation. Wouldn’t that have been fun! Would the firm catch a 2x multiplier bonus on independence violation penalties from the SEC if a single auditor is hooking up with two people in the client’s accounting department?

In 2016, EY agreed to pay the SEC $9.3 million to settle charges that two of the firm’s auditors got “too close to their clients on a personal level.” One of these was the Ventas situation, the other was a partner who really loved sports tasked with winning an unhappy client back by “developing” and “mending” EY’s relationship (internally, the firm said the client was a “troubled account”). The latter went on to incur approximately $109,000 in entertainment-related expenses—meals, sports tickets, and related travel and lodging—which he billed to the client’s charge code. As far as we know the sports-loving partner was merely a BFF to the client’s CFO and not banging him. Though they did have a lot of sleepovers and vacations together.

From an SEC press release dated Sept. 19, 2016 that lumps together Ventas and the other partner in one juicy $9.3 million settlement:

SEC investigations found that the senior partner on an engagement team for the audit of a New York-based public company maintained an improperly close friendship with its chief financial officer, and a different partner serving on an engagement team for the audit of another public company was romantically involved with its chief accounting officer. Ernst & Young misrepresented in audit reports issued with the companies’ financial statements that it maintained its independence throughout these audits.

“These are the first SEC enforcement actions for auditor independence failures due to close personal relationships between auditors and client personnel,” said Andrew J. Ceresney, Director of the SEC’s Division of Enforcement, in that press release. “Ernst & Young did not do enough to detect or prevent these partners from getting too close to their clients and compromising their roles as independent auditors.”

Don’t shit where you eat!

The post Why Are EY Clients So Stupid Sexy? appeared first on Going Concern.

FT:

EY has started monitoring UK employees’ office attendance, with swipe card entry data being circulated at senior levels of the firm as some of its staff flout its hybrid working guidelines.

Some partners at the Big Four firm have been shown anonymised “turnstile access” data in recent weeks showing how frequently staff are attending its offices, people at the firm told the Financial Times.

One person said the statistics would be used in parts of the business as a “carrot rather than a stick” to influence teams to comply with EY’s hybrid working guidelines. They added that at least 50 per cent of some teams were failing to meet its policy of being in the office at least two days a week.

Once again I would like to extend a huge thanks to blabbermouths who snitch on their firm to the media. You guys are great and we love you.

Let’s add this bit:

Some partners at EY, which employs around 21,000 people in the UK, were also shown analysis correlating office attendance and mid-year performance ratings, one person said.

RIP carrot, we hardly knew ye.

We wrote about this “carrot vs. stick” issue back in April of 2023, just a month or so before Big 4 firms started reversing their position on return-to-office. This is from “While Other Industries Have Turned to the Stick, Accounting Firms Continue to Use the Carrot to Encourage RTO” published April 6, 2023:

In a recent Employee Benefits News piece, Frank Giampietro, chief well-being officer at EY, says that his firm continues to embrace the carrot. Though as the red hot job market cools off, we are beginning to see hints of firms contemplating the stick.

At EY, they realized that employee obligations at home were preventing some people from coming into the office. “We have a multigenerational workforce, and when we went out and talked to our folks, we discovered there was a wide variety of things getting in the way, some of which were financial. We had to remove the barriers and create opportunity,” he said. So the firm added $800 to the existing $1000 well-being fund that reimburses things like childcare, pet care, and commuting. This is the point in the article where the parents laugh heartily at the thought of $800 making even the tiniest difference in the daycare bill.

The message behind this is that great things happen when people are together in person, and the company is invested in making that a reality for employees, says Giampietro. And it’s paid off: The company saw a 150% increase in employees returning to the office in just over a year.

Mind you when we wrote the above, the Great Resignation was just starting to cool off and firms were still a bit freaked out about the whole lack of talent thing. Despite the huge number of accountant shortage articles you’ve read (or skipped over) since then, firms started complaining about low turnover last year which meant overcapacity which meant layoffs. Almost 8,000 layoffs at Big 4 and mid-tier firms in 2023 actually, and that’s only the ones that were officially announced.

A week after the carrot/stick article went up, rumors started buzzing about PwC — a firm that bragged loudly about embracing remote and hybrid work forever in 2021 — pushing a soft (and generous, TBF) return-to-office. That rumor turned out to be somewhat true. Deloitte then jumped on the RTO bandwagon too. So far no one is expecting every team in the office every day but who knows what the next year could bring.

In October, EY Americas Chief Some Bullshit Officer Frank Giampietro told HR Brew EY expects most staff to spend 40% and 60% of their time working “together in person,” be that in the office or at the client site. So yeah, the guy talking about the carrot in April was suggesting they might have to bust out the stick by October.

If you haven’t figured it out by now, “I’ll quit if you make me come into the office” is no longer a threat. They want you to quit. In some cases, they’re asking you to quit so they don’t have to fire you.

Of course, they can’t fire everybody. Hold the line, pajama gang.

The post EY Is Monitoring Badge Swipes and It Isn’t Looking Good For Return-to-Office appeared first on Going Concern.

EY has announced plans to grow its Global Delivery Services (GDS) staff in Manila by 50 percent in the next two years, bringing the total from 5,000 to 7,500. These are the offshore staff working directly with EY member firms, half of whom do assurance work while the other half focus on tax and consulting.

Malaya Business Insight:

In a press conference, Andrea Catte, EY GDS Philippines tax co-leader and EY Asia-Pacific & EY Global Compliance and Reporting ( lead, said the company will boost staffing to 7,500 from the current 5,000.

Catte cited the English proficiency of workers as well as the rich talent pool of accounting and business graduates as an advantage of the Philippines, considered the second largest in EY GDS network globally after India.

Catte said EY GDS is focusing on technology including AI as well as in equipping the company’s workers with the right skills to remain competitive.

513 miles from Manila to the south, EY is also expanding its cyber operation in Cebu.

“Cebu is an excellent tech hub in the Philippines and is key to the growth strategy of EY GDS in the cybersecurity domain. We are truly excited to grow our presence in Cebu as well as in Manila and build upon our cyber skills and talents, further strengthening our services to support EY clients around the world,” said Maria Elizabeth “Maez” de Guzman, EY GDS Philippines Cybersecurity Leader.

According to De Guzman, EY GDS’ talent expansion plans are in response to the growing need for augmenting its pool of cybersecurity personnel, given the increasing occurrence of data breaches recently in the Philippines involving major national institutions.

According to the Philippine Daily Inquirer, EY’s Philippines operation has grown from 25 staff in 2015 to 5,000 as of 2023. The Manila GDS center opened in September 2019 followed by the Cebu City hub in October 2023. There are no current plans to open any new GDS centers in the Philippines that we know of.

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In a lawsuit filed in Los Angeles superior court just before the new year, a woman once employed in Core Business Services at EY is suing the firm, CBRE, and various affiliated persons like managers and supervisors for a whole grab bag of things from race/sex discrimination to retaliation, wrongful termination, harassment, and failure to accommodate physical disability after she suffered a stroke in 2017.

Specifically, these ten things:

• (1) Race/Gender Discrimination- (Violation of California Gov. Code §12941 et seq)
• (2) Retaliation in Violation of FEHA
• (3) Retaliation in Violation of LaborCode § 1102.5 et seq.
• (4) Harassment-Violation of Gov.Code §12940(k) et seq.
• (5) Failure to Take All Reasonable Steps Necessary to Prevent Discrimination from Occurring (California Government Code §12940(k))
• (6) Wrongful Termination/Constructive Termination in violation of Public Policy and FEHA
• (7) Age Discrimination (Gov. Code§12940)
• (8) Violation of Business &Professions Code §17200 et seq.
• (9) Physical Disability Discrimination (California Gov. Code §12940(a) etseq.);
• (10) Failure To Make Reasonable Accommodation For Physical Disability (California Gov. Code §12940(m));

The plaintiff is a 57-year-old African American female who, according to her LinkedIn, had been with EY since January 1999. EY and CBRE have some arrangement for workplace services I’m not entirely clear on, if someone could do me a solid and enlighten me it would be appreciated.

The lawsuit says plaintiff Davanne McCrady “was acting as a loyal and honest employee, who acting out of integrity and values, “blew the whistle” on defendants discrimination and harassment of employees, fraudulent misconduct, fraud on consumers, safety violations and violations of California Labor law.” She alleges her managers and supervisors, “including but not limited to Bryan Curelle and Jamre Walls, in their capacity as supervisors and managing agents of defendants, routinely harassed, retaliated against and discriminated against” her based on her “race, gender, sex and age based characteristics, and based upon age and physical disability.”

In 2017, McCrady suffered a “work related injury, resulting in her suffering a stroke.” She took a month of medical leave and returned to work with “residual permanent medical conditions” which were accommodated from September 2017-January 2021, according to the complaint. But then…

Plaintiff’s managers and direct supervisors advised Plaintiff they would no longer make reasonable accommodations for her medical disabilities, and began harassing and discriminating against Plaintiff based on Plaintiff’s age and physical disability. This included directly advising Plaintiff on multiple occasions that she was ‘too old’ and ‘too sick’ to continue working in her position.

The complaint accuses managers/supervisors Bryan Curelle and Jamre Walls of making disparaging comments such as “repeatedly advising Plaintiff that her job duties should include ‘cleaning tasks’ and that ‘she should be comfortable with such work because she is African American’ and also because she is female.”

Starting around January 2021, managers and direct supervisors advised Plaintiff that they “would no longer make reasonable accommodations for her medical disabilities and began harassing and discriminating against Plaintiff based on Plaintiff’s age and physical disability.” Specifically, Plaintiff alleges that they directly told Plaintiff that she was “too old” and “too sick” to continue working.

And:

“Derogatory comments directed at Plaintiff related to Plaintiff’s characteristics as an African American female”

“Calling Plaintiff an ‘incompetent woman'”

“Repeatedly making obscene, lewd, and derogatory comments about the anatomy of female employees”

In January 2021 she complained “to corporate agents and officers, including but not limited to corporate officers and executives, concerning the unlawful harassment, retaliation and discrimination” directed at her. According to the complaint, the defendants “intentionally ignored” her complaints and “undertook no efforts to prevent further and continuing discrimination and harassment directed at her in the workplace.

She names Bryan and Jamre again and suggests they conspired to make her do things she shouldn’t have been doing:

Furthermore, between January, 2021 and January 3, 2022, Plaintiff’s managers and supervisors, including but not limited to Bryan Curelle and Jamre Walls, in their capacity as managing agents of defendants, retaliated against Plaintiff for complaining about the harassment and discrimination by demoting Plaintiff and forcing Plaintiff to perform unsafe tasks outside of her job description, and in disregard for her physical disabilities, solely to harm Plaintiff.

This went on for a year until her employment was terminated on January 3, 2022. She alleges this was done “without cause or justification” and in retaliation for her complaints about harassment, discrimination, and unlawful pay practices in the workplace.

Full complaint for your reading pleasure:

Davanne McCrady lawsuit aga… by Adrienne Gonzalez

The post Former Longtime Core Business Services Staff Is Suing EY for All the Discriminations appeared first on Going Concern.

WSJ:

EY began to inform affected partners last week, with notifications expected to continue this week, the people said. Some U.S. partners tend to be cut annually over unsatisfactory performance, but the cuts under way are larger than usual, the people said.

The accounting firm said the U.S. layoffs affect a “limited number of people.” It also deferred start dates for some new hires in certain areas, a spokesman for the U.S. unit said. “These decisions have been thoughtfully made with respect and fairness for all of our people and the future of our business,” the spokesman said. “EY will offer comprehensive support to those who are affected.”

“As part of our long-term planning, EY has been transforming our business to focus on the areas where our clients have the greatest needs,” the spokesman added.

“EY Is Laying Off U.S. Partners Amid Tough Economic Conditions,” WSJ December 12, 2023

It’s been a rough year for EY. First, and most significant, the dream of tens of billions of post-split consulting bucks came crashing down when infighting killed Project Everest in April. This left a $500-600 million hole in EY’s pocket, a hole the firm told partners would be plugged through “a combination of bank borrowing and accounting maneuvers to ensure that the dead-deal costs have ‘minimal’ impact on partner earnings” (“EY Confronts Slowing Growth After Breakup Deal Fails,” WSJ April 20, 2023).

Then, and totally unrelated to Everest even though it happened literally right after it failed, the EY US laid off 3,000 people, the largest number of layoffs we’ve seen from any Big 4 firm in recent memory. Then came deferred start dates, some of those have been delayed a second time and pushed back to August 2024 (“Your early experience in the practice is important for setting you on a strong trajectory, and we believe that you’ll have a better opportunity to grow, develop and progress in the practice with an August 2024 start date,” said the firm in an email to new hires in November).

In September, EY reported global revenue of $49.4 billion which puts them a whole $15.5 billion behind #1 Deloitte.

And now they’re letting partners go. Right before Christmas. Rough! Godspeed to the affected, there are surely greener and less flaming bags of dog shitty pastures out there for all of you.

The post This Is Not a Drill: EY Is Laying Off Partners Now appeared first on Going Concern.

A few months later EY told its people that bonus pools were shrinking, and that’s if people get a bonus at all as the “people who are even getting a bonus this year” pool was also shrunk. It could be worse than a smaller bonus though, you could have been one of the 150 staff axed from the 2,300 people in financial services consulting.

Well, bad news. Another 150 people had to go. Per Financial Times on Sunday:

The cuts will affect staff in EY’s legal arm, as well as employees at EY-Parthenon, its strategy and transactions advisory business.

The firm is also in the process of shutting EY Riverview Law, the Manchester-based legal services business it bought in 2018, which will result in the majority of its employees being laid off, the people said.

Laid off three weeks before Christmas, brutal.

EY to cut a further 150 UK jobs as Big Four firms grapple with waning demand [Financial Times]

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The Big Four firm told recent graduates who had originally expected to start work this autumn that some of them would now not be required until July or August 2024, almost a year late.

The decision was “based on emerging business conditions and our assessment of our business needs”, according to an email on Tuesday from EY’s campus recruiting department to a recruit in the EY-Parthenon business, which was seen by the Financial Times.

Get a load of this crap:

Its email this week said it was accelerating start dates for some, but further deferring start dates for others. “Your early experience in the practice is important for setting you on a strong trajectory, and we believe that you’ll have a better opportunity to grow, develop and progress in the practice with a July start date,” it told disappointed recruits.

EY’s fiscal year ends on June 30, perhaps they want to see how the year shakes out before taking on too many new people.

Here’s the full text of the email the firm sent out yesterday (lifted from this thread):

We hope this email finds you well. We want to provide an update on your start date with EY. After careful consideration of the current economic environment and our business needs, we are deferring the majority of incoming January/February/March hires to August. In light of this decision, your start date will now be in August. Your early experience in the practice is important for setting you on a strong trajectory, and we believe that you’ll have a better opportunity to grow, develop and progress in the practice with an August 2024 start date.

In December we will be issuing a letter reflecting this modification to the start date listed in your offer letter.

As a result of this delay, we will be providing you with an additional deferral stipend of $7,000 less applicable taxes, payable in early 2024.

We understand this change may be disappointing. On or before December 8th, a member of our team will follow up with you to discuss further.

It looks like stipends are all over the place, FT said some people were offered $5,000, others $6,000.

When EY delayed start dates the first time earlier this year they also offered stipends. Incoming hires were told of start date delays in April, the same month Project Everest imploded and EY fired 3,000 people. So these delayed offers would have been made when Everest was still in play and leadership was dreaming of comically oversized burlap sacks with dollar signs drawn on them.

Anyone with an offer from EY would be wise not to sit around waiting for August. Fool me once, shame on you. Fool me twice, blah blah.

The post EY’s Pushing Start Dates Back…Again appeared first on Going Concern.

Just two hours ago, EY announced the firm has selected Janet Truncale to be EY Global Chair and CEO, effective July 1, 2024. She of course steps into the highly polished shoes of Carmine Di Sibio who sadly only made it a single term. Janet currently serves as Regional Managing Partner, EY Americas Financial Services Organization (FSO).

Did Deloitte’s communications team write this blurb? Let’s dial it back a little, you guys.

In this role she leads a diverse team of more than 14,000 professionals throughout the Americas. Janet works closely with EY clients to build a financial services industry in which financial institutions are trusted and flourish, customers’ financial goals are attainable, and the global economy is healthy, growing and secure.

Prior to her current position Janet was the Managing Partner for Americas FSO Assurance with a team about one-fourth the size of her existing one. 3,000 -> 14,000 -> 400,000. Nicely done climbing that ladder, ma’am (not sarcastic).

Outside of EY, Janet serves as the Board Chair for Women’s World Banking, a global non-profit devoted to giving more low-income women access to critical financial tools. She is also on the Board of Directors of UNICEF USA, and serves as a managing trustee for Liberty Science Center, a not-for-profit learning center dedicated to inspiring the next generation of scientists and engineers. Janet has received the Profiles in Diversity Journal Women Worth Watching Award and was named in the Crain’s New York Business Notable Women in Accounting and Consulting list (2019 and 2021).

Janet joined EY as an intern and received her BSE from The Wharton School of the University of Pennsylvania, and her MBA from Columbia University.

“Janet is an exceptional leader, with a strong foundation in serving clients across all EY’s businesses,” said Carmine Di Sibio or, more accurately, the people who handle EY press releases with his blessing. “She is a great choice to lead our organization through the next chapter of its history. I truly believe Janet will inspire EY people and partners through her strong emphasis on culture and her deep experience.”

And SHE said, “It will truly be an honor to lead this amazing organization. The work we do in creating opportunity for our people and clients, as well as our role in the capital markets defines EY as an organization, and I couldn’t be prouder to have the opportunity. I am inspired by the example Carmine has set, instilling an intent to be profession leaders, focusing on staying ahead of the curve in technology and most of all personifying EY values.”

Reactions, reflections on Carmine’s time at the helm, and well wishes for Janet are welcome in the comments. Be nice, please.

The post Rejoice! EY Has Elected a New Global CEO appeared first on Going Concern.

This from a press release on Friday:

EY was the subject of a Securities and Exchange Commission (SEC) order that included a number of professionals licensed as Texas CPAs who were found to have cheated on ethics exams and on a variety of other examinations required to maintain their Texas CPA licenses. The SEC had further determined that EY had withheld this misconduct from the SEC staff who were involved in the investigation.

“The action represents the Board’s message to all Texas licensees that the Board will not tolerate any form of professional misconduct,” said TSBPA Executive Director William Treacy.

That’s it. That’s the press release.

Earlier:

How Exactly Did EY Auditors Cheat on CPE Exams? Details From the SEC Order

The post The Texas Board of Accountancy Slapped EY With a Huge Fine appeared first on Going Concern.

46 percent of student respondents cited “career stability and comfortable lifestyle” as one of the top motivations to pursue a career in accounting. The ability to find solutions within numbers and data (25%), the opportunity to contribute to society (23%) and the chance to impact sustainability (21%) rounded out the list. Almost 8 in 10 accounting and STEM students surveyed believe an accounting career will deliver long-term value and 34 percent of the students see a career in accounting as a steppingstone to other leadership opportunities.

Great. That’s all great. Let’s talk about this part though. There are citations littered throughout the text in EY’s report, we’ll hit each of them as we go.

The CPA career path advances opportunities

In a survey by the Center for Audit Quality (CAQ) and Edge Research, 82% of undergraduate accounting majors and 74% of recent accounting graduates find value in the CPA exam, citing respect, career advancement and higher earning potential as the top motivators for obtaining CPA licensure

They’re talking about this CAQ survey: Increasing Diversity in the Accounting Profession Pipeline: Challenges and Opportunities. The one that contains this quote:

The EY survey report continues:

CPAs bring desirable skills to C-level executive roles. According to recent survey data shared by the Association of International Certified Professional Accountants and the Chartered Institute of Management Accountants, the top undergraduate major among CFOs was accounting. Additionally, of the 652 CFOs surveyed in that study, close to 45% were CPAs.

They’re now referring to this: Diversity continues to rise among CFOs and CEOs, survey shows in Journal of Accountancy (January 2022).

Next:

Yet the National Association of State Boards of Accountancy’s data indicates that the number of CPA exam takers fell by almost 50% between 1990 and 2021. [Ed. note: new CPA exam candidate data came out just before EY released this survey and surprise, it’s worse]

Another cite here. The More Things Change, the More They Stay the Same: Addressing the CPA Pipeline Crisis written by Rick Reisig, CPA and published on NASBA’s blog on March 14, 2023. Choice quote from his article:

Yes, like me, many of us obtained a CPA license prior to the 150-credit hour education requirement, and we’re doing “just fine.” We need to acknowledge that we expect much more from our staff when they come to us — particularly during their first year with the firm—than we ever did before. If there were ever a time we need our young staff to come to us with more education not less, it’s now. That’s what CPA Evolution is all about–providing the education and the skillsets not needed yesterday, or even today, but those that will be needed for tomorrow! How can relying on the experience earned “yesterday” be an effective replacement for the education necessary to prepare our staff for what will be needed tomorrow?

Then EY swings back around to the CAQ report:

However, according to CAQ research on increasing diversity in the accounting profession pipeline, many students have expressed that the cost and time needed to reach the 150 credit hours required for CPA licensure serve as a big obstacle.

For 52% of the non-accounting students, not being able to afford the 150-hour obligation was a reason for not choosing the profession. This concern was even higher among Black (62%) and Hispanic (69%) respondents.

Interestingly, in the EY survey it’s the executives who support alternate paths to CPA licensure more than the students. 87 percent of executives surveyed believe the profession would benefit from alternate pathways to earning a CPA.

Said Becky Burke, EY Americas Assurance Chief Operating Officer: “Our survey findings underscore the importance of creating alternate paths for students to become CPAs. A career in accounting can open the door for many opportunities. Organizations, academic institutions and professional associations can collaborate to demonstrate the benefits that a career in accounting provides and remove potential barriers to entry.”

Right now the prevailing alternate pathway being considered is 120 units and two years of experience as introduced in Minnesota and hated on by the AICPA and NASBA. The debate on that continues.

Does the 150 Hour Rule Provide Value to the Profession or to Students as Future CPAs? No, Says Professor

The post EY Survey: Students and Executives Alike Support Alternate Pathways to CPA Licensure appeared first on Going Concern.

The firm, which was the only big four giant to avoid cutting staff during the COVID-19 pandemic downturn, is also dealing with issues on two other fronts: the fallout of a scathing report into its culture, which found staff felt overworked, bullied and harassed and its own tax scandal involving a former partner.

The announcement means the big four consultants have now all cut staff numbers in Australia; the total reduction adds up to roughly 900 people, or about 2 per cent of their collective workforce of 42,700.

Soon-to-be ex-staff found out today.

The firm had earlier tried to reduce costs through measures such as reducing non-essential travel, cutting back on recruitment, deferring the start date of about 12 per cent of its graduates and forcing staff to take three of their four weeks of leave at Christmas.

EY Oceania chief executive David Larocca was surprised by the sharp downturn in a “challenging and uncertain environment” this financial year, but hoped demand would pick up again by the middle of next year.

AFR spoke to someone inside EY who told them the layoffs were partially driven by leadership’s desire to protect partner profit margins. The insider also mentioned “there had been a big push in parts of the firm to have Australian staff assign work to EY’s offshore service centres as a way of cutting staffing costs and increasing output” but that offshore output sucks and “often needed to be reworked by local staff and the shift had left junior staff in parts of the firm without enough work to do.”

Here’s the down under layoff count since as put into handy chart form by AFR and manually entered into a table maker by us so we feel like we’ve done some work here:

Here in the US we’ve yet to see PwC laying anyone off (as always there are grumblings of pushing people out via aggressive PIP usage), the other three have shed approximately 6,900 people (nice) since KPMG let some advisory people go in February.

Here are total Big 4 and mid-tier layoffs we’ve reported on so far this year, if we missed any let us know. It comes out to about 7,700 people though we’re missing exact figures on RSM.

• Grant Thornton: 200 (November)
• Baker Tilly: 180 (June)
• RSM: ? At least 20 (June)
• KPMG: 700 (June)
• Grant Thornton: 300 (May)
• Deloitte: 1200 (April)
• EY: 3000 (April)
• BDO USA: 85 (March)
• KPMG: ~2000 (February)

EY cuts 232 jobs as big four job losses widen [AFR]

The post Layoff Watch ’23: EY Joins the Aussie Layoff Party, Now All Four Big 4 Firms Made Cuts This Year appeared first on Going Concern.

“The Face of the Future” campaign uses images of more than 200 actual EY people terrifyingly mashed together with AI voiceover. The concept, says the firm, is to show how people are at the center of AI.

To highlight every individual’s facial architecture, a specially adapted one-shot StyleGAN was created. From there, a single professional voice recording was transformed using voice AI to develop an unlimited number of new voices that matched the film’s moving faces precisely. This process yielded an asset that would previously have been near impossible to deliver and saved hundreds of filming and editing hours.

John Rudaizky, EY Global Brand & Experiences Leader, says, “The Face of the Future” is not only an extension of the EY long-standing commitment to AI innovation but underlines the organization’s belief that people must be augmented by technology, not in service of it. EY aspires to build a brand that is synonymous with leading on AI and this campaign will serve to show EY clients, people and communities alike how we are doing just that – by placing people at the center of AI to create exponential value.”

We might be freaked out now but five years from now we’re going to look back on this at laugh at how rudimentary it is. We might be laughing now, actually.

The post EY Launches a Creepy AI Campaign Just in Time For Halloween appeared first on Going Concern.

Ahead of the global revenue announcement, EY UK informed staff not to expect much in the way of bonuses and raises this year, we just had to wait to see if the same austerity measures would be extended to partners come payout time. Surprisingly, they were.

Reported Bloomberg yesterday:

Ernst & Young LLP partners in the UK saw their share of profits drop for the first time in three years as the Big Four audit firms face economic uncertainty.

Partners at the accounting firm’s UK arm pocketed an average of £761,000 ($923,000) last year, compared with £803,000 the year before. The firm also cut its pay rise and bonus pool by about 30% to £155 million.

Not quite the $1.7 million to $3.6 million for audit partners and $5.95 million to $8.1 million for consulting partners they were expecting when Everest was in play this time last year.

Going by the press release EY UK put out this morning they didn’t have a bad year, reporting record revenues of £3.8 billion ($4.6 billion):

EY has achieved a second year of double-digit revenue growth, with UK revenues up 16% and fee income increasing to a record £3.76bn from £3.23bn the previous year. This market leading performance has been underpinned by long term investments in people, audit quality and technology. Distributable profits before tax increased 4% to £659m.

EY achieved strong growth across all of its service lines in the UK. Tax revenues grew by 20%, Consulting 18%, Assurance 17% and Strategy and Transactions by 8%. EY has also seen strong demand across its industry sectors with stand-out performances from Energy (28% UK revenue growth), Government & Infrastructure (26%), Technology, Media & Telecoms (15%) and Financial Services (12%).

Compare this to global service line growth for the year ended June 2023:

• Assurance: $15.1 billion, 11% growth
• Consulting: $16.1 billion, 21.6% growth
• Strategy and Transactions: $6.1 billion, 8.4% growth
• Tax: $12.1 billion, 12.2% growth

Was it economic uncertainty that hurt EY UK partners’ pockets this year or was it Everest? When the split’s biggest cheerleaders conceded the loss in April, WSJ wrote about leadership going out of their way to assure partners their payouts would be protected best they could:

Global leaders of the company sought to reassure partners that they are working to cushion the financial impact from the abandoned project. That cost mostly fell on EY’s U.S. and U.K. partnerships, which did the lion’s share of the work on the breakup.

Executives at EY’s global unit said on an internal call that they plan to use a combination of bank borrowing and accounting maneuvers to ensure that the dead-deal costs have “minimal” impact on partner earnings.

£42,000 when you make almost a million does in fact seem pretty minimal. Still, it’s got to hurt. Our thoughts and prayers to them during this difficult time.

The post Break Out the Violin for the Poor EY UK Partners Taking a Pay Cut This Year appeared first on Going Concern.

Where’s EY on hybrid work these days? HR Brew:

Embracing “predictable flexibility.” Currently, EY expects most people to spend between 40% and 60% of their time working “together in person,” and the rest remotely, according to Giampietro.

In July 2022 Giampietro spoke to another HR rag we don’t read about how the firm was herding its people back under the fluorescent lights. At that point in time the firm said an employee survey showed a lot of people wanted to be in the office part-time (X) however the actual number of people showing up in the office didn’t reflect that.

HR Executive wrote:

Earlier this year, the firm instituted what it called the “EY way of working transition fund” that covered all commuting costs, all dependent care costs and all pet care costs for its U.S. workers so that those barriers would be removed for office visits. All of its 55,000-plus U.S. employees were able to ask for reimbursements on those costs an unlimited amount of times.

And here’s where we’re at today:

Last year, Giampietro and his team sought to understand “what else was holding people back from coming together,” besides upticks in Covid-19. They picked up on financial concerns related to commutes, as well as dependent and pet care, and decided to offer employees an $800-a-year “way of working” fund to alleviate some of these costs.

EY rolled out the fund in February 2022, and has since seen a 150% year over year uptick in time spent together in the office, Giampietro said. Due to the success of the stipend, EY will offer it annually going forward. The idea, he added, is to “ease the burden for you to kind of get back into new habits of coming together again.”

Reminder that the average cost per in-office day is $71 (assuming pet care is part of your costs) which means an $800/year stipend would cover approximately eleven days in office. Hybrid workers spend a more modest $36 per day, that breaks down to 22 days. Technically 22.22 so 22¼ days. The average American commuter spends $8,466 and about 19% of their annual income on their commute every year, if you live in Detroit, Atlanta, NYC, SoCal, San Francisco, Chicago, Houston, Dallas, or Washington, DC your average commute cost per year is closer to $10,000.

Back on topic. As with anything else Big 4, the in-office expectations are heavily dependent on your team. HR Brew says “certain parts of the business spend over 80% of their time in a hybrid environment” which could mean 80% in the office or 80% remote, who knows. Other teams are hybrid closer to half, they said.

EYers are welcome to chime in with their own anecdotal data.

The post EY Expects Its People to Build a Better Working World Together In Person Up to 60% of the Time appeared first on Going Concern.

Some choice quotes from her “Why I quit my job with no backup plan” video (embedded below):

“I don’t understand accounting, I don’t like what I’m doing.”
“When I would tell other seniors and staff, like, how I felt they would all tell me ‘Everyone here is faking it, we have no idea what we’re doing.'”
“I got my Master’s in accounting, I went to school for accounting and I just don’t want to do anything related to accounting anymore.”
“I hate wearing business professional stuff, I hate just sitting at the computer, I hate meetings, I hate talking professionally, I just hate it all, guys.”

@sabrinabui1999 Why I quit my job with no backup plan #big4accountant #corporatelife #corporatetiktok #fyp #accountinglife #accounting #unemployed #unemployedlife #ey #resign #quitingbig4 #worklife #stayathomedaughter #accountingstudent #accountingtiktok #corporateamerica #quittingmyjob #resignationletter ♬ What Was I Made For? [From The Motion Picture “Barbie”] – Billie Eilish

Her resignation letter from an earlier video:

She seems to be doing just fine without the Big 4 hassle in her life.

@sabrinabui1999 My life now #unemployedlife #fyp #quitingbig4 #resign #unemployed #corporatelife #livingathomeinyour20s #livingmybestlife #dayinmylife #dayinthelife ♬ all-american bitch – Olivia Rodrigo

The post Staff 2 Who Couldn’t Fake It at EY Anymore: “I Would Just Cry Every Single Day After Work” appeared first on Going Concern.

It appears the ever talkative “people familiar with the matter” blabbed recently to Financial Times about an EY UK consulting job gone awry. The firm was hired to solve an anti-financial crime problem that had plagued the UK arm of Santander — one of the largest financial institutions across the pond —  for years. Unfortunately people familiar with the matter were not forthcoming with the gory details, or if they were FT elected not to share them. Due to their shoddy work on the project, EY had to terminate the contract and offered the bank a refund of £15 million ($18 million USD).

Santander’s problems with its anti-money laundering systems and controls led to a £107.7 million fine from the Financial Conduct Authority last year, the FCA being the Brits’ financial services regulator. Here’s an example of a specific problem as described by the FCA in a December 2022 news release:

In one case, a new customer opened an account as a small translations business with expected monthly deposits of £5,000. Within six months it was receiving millions in deposits, and swiftly transferring the money to separate accounts.

Although the account was recommended for closure by the bank’s own AML team in March 2014, poor processes and structures meant that this was not acted upon until September 2015. As a result, the customer continued to receive and transfer millions of pounds through its account.

Santander agreed to a request from law enforcement to keep the account open in September 2015, however, it failed to keep track of this request and the account remained open until the FCA wrote to Santander in December 2016.

The bank started making improvements to its AML [Anti-Money Laundering] systems in 2013 but did not adequately address the underlying weaknesses. In 2017, the bank implemented a comprehensive restructuring of its processes and systems and here’s a 2021 document outlining Santander’s extensive efforts to curb and deter financial crime [PDF]. “Our AFC [Anti-Financial Crime] Strategy is based around our aspiration to be least attractive to criminals, to be seen as a safe bank by our customers and community, and to meet and exceed regulatory expectations by having a collective, forward looking and informed view to managing financial crime risks,” reads the seven-page Santander UK Financial Crime Statement.

Right. Anyway. FT:

The work, codenamed Project Morgan, “went badly wrong over an extended period” and the financial settlement dented the results of the consultancy’s UK financial services division for its most recent financial year ended in June, said one of the people.

It is not clear whether the work has been brought in-house by Santander or handed to another firm.

The amount refunded to Santander is equivalent to the annual pay of about 19 of EY’s UK partners, who were each paid an average of £803,000 in the 12 months to June 2022, the most recent year for which it has published financial results.

It’s unclear how much Santander paid for the contract but FT says the bank has invested £700 million over the last five years to improve its rickety AML/AFC processes and systems.

FT goes on to say that “dozens” of people on the 150-person deep team are in line to be let go though this division was already warned there would be layoffs due to a decline in client demand. See: EY warns UK staff over pay as it trims jobs from FT on August 16.

EY is still working for Santander on other stuff, said a person in the know who spoke to FT, just not this particular job. Obviously.

Santander ditched EY as financial crime consultant over alleged failings [Financial Times]

The post EY’s Work on This One Bank Project Was So Bad They Had to Refund the Client appeared first on Going Concern.

“Right now, Gen Z is particularly important as the newest generation of consumers, employees and citizens that will dramatically impact businesses today and into the future,” said Marcie Merriman, EY Americas Cultural Insights & Customer Strategy Leader. “Our research has consistently found that mental health is an ongoing challenge for Gen Z. As the generation moves into our prime workforce and consumer markets, several shifts are happening simultaneously. The oldest Gen Z are aging out of their parents’ health care plans this year, and they are feeling the impact of financial independence amid economic uncertainty. These factors are shaping their views of work and life and what success looks like.”

Placing importance on making money has consistently increased year-over-year, 46% of respondents said it was a top priority in the 2023 survey compared with 32% in 2021 and 38% in 2019.

Among the financial fears for Gen Z are (quoted directly from EY’s press release and the report):

• More than a third (39%) said they are very or extremely stressed or worried about making the wrong choices with their money.
• 69% rate their current financial situation as only “fair” or worse, with 32% rating their current finances as poor or very poor.
• Gen Z normalizes working multiple jobs to hedge their bets against the future by preparing well now. Nearly two-thirds (65%) of Gen Z were employed in a part-time or full-time job last year, while 56% earned money from freelance or “side hustle” work. Moreover, 39% of Gen Z earned money working both a job and a side hustle. This pragmatic need to get ahead by whatever means necessary is changing how they view work, how they approach savings, and when and how they choose to spend their money.
• While they are concerned about having enough money, they are less focused on having a lot. Compared to millennials at a similar age, Gen Z teens in 2021 were less likely to believe that they will become rich in the future (63% and 51%, respectively).

To that last point, it’s not that they are less focused on having a lot, it’s that they’ve seen what happened to millennials and have accepted their fate. They figured out earlier than we did that things like home ownership and being able to provide for a family on a single income are relics of the past except for a select few in well-paid careers.

Huh, things must have changed drastically between 2021 and now because this is how this survey looked the last time EY did it:

They tried to pull this crap on millennials too, claiming we valued purpose above all else when we started hitting the job market in the early 2000s and continuing to suggest it’s a critical motivator for us today. Purpose is nice but let’s be real, if it was that important, we’d all be working at non-profits.

Also from the 2021 report:

Cap.

Again, it is more likely anxiety-riddled Gen Z is too worried about their current financial situation and how that relates to the economy and job market to fantasize about making a lot of money. Here’s where they’re at in 2023:

“With inflation surging to its highest level since the early 1980s, Gen Z is experiencing unprecedented prices increased against most goods and services categories, and wage growth is only now starting to outpace inflation, so that wages adjusted for inflation have essentially stagnated over the past four years,” said Gregory Daco, EY-Parthenon Chief Economist, Strategy and Transactions.

Understandably, Zoomers are anxious in general. Aren’t we all. The 2019 and 2021 surveys called out stress and anxiety as “a hallmark of this generation,” now it’s even higher.

Almost half of Gen Z (47%) respondents report excessive anxiety or worry that is difficult to control on an ongoing basis. Said EY in the 2021 survey [PDF]:

They live in a constant state of overwhelm. They are admittedly high-stress, anxiety-ridden and untrusting of the world around them.

Now, 54% of Gen Z said they were moderately, very or extremely worried across a variety of topics, up from 46% in 2021 and 30% in 2019.

This is depressing, I’m gonna wrap it up. You can read the full report here (PDF).

The post EY Survey: Gen Z Is Broke, Anxious, and Extremely Worried About Everything. We Can’t Blame Them appeared first on Going Concern.

As you can see from their snazzy graphic below, revenue by service line breaks down to:

• Assurance: $15.1 billion, 11% growth (2022: $14.4 billion)
• Consulting: $16.1 billion, 21.6% growth (2022: $13.9 billion)
• Strategy and Transactions: $6.1 billion, 8.4% growth ($5.9 billion)
• Tax: $12.1 billion, 12.2% growth (2022: $11.3 billion)

“I am very proud of EY growth this year,” said Carmine Di Sibio, EY Global Chairman and CEO. “Guided by a commitment to create long-term value for all stakeholders, the organization is seeing the result of investment in pivotal alliances, cutting-edge technologies, and, most profoundly, the continuous upskilling of EY people.”

Of those many billions of dollars, EY has been putting some of it back into the important stuff:

There has been EY investment of US$3.6b in FY23 across audit quality, innovation, technology and people, as part of a US$10b three-year commitment announced in FY21 of which US$1.4b has been specifically focused on AI and the launch of unifying platform EY.ai.

EY.ai combines EY capabilities, AI and curated ecosystems. EY has also announced a rollout of a large language model – EY.ai EYQ – the EY.ai Confidence Index and specialized AI training for all EY people. This follows the launch of numerous AI tools including the EY Tax Co-Pilot, augmenting the capabilities of EY tax professionals.

And:

In FY23 there were record EY investments of US$385m in training which delivered an all-time-high of 24m training hours, amounting to an average of 61 hours per employee.

The EY organization offers 227 learning accreditations – known as EY Badges – across a range of disciplines including AI, supply chain planning, Diversity, Equity and Inclusiveness (DE&I) and sustainability, in addition to technical training in accounting and tax. More than 430 Badges are earned by EY people each day and to date more than 410,000 have been earned since the program’s inception in 2017.

In his introductory letter in the firm’s Value Realized Report, also released yesterday, Carmine says that while Everest did not come to fruition, it “unlocked innovation, identified strengths, and opened new and important conversations with EY clients and regulators.” The report also says 86% of EY people are proud to work at EY. The image below is supposed to be one of them, I guess.

Their graphic designers really like images of people climbing rocks don’t they.

It wouldn’t be an EY press release without the obligatory tagline: EY exists to build a better working world, helping create long-term value for clients, people and society and build trust in the capital markets.

PwC’s global revenue should be out soon followed by KPMG later in the year. Deloitte reported a record $64.9 billion in global revenue a week ago which means EY is sitting in second place for now.

EY reports record global revenue results of just under US$50b [EY]

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Anyway, doesn’t matter, not going to happen. The first Everest plan didn’t work out and it’s been lentils and beans at EY since. Because the economy also sucks and demand for consulting services isn’t strong — especially from consulting firms that can’t even work out a clean split of their own divisions for the purposes of buckets of cash — it seems there will be another round of cuts and belt-tightening at EY UK. Another.

Michael O’Dwyer reports in Financial Times:

EY has told staff in the UK to expect less generous pay rises than last year and is launching a small round of redundancies as it faces rising costs and a difficult economic outlook.

Leaders at the Big Four firm’s British business, which employs about 18,500 people, also informed staff this week that bonus pools would be smaller than last year and would be split among a more limited group, according to people familiar with the matter.

Big ups to people familiar with the matter for blabbing. These familiar people told FT bonus pools for certain teams are getting cut by more than half. Anyone getting a paltry bonus is lucky though, luckier than the five or so percent of people in EY’s financial services consulting practice who will not have a job.

The firm will axe more than 5 per cent of its roughly 2,300-strong financial services consulting practice, with 150 jobs set to be cut in teams that advise on business transformation and risk management.

EY should have hired themselves to advise themselves on the risk of a failed split and the fallout thereof.

We’re hearing limited grumblings of a bit of fat-cutting on this side of the Atlantic, nothing that couldn’t be attributed to the shedding of low performers for now. If you’ve heard otherwise you know what to do.

The post EY UK to Everyone Who Works at EY UK: ‘Go F*ck Yourselves’ appeared first on Going Concern.

TPG outlined its plan for a debt-and-equity deal to separate the consulting arm from EY’s audit business in a letter sent to the firm’s global and US bosses. The consulting business could then be floated on the stock market at a later date, according to the letter, which was seen by the Financial Times.

US-listed TPG, which manages about $137bn of assets, did not put a value on the consulting business in its letter.

They may not have put a value on the business but they did lay out the plan and dangle a carrot that might tempt partners who were expecting big payouts up until Everest crashed and burned a couple months ago:

Under the plan, EY’s audit operations would continue to be owned entirely by the partners who run it, and TPG would make an equity investment into the standalone consulting arm. It said it was “highly confident” that it would be able to commit the sums required “from both TPG funds and our limited partners, without the participation of other financial sponsors”.

The consulting arm would also raise debt and the transaction proceeds would be used for cash payouts to audit partners and to settle other liabilities, TPG said.

An important point made by FT in their article: egos are still bruised over the failure of Everest and the turmoil that prompted its collapse hasn’t really been resolved since the plan was shelved in April. Any remaining resentments will come back to the forefront any time the word “split” is uttered by leadership. “It also threatens to reopen internal divisions that surfaced during talks over Everest, which leaders are now trying to heal,” wrote Michael O’Dwyer and Stephen Foley.

Second, there’s the issue of Carmine’s soon-to-be vacated post as global CEO (he is due to leave at the end of this fiscal year in June 2024). It’s said fellow Everest cheerleader EY Global Managing Partner Andy Baldwin is in the running and “the favorite by a large margin” but he was also pushing Everest way, way too hard and some might still be bitter about that. A transaction like this is not the kind of thing you want to get into when leadership is an open question.

Up until audit and consulting started bickering about where the tax people would end up — consulting getting too many tax people in the plan was the issue that ultimately doomed Everest to failure — the biggest concerns were unfunded pensions and market conditions. TPG’s proposal potentially solves the market conditions problem and they said in their letter they “remain highly flexible with respect to the division of the tax business . . . and would be comfortable with [audit] retaining a majority portion.” That just leaves pensions and hurt feelings.

All that said, reviving the split could just be a big nothing burger. Said FT:

It is unclear whether EY has responded to TPG. But one person familiar with EY’s internal discussions said: “The expectation is that the organisation will not pursue this expression of interest.” EY and TPG declined to comment.

TPG approaches EY about buying stake in consulting arm [FT]

Update 8.18.23: It’s not. “EY has rejected a proposal from US private equity group TPG to break up the Big Four firm and take a stake in its consulting business, according to a statement sent to partners yesterday,” said Gordon Smith in his FirstFT wrap up.

The post EY Split is Back on the Menu, Boys (UPDATE) appeared first on Going Concern.

AFR wrote about EY Australia audit salaries this morning (their morning):

The starting pay for most auditing staff in parts of EY’s financial services division will not increase this year, at the same time the firm has told clients that “significant wage inflation” had forced it to increase its audit fees.

Only graduate pay will increase for auditing staff in the division, with new starters set to earn $66,500, including superannuation, an increase of less than 1 per cent from last year’s starting pay of $66,000.

All other ranks in the area will earn the same starting pay as last financial year, despite inflation running at 6 per cent, according to data seen by The Australian Financial Review.

The firm has told clients the cost of salaries in its audit division is up 11.1 per cent for 2023. This figure takes into account average pay increases and promotions, and is separate to base pay for most EY auditing staff not increasing in 2023.

Here’s a handy chart AFR put together. $66,000 AUD is about $42,700 in US dollars so this year’s incoming auditors are getting base pay of about $43k USD and seniors $56.3k.

Australian inflation has been between 6-8% in the past year.

EY pointed to salary increases in a letter to clients earlier this year when they raised fees. “Demand for our services and the competencies of our people is driving significant wage inflation across the industry,” the firm said. “This is driving significant increases to our cost base to remain competitive and assist with retention of our people. We understand [client name] is experiencing the same challenges.” Clients were told EY’s audit salaries increased by 11.1 percent for 2023, a number based not only on base pay. Unlike the other three firms, EY does not publicly share its salaries.

Said an EYer to AFR, the lack of raises this year was due in some part to leadership betting on low turnover again this year. Firms across the world are experiencing lower-than-expected attrition and the market for professional services is no longer the boom it was just a year or two ago (sorry). “I don’t think it is inflation that is driving salaries,” said the staffer to AFR. “It’s more retention. They see the outlook and it will be less of any issue,” they said. “Where I think it is hard is particularly graduates, they’re essentially making 6 per cent less, which is headline inflation, than the previous group.” Essentially, people are sticking around so the firm isn’t as worried that disappointing salary news will force them out onto the market.

EY audit pay rates stay the same despite inflation [AFR]

Related:

Word Hits TikTok That Big 4 Firms Are Cheap Bastards, “It’s Modern Day Slavery”

The post Sorry EY Australia Auditors, No Raise For You This Year appeared first on Going Concern.

We saw this story on Cybernews, shout-out to them for staying on top of the MOVEit data breach. TL;DR: File transfer program MOVEit was compromised earlier this year by the Cl0p ransomware group, Cl0p threatened to release the data they have if affected entities didn’t pay a ransom, EY didn’t so the data is trickling out. The group named EY and PwC as victims early on, they later announced Deloitte had been breached as well. And they got Crowe, too.

Yesterday EY filed a data breach notification with the Maine attorney general that says 30,210 Bank of America customers may have (probably) had their personal information — including debit or credit card numbers and government ID numbers — acquired in the MOVEit breach. BofA is offering 24 months of Experian credit monitoring and identity theft resolution as a result, detailed in this letter EY is sending out to affected BofA customers:

The United States firm of Ernst & Young LLP (“EY,” “we” and “us”) is writing to notify you of an issue that involves your personal data. EY provides consulting, advisory, and tax services to Bank of America. As part of those services, we receive and handle information that may include personal data in certain instances.

WHAT HAPPENED
On May 31, 2023, we were informed by our third-party supplier, Progress Software Corporation, of a security vulnerability involving the supplier’s MOVEit Transfer solution. MOVEit Transfer is a file transfer tool used by many organizations, including us, to support the transfer of data files. Upon becoming aware of the issue, we promptly launched an investigation and took steps to secure our systems. We have also been working with third-party security experts to investigate the scope of the issue and advise on our response. Bank of America has informed us that its systems and servers were not impacted by this event.

WHAT INFORMATION WAS INVOLVED
Certain files within the third-party software solution have been compromised through this security vulnerability. These files may contain your personal data. The personal data in the relevant files may have included your first name or first initial and last name, address, financial account information, debit or credit card numbers, social security number, and/or other unique government-issued identification numbers.

WHAT WE ARE DOING
EY is informing you about the issue so you can take steps to protect your personal data from identity theft, phishing and other potential misuse. As an additional measure of protection, we are notifying you that Bank of America will be making available a complimentary two-year membership in an identity theft protection service provided by Experian IdentityWorks. You will not be billed for this service. [snip, more on how consumers can use this service blah blah]

WHAT YOU CAN DO
Over the next 12 to 24 months, we recommend you remain alert for any unsolicited communications regarding your personal data and review your account statements and credit reports for suspicious activity. You should promptly notify your financial institution of any unauthorized transactions or suspected identity theft. We also recommend that you enroll in the complimentary Credit Monitoring Service offered by Bank of America. Finally, please review the “Additional Resources” section included with this letter below. This section describes additional steps you can take to help protect your information, including recommendations by the Federal Trade Commission regarding identity theft protection and details on how to place a fraud alert or a security freeze on your credit file.

MORE INFORMATION
Should you have any questions regarding this incident, please contact Bank of America at [censored] Monday – Friday between 8am – 11pm ET and Saturday 8am – 8pm ET who can assist you during this process.

We regret any inconvenience this issue may cause you.

Ernst & Young LLP

According to Cybernews, more than 40 million people and 620 organizations have been confirmed to be impacted by Cl0p’s MOVEit Transfer attacks. And:

Cl0p claims that it has access to a staggering three terabytes of EY‘s data, stolen during the attack. The cybercrooks say they have data ranging from financial reports to passport scans. If the volume of stolen data is confirmed, additional exposed EY customers may surface.

Said Cyjax chief information security officer Ian Thornton-Trump to Information Security Media Group in July, “There is no doubt in my mind that sensitive data exists within this data set, and companies need to be actively monitoring the data breach/ransomware ecosystem to determine the organization’s potential exposure directly or indirectly through a supply chain partner compromise.”

Full notice to the Maine AG below:

2023-08-09 EY US Notice to … by Adrienne Gonzalez

Earlier: 

EY and PwC Among the Many Entities Caught Up in the MOVEit Cybersecurity Breach Ransom

The post EY Regrets Any Inconvenience Cybercriminals Having Your Credit Card Number May Cause You appeared first on Going Concern.

The deafening cacophony of public criticism for their handling of the matter prompted EY Oceania to engage an outside consultant for a workplace culture review of member firms in Australia and New Zealand. The results of that independent review were made public today, a move the independent consultant said “represents an act of courageous leadership and a deep desire to learn and grow.”

Key findings from the review as summarized in the firm’s press release are:

Overall, the vast majority of people feel safe in EY Oceania workplaces and believe people behave in a respectful manner towards others. Over nine in ten of our people agreed that they always feel safe in their workplace (94%) and that people behave in a respectful manner towards others (92%).

Some 74% of people report that they rarely feel excluded in the workplace, suggesting that a significant minority at times do feel excluded.
However, positive experiences are not experienced by all, and negative experiences have a significant impact on individuals, teams and the firm.

Despite initiatives to advance a safe, inclusive and respectful culture, in the last five years 15% of people have experienced bullying, 10% indicated they had experienced sexual harassment, and 8% of people experienced racism.

Long working hours and overwork are a critical issue, having a negative impact on individual wellbeing, team cohesion and retention with 46% reporting that their health has been negatively affected as a result, and two in five people considering quitting.

31% of people at EY are working 51 or more hours in a week, at least one week out of every four; approximately one in ten (11%) are working 61 or more hours in a week, at least one week out of every four.

There is a relatively high level of confidence that EY Oceania can address many of the issues explored in the Review with 78% feeling confident the organisation will make meaningful change in relation to sexual harassment, 74% in relation to racism, and 70% in relation to bullying. However, only 31% of people are confident EY Oceania can change a culture of long work hours and overwork.

Because EY would be loath to give the impression it is the only Big 4 firm with the above issues they add:

The Report identifies that many of these issues are known challenges across professional services firms in Australia, particularly balancing productivity and wellbeing, and that these issues lend themselves to shared learning and shared problem solving across firms.

Said David Larocca, EY Regional Managing Partner and CEO Oceania, in a very long quote block:

“There are findings in the report that are distressing and completely unacceptable. Bullying, sexual harassment and racism have no place at EY Oceania and I apologise to anyone who has suffered as a result.”

“The purpose of this independent review was to enable us to listen and learn so that we can action the feedback. We are determined to ensure EY Oceania is a more respectful and inclusive workplace, where everyone feels empowered to speak up”.

“While the report shows many people have had a positive experience working at EY Oceania, it also shows that this is not everyone’s experience and that we have fallen short of the standard that everyone who works at EY has a right to expect. The impact of long working hours is also significant and taking a heavy toll on the wellbeing of many of our people.”

“EY Oceania accepts all of the recommendations made in the report and commits to their implementation. It is critical that all our people have the opportunity to reflect on what this report has told us, and that they are able to contribute to the meaningful action we take in response to these findings.”

“I’m heartened to know that the vast majority of people who participated want change, have confidence in our commitment to action this change and are keen to do what they can to accelerate cultural transformation”.

“I am grateful to everyone who participated in the Review and shared their experience. I thank them for their honesty and courage in coming forward.”

The full 142 page report can be found here [PDF]. Be warned, the first page comes with a content warning:

We wish to advise that this report contains some distressing personal stories of harmful behaviours. As a reader, you may experience a range of emotions, particularly if you have directly experienced or witnessed harmful behaviours yourself. Please use your available support networks.

If people are interested, we can do a deeper dive on the findings.

The post EY Finally Admits It Has Some Serious Culture and Overwork Problems After Someone Died at the Office appeared first on Going Concern.

FT:

Ann Cook will leave the firm on August 1, partners have been told.

Her resignation comes amid scrutiny of the actions of the general counsel’s office in 2019, when the US Securities and Exchange Commission was looking into allegations of widespread cheating on training exams, including ethics tests.

Cook was deputy general counsel for litigation and regulatory matters in 2019, before being promoted to general counsel in 2021.

Cook did not respond to messages seeking comment, and EY declined to give a reason for her resignation.

“We wish Ann well in the next chapter,” the firm said. “She has been a valuable member of the leadership team at EY, and we thank her for her many positive contributions over the years.”

As part of its punishment for widespread cheating on internal web-based learning and the open book ethics portion required in some jurisdictions for CPA licensure, EY was required by the SEC to “engage in extensive undertakings,” including retaining two separate independent consultants to help keep the SEC off their ass remediate deficiencies. One consultant was supposed to review the firm’s policies and procedures relating to ethics and integrity. The other was tasked with reviewing EY’s conduct regarding its disclosure failures, including whether any EY employees contributed to the firm’s failure to correct its misleading submission.

See, part of the reason why the SEC hit the firm with the biggest fine ever was because EY did not voluntarily offer up all the information it had on cheating to the SEC. This is from the SEC’s June 2022 press release:

EY further admits that during the Enforcement Division’s investigation of potential cheating at the firm, EY made a submission conveying to the Division that EY did not have current issues with cheating when, in fact, the firm had been informed of potential cheating on a CPA ethics exam. EY also admits that it did not correct its submission even after it launched an internal investigation into cheating on CPA ethics and other exams and confirmed there had been cheating, and even after its senior lawyers discussed the matter with members of the firm’s senior management. And as the Order finds, EY did not cooperate in the SEC’s investigation regarding its materially misleading submission.

So that’s why the independent review part of the SEC’s order is critical to the firm getting right with regulators. The independent reviews were supposed to be done by this past March but people familiar with the matter ratted to FT that it hadn’t been done and the SEC had granted them more time. When asked about the delay, EY told FT the firm “met every deadline required of us, with the agreement of the SEC staff, and extensions are not uncommon.”

Shortly after the SEC announced action against EY, resident SEC contrarian Hester Peirce (even her name is contrary to the “i before e” rule) wrote in detail her reasons why she disagreed with the action, particularly the independent review part. The independent review, which is not required to be shared publicly and probably won’t be unless some amazing person of the very few with access to it leaks it to the media, is in essence a mission to identify people who should be thrown under the bus:

Third, this settlement’s remedies also set a troubling precedent. To conduct an “Independent Review of EY’s Disclosure Failures,” the Order mandates that EY “designate a three-person committee of EY senior personnel” to retain an independent consultant (the “Remedial IC”). The Remedial IC, who will have full access to EY’s privileged information, will “conduct a review . . . of EY’s conduct relating to the Commission staff’s June 2019 Information Request, including whether any member of EY’s executive team, General Counsel’s Office, compliance staff, or other EY employees contributed to the firm’s failure to correct its misleading submission.” The Remedial IC’s report shall “mak[e] recommendations, as the Remedial IC deems appropriate, as to employment actions or other remedial steps.” While the three-person committee can object to the recommendations, ultimately, the Remedial IC has the final say. The upshot of this requirement is that the Remedial IC is vested with non-appealable authority to discipline or fire any EY personnel involved with responding the SEC’s June 19 request. This implicit directive to find attorneys and compliance personnel to blame for not complying with a non-existent obligation to correct the June 20 submission is particularly troubling.

So you see now why there may be trouble brewing in EY’s in-house lawyer house and why a smart lady like Ann Cook might want to get out of there.

The post EY’s Top In-House Lawyer Just Quit appeared first on Going Concern.

Here’s what FT said:

EY’s auditors outside the US are failing a higher number of quality inspections by American regulators, according to the firm’s internal estimates, as US authorities push to improve global standards they fear were hit by the coronavirus pandemic.

Inspections of EY’s work for US-listed companies uncovered deficiencies in up to 38 per cent of the audits carried out by the firm’s overseas businesses last year, according to estimates described to the Financial Times.

That would be a big jump from 2021, when 21 per cent of audits sampled by the Public Company Accounting Oversight Board contained deficiencies.

The figures do not include inspections of audits carried out by EY’s US business — the largest in its global network — and could be lower if the firm successfully pushes back against concerns raised by the PCAOB before inspection reports are finalised. However, they hint at a trend since the pandemic that has alarmed the regulator.

The PCAOB inspected 37 audits carried out by EY’s non-US businesses last year, and EY estimated that the increase in deficiencies would be largely consistent across the Americas, Europe and Asia-Pacific.

Said EY to FT, “[The firm] actively reviews audit quality results from both internal and external monitoring. The figures reported by the Financial Times are from a preliminary stage of that process, during which areas for additional focus are identified. The figures do not reflect the ultimate conclusions drawn from that process.”

EY expects more failing grades from US audit inspectors [FT]

The post EY’s Getting Ready For Bad Grades From the PCAOB For Overseas Colleagues’ Work (Allegedly) appeared first on Going Concern.

EY all hands, people do not seem happy.

Staff on the call were told the firm will be focused on ‘delayering’ in fiscal 2024. And then little more was said, leaving the non-consultants to have to Google what that even means.

Comment
by u/TheR2DP from discussion EY Global All-Hands
in Big4

So what is delayering? From some HR rag:

Delayering is the process of removing layers of hierarchy between the highest and lowest levels in order to boost operational efficiency, decrease the wage bill and remove red tape. Delayering typically removes middle managers, providing senior managers easier reach over the organisation as a whole.

Commonly cited advantages of delayering include increases in engagement and motivation as more responsibility is afforded to ‘on the ground’ workers to make decisions, instead of being told what to do by middle managers. Communication may also increase as there are fewer levels of information to become lost in translation and bottom-up feedback may also increase as employees’ feel their views have more chance of being heard by decision-makers.

Despite the value of delayering, there are disadvantages. Senior leaders tend to gain more control over decision-making with reduced oversight, which means the effects of poor individual decision-making may be felt more acutely. The flatter organisational structures created by delayering may work in particular industries but may be unsuitable for others, and the redundancies associated with delayering may affect worker morale.

So layoffs then. Layoffs wearing a costume made of organizational inefficiencies.

Conveniently enough I found a Deloitte paper on the topic [PDF] and would you look at this:

Some organizations use delayering as a quick fix solution to address common organizational issues such as uncompetitive (or high) operational costs and slow organizational responsiveness. Often times, these issues are only symptoms of much bigger challenges such as:

• Weak organizational discipline in spending (e.g., weak spend policies and lack of a cost-conscious culture)
• Poor organization design (e.g., functional duplication and accountability overlaps)
• Unsuitable career development process (only creating development opportunities through layering)
• Skill gaps at critical positions
• Weak decision-making / governance model

Understanding the root cause of organizational issues requires a thorough, broad-based organizational assessment to evaluate the current state of the organization across various dimensions (e.g., cost, people, structure and processes). Delayering, as a standalone event, is unlikely to bring sustainable cost savings. This can be likened to crash dieting. One can probably shed some weight short term, but may put the weight back on, and sometimes more. Plus, it’s a lot of short-term pain, often for little to no long-term gain. And sometimes it can even do irreparable damage.

Yeah, definitely layoffs. Drop more details on today’s call if you have them.

Earlier and probably related: EY Tells Staff to Get Ready for Some Cuts After the Everest Embarrassment [UK]

The post Google Searches For the Word ‘Delayering’ Up 558% Since Today’s EY Global All-Hands Call appeared first on Going Concern.

Per the obligatory press release, these new appointments reflect the firm’s increased investment in its sectors, service lines and regional business, in areas such as Audit, Financial Services, Technology Consulting, EY Parthenon, Private Equity, and the Energy sector. 42% (112) of the new appointments are Equity Partners and around a quarter (62) of all the new Partner appointments are based outside of London.

“We are on track for our third year of double-digit growth in the UK and are making significant investments to meet client demand,” said EY UK Chair Hywel Ball in recycled press release comments. “These new appointments increase the size of our UK Partnership by 10% and put us in a great position to continue our outstanding growth in the years ahead.”

“The new appointments span all parts of our business, across all parts of the UK, with notable investments in areas such as audit, financial services, technology consulting, Private Equity and EY Parthenon,” he said. Yeah the press release already said that, my guy.

“I’m also particularly proud that 60% of this year’s Partner appointments are internal promotions and mark our commitment to developing top talent. We want EY to be a place where everyone is able to achieve their potential and we’re focussed [Brit spelling] on building a pipeline of talent across all parts of the firm.”

Project Everest, the ambitious plan to split audit and consulting in order to bypass current independence requirements, made things tough for the firm ever since the idea was announced in May 2022. Belts were tightened, travel was frozen, hiring slowed to a crawl in some areas, and at the end of it all the split’s failure left a $600 million hole in the global organization’s pocket. EY US and EY UK are taking the biggest reputational hits as they were Everest’s biggest cheerleaders, though to be entirely honest the US arm was not only cheerleader but the fat bald guy driving the bus to every cheer competition. So it’s nice to see

In April, a few months before EY’s fiscal year end in June, Financial Times reported that EY UK was planning cost cuts as a direct result of Everest’s failure. “We have inefficiencies in our business, which we can start to address now so we are already working on reducing our costs,” said Anna Anthony, UK managing partner for financial services, in a call with partners.

Mr. Ball was on that call as well and told partners to get ready for “a bit of a tough period” but softened the blow by assuring partners the firm was on course for a third consecutive year of “strong double-digit growth.” EY Global revenue for 2022 shook out at $45.4 billion, we’ll know in September just how strong any growth was given the distraction of Everest for most of the year.

Last year’s partner cohort of 75 internal promotions and 45 external hires was, at the time, EY’s largest ever number of new equity partner appointments in the UK.

The post EY UK Appoints 267 New Partners appeared first on Going Concern.

According to Tech Crunch, a dozen or so US agencies have active MOVEit contracts, among them the Department of the Army, Air Force, and the FDA. AFR is reporting PwC and EY are among the affected, too.

The cybercrime group Cl0p first broke into the file service, which is called MOVEit, in late May and began stealing data from entities including US federal agencies, energy giant Shell and the BBC. Rival consultancy EY was also affected in the breach, which is growing larger by the day as companies reveal they have been targeted.

On Monday, PwC Australia confirmed it had used the software for a “limited number” of its clients, adding to its woes stemming from the Collins tax scandal.

“We are aware that MOVEit, a third-party transfer platform, has experienced a cybersecurity incident which has impacted hundreds of organisations including PwC,” a PwC spokesman said. He declined to comment on the ransom demand.

That spokesperson told AFR the firm stopped using MOVEit as soon as they were aware of the breach and spoke to clients whose files were exposed, along with opening an investigation. EY meanwhile:

A spokeswoman for EY said it learned of the breach on May 31, when an American firm called Progress, which makes MOVEit, confirmed the vulnerability in its software. “We immediately launched an investigation into our use of the tool and took urgent steps to safeguard any data,” the spokeswoman said. She also declined to comment on the ransom demand.

The EY spokeswoman said most of its systems that use the transfer service were not compromised but the firm was manually investigating where data may have been accessed and communicating with customers and authorities.

It seems the ransomware group is not interested in government data at all. “If you are a government, city or police service do not worry, we erased all your data. You do not need to contact us. We have no interest to expose such information,” reads Cl0p’s dark web leak site according to CNN. We were not able to connect to the .onion to confirm (502 Bad Gateway), others seem to be having the same problem.

We were able to access today and read their totally cool message pic.twitter.com/3cuXqyp2Xr

— vx-underground (@vxunderground) June 16, 2023

It’s said the group gave non-government breach victims until last Wednesday to reach out and discuss ransom terms, after that Cl0p would publish names. So far they’ve listed Boston Globe, East Western Bank, biotech company Enzo Biochem, Microsoft-owned AI company Nuance, 1st Source, First National Bankers Bank, and Shell, among others.

A joint advisory issued by the Federal Bureau of Investigation (FBI) and the Cybersecurity and Infrastructure Security Agency (CISA) explains how exactly MOVEit was compromised:

According to open source information, beginning on May 27, 2023, CL0P Ransomware Gang, also known as TA505, began exploiting a previously unknown SQL injection vulnerability (CVE-2023-34362) in Progress Software’s managed file transfer (MFT) solution known as MOVEit Transfer. Internet-facing MOVEit Transfer web applications were infected with a web shell named LEMURLOOT, which was then used to steal data from underlying MOVEit Transfer databases. In similar spates of activity, TA505 conducted zero-day-exploit-driven campaigns against Accellion File Transfer Appliance (FTA) devices in 2020 and 2021, and Fortra/Linoma GoAnywhere MFT servers in early 2023.

A June 2020 info article by EY entitled Ransomware: to pay or not to pay? covers the issue extensively, ultimately advising readers not to pay up . “While we at EY do not suggest organizations pay ransoms, we do acknowledge this option exists,” it reads. “We have therefore created this concise guide on the subject with the caveat that organizations who are faced with this scenario should seek legal counsel, recommendations from any cyber insurance providers, input from law enforcement as well as expert security advice before making any final determination as to the appropriate course of action.”

The post EY and PwC Among the Many Entities Caught Up in the MOVEit Cybersecurity Breach Ransom appeared first on Going Concern.

FT:

On Tuesday, Di Sibio made it clear he did not intend to step down immediately, but would instead oversee the organisation through a long transition lasting until the end of the next financial year in June 2024.

In a partner webcast, he said he planned to leave “having reached the EY mandatory retirement age”.

His initial four-year term was due to expire this month but EY had extended his tenure for two years, allowing him to continue beyond the firm’s retirement age of 60 so that he could oversee the split, which he had argued would become a blueprint for other Big Four firms.

Carmine reached the peak of his EY career in early 2019 after the retirement of GC favorite and Kenny Powers lookalike Mark Weinberger. All seemed well until someone got the bright idea to separate audit and consulting last year.

Had the Project Everest split gone forward, Carmine was set to be head of the liberated consulting business. As we know, that never materialized. Only days ago, Di Sibio said in a Bloomberg Markets Europe appearance the firm would likely revisit the split in a few years.

A successor is expected to be named in November.

The post Suddenly Cognizant of Mandatory Retirement Age, EY Global CEO Carmine Di Sibio Is Stepping Down appeared first on Going Concern.

When this fancy new bot was introduced in March, EY said the technology was built “to understand the anatomy of an individual’s pay slip and to link regulatory compliance elements with company policies.” The Microsoft post gives some specific examples:

An employee in Hungary asked if having twins would impact his parental leave. A worker in Spain wondered whether the bonus of $20,000 euros she received would be taxed. Another employee asked what requirements he would have to abide by if he went to work in a United Arab Emirates country as a foreign national.

The bot, leveraging Microsoft Cloud and ChatGPT in Azure OpenAI Service, uses a large language model that analyzes information from pay slips, tax regulations and employer policies and then bypasses the step of a human Googling these to find answers to obscure and/or hyper specific payroll questions. Said Microsoft, when EY began developing a proof of concept for the chatbot they uploaded data from a range of sources into the bot and asked its payroll consultants in various countries to share questions employees had recently asked, then used that information to train the model.

The hope is that the bot will give people answers to their pay questions which in turn creates warm and fuzzies in employees. EY teams “anticipate that the technology will be able to answer more than 80% of payroll questions” and could save employers more than half of current costs associated with answering these complex questions. Not mentioned: preventing several gigabytes of frustrated employee emails.

“Payroll touches employees more than any other function,” says Sheri Sullivan, EY global payroll operate leader. “Employees around the globe currently have a very poor experience when it comes to getting answers to their payroll questions. And employers struggle with that.”

Research has shown that employee attraction and retention are directly proportional to workers’ experiences on the job, Sullivan says. And pay is central to that, she says — not only the amount, but also employees’ perception that they are being paid fairly and understand payroll policies.

Of course the ultimate goal here is to bill for this technology. “There is interest from clients in the largest countries to be part of this pilot,” Sullivan said. “The interest is through the roof, because this is such a pain point for them.”

The post EY’s New Payroll Chatbot Just Has to Be Slightly Less Sucky Than HR to Be a Success appeared first on Going Concern.

The PwC tax scandal (AFR coverage) has brought to light the government’s liberal use of outside consultants (that’s “liberal” as in “a lot” not the political leaning so spare the comments) and amplified the voices of people who believe the government should be doing a lot of this work itself. Cost is of course an issue, as is a lack of oversight. But the PwC problem, now common household news at least in Australia, has brought conflicts of interest to the forefront of the discussion.

A March report by the New South Wales Auditor-General [PDF] breaks everything down by the numbers and is mentioned here because the PwC tax scandal went down on their side of the world. Home to Sydney among other cities us Yanks probably have never heard of, NSW is Australia’s largest state economy at almost 700 billion dollars, (about the size of Maryland’s when we convert AUD to USD).

The report’s analysis of spending on consultants between 2017–18 and 2021–22 shows that Big 4 professional services firms accounted for around 27% of total spent on consultants by NSW government agencies. KPMG led the pack at $72 million, EY $70 million, PwC $57 million, and Deloitte $42 million. Total spending on consultants in this time period was around $1 billion Aussie money across more than 10,000 engagements. “Most consulting engagements we reviewed were not monitored or evaluated by agencies to ensure they were delivering value,” says the report.

It also says:

Our analysis indicates that this concentration of consulting engagements within a small number of firms is increasing, with the number of firms that accounted for 50% of total spending dropping from 11 to eight between 2017–18 and 2021–22. The remaining 50% of spending on consultants during this period was spread across more than 1,000 other firms. Frequent engagement of a small number of providers may have some benefits for agencies, such as helping them to negotiate lower rates. However, it creates a range of risks, including over-reliance on a limited number of providers for advice and potentially reducing the independence of advice.

Another concern when it comes to government reliance on outside consultants: knowledge transfer. The idea being that when you pay people to do stuff rather than have your own people do the stuff, your people don’t really figure out how to do the stuff. Teach a man to fish et al.

Our examination of a sample of consulting engagements identified only 11 engagements (13% of our sample) that included evidence that knowledge transfer or plans for retention of knowledge were built into agreements with consultants. There is no formal requirement for knowledge transfer or retention plans to be included in consulting engagements, and it is possible for staff at agencies to gain some knowledge from consulting engagements informally or indirectly. However, using a structured approach to transferring and retaining knowledge from consulting engagements would increase the likelihood that opportunities to improve staff skills are maximised. This may reduce the chance that agencies will need to re-engage consultants to do similar work in the future.

TL;DR: Most agencies did not transfer or retain knowledge and skills from consulting engagements.

That last one rated a mention in a recent Daily Telegraph article quoting former partner and public servant Jim Birch, who led the health and human services practice at EY Asia Pacific and government and public sector practice for EY Oceania. He says several factors have led to an overreliance on outside consultants, particularly knowledge gaps. “The most significant is the progressive erosion of capability in the public sector over many years,” he said. “Efficiency dividends, a reduction in executive overheads, the paucity of senior executive training and career paths, poor succession planning, has resulted in a loss of great capability.”

“It is very important that consultants are used only for very highly skilled requirements and also where it is clear that a major program of work is so large and complex that it requires some additional specialised skills,” he added. “Too often consultancies are providing employees as backfill for public sector staff gaps.”

Big 4 firms are currently being grilled by the Senate’s Finance and Public Administration References Committee to help the government answer the question “why tf did this PwC situation even happen!?” The inquiry “was established to investigate the concentrated power of the Big Four consulting firms, who seem to have been allowed to set up a shadow government alongside our public service that is far less transparent, far less accountable and in some cases far less ethical than it should be,” said Senator Barbara Pocock, who has been going HARD on consulting firms lately.

The ethical inbox appears to be a mysterious black hole where information about dodgy practices just disappears! This what happened when I asked Treasury about PwC at our Senate Inquiry on consultants today. pic.twitter.com/uGBCuWjtC6

— Barbara Pocock (@BarbaraPocock) June 7, 2023

More:

Peter Collins opened a real Pandora’s box when he leaked confidential intel to his colleagues that’s for sure.

The post Former Partner Who Got His Says Aussie Government Should Stop Using Outside Consultants appeared first on Going Concern.

Text:

(Burner account) I wanted to ask if anyone else is interning with EY this summer and is just absolutely disappointed? First, the program length gets cut down to be 6 weeks with one unpaid, so really 5. Then, they cancel our intern gifts and tell us that there are ‘supply chain issues’ instead. Now, they have told us that the annual Disney trip is cancelled. I’ve also been hearing that some service lines won’t even work the full 5 weeks, but only 2 days of one week, making the full experience a little over a month.

All of this info has come wayyyyyy after our offer letters have been signed, and for a lot it was too late to find another internship. A complete lack of transparency is the thing that sealed the deal for me and my disappointment. I don’t understand why they think this will work, or will make interns want to really sign a full time offer if they can do any better (which I honestly think they can).

I just want to highlight this heavily upvoted comment:

Christ. You need a reality check.

Your internship is about buffing out your CV, making connections and getting a bit of exposure to the world of work. Your internship doesn’t benefit the business, no matter how important or great you think you are. It benefits your resume.

And here you are complaining about your Disney land trip being cancelled and not receiving gifts… are you an actual child? Grow up and stop feeling so hard done by. There’s lots of people who get fuck all for internships and apprenticeships and, worse yet, there’s lots of people who don’t have the social mobility / links to get internships. Stop complaining.

Kids these days. They all think the world owes them something.

Yeah, a North Face jacket.

The post EY Interns Are Going to Have the Worst Summer appeared first on Going Concern.

The obligatory press release makes sure to mention that these promotions reflect continued growth and strong business performance by the organization. In case we didn’t get it the first time, it also adds this: “The significant number of partner promotions demonstrates the EY commitment to offering exceptional opportunities for career progression, diverse career opportunities across all business areas and geographies, and rewards for high performance.”

Although a greater percent of women were promoted to partner this year compared to last year (34% vs. 32%), because last year’s cohort was larger the number of women promoted was about the same (329 this year vs. 330-ish last year).

EY member firms in Europe, the Middle East, India and Africa (EMEIA) had the largest proportion of new partners, with 395 promotions (41%) followed by the Americas with 322 promotions (33%). New partners in EY member firms in the Asia-Pacific area totaled 216 (22%).

The largest proportion of partner promotions came from Assurance with 304 (31%). Totals across the service lines are as follows:

• Assurance: 304 (31%)
• Tax: 268 (28%)
• Consulting: 262 (27%)
• Strategy and Transactions: 111 (11%)

The remaining new partners are 21 folks in business support (2%).

Last year’s breakdown went Assurance with 344 (33%), Consulting with 265 (26%), Tax with 235 (23%), and Strategy and Transactions with 171 (16%) plus 18 business support partners (2%).

And here come the quotes!

“As we prepare EY to continue to thrive this year and beyond, I am delighted to congratulate our new class of EY partners on this impressive milestone as we celebrate the career progression of our new partner promotes. They are fantastic stewards of the EY brand and their promotions are the result of their continuous commitment to the EY purpose of building a better working world,” said Carmine Di Sibio or whoever writes his quotes to make sure he gets “better working world” in there.

“It’s an honor to introduce this new member firm partner class, with an impressive diversity of backgrounds, experiences and perspectives. These dedicated individuals will be instrumental in helping us shape the future of the organization, and truly illustrate that EY is a place where people can explore flexible, diverse career paths as they gain the skills and experiences they need to achieve their unique career ambitions,” added Trent Henry, EY Global Vice Chair – Talent.

Jokes about canned PR quotes aside, congrats to all! You made it!

The post Promotion Watch ’23: EY Promotes 966 to Partner, Missing Last Year’s Record of 1033 appeared first on Going Concern.

Colliers is pleased to announce it has been awarded the exclusive leasing and property management assignment of Downtown Los Angeles’ EY Plaza, formerly Ernst & Young Plaza, at 725 S. Figueroa Street. The firm was retained by Gregg Williams of Trident Pacific Real Estate, who has been appointed Receiver. Serving as lead advisor for the receivership estate, Sean Fulp, Head of Office Capital Markets, U.S. Southwest, is tasked with ensuring EY Plaza’s value is preserved despite the turbulent market conditions.

Check out this pettiness:

The assignment marks the firm’s second high-profile office tower takeover in under a month, an endeavor Ian M. Gilbert, who joined Colliers from Brookfield in April, is ideally suited to take on. “The opportunity to lease EY Plaza is one we are immensely proud of,” he said. “Few office assets of this caliber exist in Downtown Los Angeles, and its rich history, open-air design, and highly-desirable walkability will prove advantageous for today’s tenant expectations.” [Gilbert has transacted over 1,000 deals throughout his 15-year career, according to Colliers’ news release announcing his hiring in April]

SoCal real estate news site The Registry said Brookfield has a $275 million commercial mortgage-backed security loan for EY Plaza and a mezzanine loan worth $30 million.

Brookfield’s investors were warned months ago that the company was struggling to pay debts. The Registry:

Earlier this year, Brookfield issued a warning to investors regarding its ability to meet its debt payments. The firm acknowledged that the cash generated from the building would not be sufficient to cover impending debt obligations, leasing costs, and capital expenditures tied to EY Plaza.

The growing prevalence of remote work, which influenced increased vacancy rates, presented a dual challenge for Brookfield. Coupled with rising interest rates, the firm faced mounting debt payments not only for EY Plaza but for many of its other properties. As Brookfield held a considerable number of floating-rate loans, the rising rates had a detrimental impact. Financial filings indicate that the interest rate on the EY Plaza loan stood at Libor plus 2.86 percent. In March, with Libor hovering around 4.55 percent, Brookfield reached its rate cap of 6.02 percent.

Occupancy has been on a downward slide since 2020 and leasing “has not caught up to prepandemic levels as businesses consider how to best implement return-to-office plans and transition to hybrid or remote work policies,” Brookfield said in its 2022 annual report. With 30% available for rent at the end on 2022, downtown Los Angeles has the highest amount of vacant office space of any major US market.

It’s the second Los Angeles building Brookfield lost this year, with more LA offices at risk of foreclosure.

Accounting to this October 2020 The Real Deal breakdown of rents at EY Plaza, EY occupies 121,000 square feet in the building and pays $28.47 per square foot (building average is $29.56 per square foot).

“EY Plaza is one of the best office buildings in all of Los Angeles, and its value is worth protecting,” said Colliers’ Fulp. “We will not sit back and wait for the market to determine its fate. The building is now very well capitalized, and we have a highly skilled team of management and transaction professionals to ensure it remains one of the premier options for tenants in downtown LA.”

The post EY’s Landlord Didn’t Pay the Mortgage on the Downtown LA Office Building appeared first on Going Concern.

He also discussed hiring, saying they’ve been seeing a slowdown in hiring across the board (he means outside of the firm), “particularly in professional services” (so, in the firm). He then talks about how consulting firms, including EY, have begun pushing back new hire start dates due to the state of the economy. “It really has nothing to do with ChatGPT…YET,” he said. “It has to do with the fact that many companies were hiring based on attrition rates that were much higher a year ago, a year and a half ago post-Covid, you know, people were leaving, The Great Resignation. Those attrition rates, for example for ourselves, went from 20, over 20 percent, down to 12, pretty suddenly.” This tracks with everything we’ve been hearing surrounding layoffs and layoffs-that-aren’t-layoffs (a.k.a. Death by PIP), firms are seeing much lower attrition rates than they budgeted for AND a slowdown in client demand, leading to cuts.

“So therefore a lot of companies, including ourselves, have found ourselves with more people than we need at this point in time,” he continued.

Foreshadowing more layoffs?

Above text was transcribed by a human with rickety hands, please forgive any errors. Just watch the video.

The post Carmine Talks About AI Putting HR Out of a Job, Attrition, and a Rough Labor Market appeared first on Going Concern.

Apparently EY Global CEO and future bus speed bump Carmine Di Sibio is not letting it go. This is a quickie published May 1 in FT:

EY’s global chief executive, Carmine Di Sibio, conceded the plan to split the firm in two was “on pause for a while”, in his first public comments since US executives last month nixed a spin-off of its consulting business.

“We are not a corporate where the CEO says something and it just gets done,” he told the Milken Institute. “We’re a series of partnerships… We couldn’t get a particular group of people to vote for it and therefore it’s on pause, and it’s really on pause for a while.”

What do we think? Denial? Optimism? A steadfast commitment to independent consulting? Or is this just his way of repackaging Everest’s failure into a small disagreement among 13,000 people?

The post Carmine Will Not Let That Split Thing Go appeared first on Going Concern.

Our favorite Aussie professional services expert Edmund Tadros at Australian Financial Review has written about Deloitte and EY bringing more than 800 warm bodies into the country to staff areas like audit and cybersecurity where talent is scarce. Let’s see what he said.

The firms have welcomed the changes to the visa system proposed by the federal government last week aimed at simplifying and speeding up the process, even though recruitment and immigration experts warn it could lead to more ‘job hopping’ by sponsored workers.

“We have hired 447 employees from overseas in the past year,” said Tina McCreery, Deloitte’s chief human resources officer.

”Of these, 195 were from other Deloitte member firms and 252 were external. In addition to this, we had 207 employees spend time with us on short-term secondments from overseas Deloitte member firms.”

Ms McCreery said the firm hires globally when it cannot find specific skills in Australia.

“We go overseas to hire talent which is not readily available onshore in hot skill/high-demand areas such as audit, cyber [security], technology-based professions.”

I appreciate Edmund adding [security] in brackets to “cyber” because I’m old and that word means something completely different to me as a child of 90s AOL chatrooms.

Australia is evidently suffering from “the West’s second-worst employee shortage after Canada” due in part to severe Covid-19 restrictions that put its borders under lock and key, keeping out not only the virus but the many skilled migrants the country is in search of. On the government’s list of nearly 100 in-demand occupations are accountants (specifically general accountants, tax accountants, and management accountants), auditors (internal and external), corporate treasurers, actuaries, economists, and management consultants. We’re just gonna go ahead and leave the accountant listing here for anyone here in ‘Murica looking to make a break for it.

Linda Rowe, Asia Pacific Global Immigration Lead at EY, totally supports a redesign of skilled immigration that would mean getting away from the occupation list and focusing instead on in-demand skills. “The move away from occupation lists to evidenced based assessments of skills is long overdue,” she said. “These new foundations will be designed to strategically focus on attracting skills and integrating migration policy with labour market strategy and the training and education system.” A good example of why the system needs to change is the fact that “data analyst” doesn’t appear anywhere on the list. In the U.S., 42.7% of new hires at accounting firms do not have accounting degrees, and even that number is based on data lagging a few years behind from current day. Safe to say accounting firms are fighting each other for any skilled data analysts they can get their hands on.

“In the last 12 months we have hired 360 people from international markets, and more than 200 of these were employed by EY member firms around the globe before joining EY Australia,” said Rowe. “More than 60 per cent of these international hires were for our Assurance practice.” [Note: we have similar auditor demand over here where 66% of accounting graduates are put in audit as new hires.] EY is facing pretty much the same problems everyone else is with too much work and not enough skilled talent, she said in not those exact words.

Here’s a good read from ABC News (theirs not ours) on the long overdue skilled immigration changes, the TL;DR is:

The government argues Australia’s most important methods to bring necessary and skilled workers are mired in bureaucratic problems.

For example, the occupation codes used on the back-end of Australia’s migration, tax and other systems have not been added to since 2013.

There are jobs in Australia today facing labour shortages that did not exist when the code was last updated.

The minister wants to do away with those “outdated, inflexible” lists, and instead give Jobs and Skills Australia the authority to determine what occupations are in need.

Question is where are firms finding this spare talent? Don’t the member firms they’re getting people from need them too?

Deloitte, EY sponsor 800+ overseas workers amid skills shortage [AFR]

The post Talent-Strapped Down Under Deloitte and EY Are Importing Staff appeared first on Going Concern.

Sources at the firm told Accountants Daily that no-one would be safe from the lists, which would be drawn up by lead partners running service lines – who sit atop the 700-plus Australian partner hierarchy – and used to inform a headcount reduction.

“They have been asked to come up with a list of people who need to be performance managed,” the sources said. “That’s code for people who haven’t hit targets – that includes partners, directors, senior managers, people who are meant to bring in revenue and are not hitting targets.”

Australian Financial Review was given the same information about naughty lists. EY Oceania managing partner David Larocca had this to say about that:

“I don’t know what that is because it’s not true. We’re in a strong position, we have no current plans to reduce our headcount and we’ll continue to make decisions as we always have,” he told the Financial Review.

“What I want to also say is performance management is BAU [business as usual]. Any high-performing organisation recognises high performance and equally addresses performance that isn’t meeting expectations. However, there are no current plans for wide scale redundancies or reducing our headcount.”

Strategy & Transactions folks at were apparently told last week there will be no bonuses because the team missed their revenue target by one percent and there will be fewer promotions than last year however leadership said there won’t be any layoffs.

US leadership has already told partners to “stay close” to clients and bill “every hour [they] can get [their] hands on.” Bringing in and maintaining business is of utmost importance not only because Everest sucked a half a billion dollar hole in EY’s pocketbook but also to stop the bleeding from the reputational  injury Everest’s failure has left on the global firm.

We aren’t sure if this is the case in Australia but in the US anyway it’s been suggested that EY is using secret layoffs to trim headcount, and we’re talking long before Project Everest burned to the ground. That’s on top of the 3,000 people (5% of its workforce) that EY US admitted to laying off just days after Everest fell apart. The firm cited “overcapacity” and economic conditions for the layoffs, though as far as we know EY kept its hiring targets modest and may have even frozen hiring completely in some areas and service lines due to the uncertainty and cost of Everest (you know, before it went kablooey).

Almost immediately after Everest’s collapse, staff in the UK were warned that cuts would be forthcoming. Sources told Accountants Daily EY Australia would be unable to avoid job cuts because all 13,000 global partners want to recoup the lost money, the Americans’ gaslighting about money saved on projects aside (leadership has said that Everest actually saved the firm $400 million that would have otherwise been spent on projects deferred while they worked out the deal). “They’ll make up the $US600 million by sacking people,” the sources said to AD. “The cuts will come from core business services such as marketing, communications and HR.”

If EY Australia ends up letting go the same amount of people as EY US (5%), that’s more than 400 people without a job.

The firm categorically denies this assertion and insists there are no plans to reduce headcount (see above re: silent layoffs then). “There is no question we are in a very different market to the past couple of years, with headwinds and uncertainty ahead of us,” a spokesperson said. “We are still experiencing solid growth and demand for our services across many parts of our business. We have pulled back on recruitment where necessary. We do not currently have any plans for reductions in our headcount.” Bet.

As for the abrupt departure of EY Oceania talent head Elisa Colak, sources told AD she was leaving “voluntarily” and did not have another job lined up. She spent eight years at the firm and to hear the sources tell it, leadership begged her not to go. “It is with a great deal of disappointment that I advise you that Elisa has decided to take a change of direction in her career and chosen to finish in her role with the firm at the end of May,” said COO Craig Robson. EY staff may feel another sort of way about her exit,

EY Australia had much higher turnover than its competitors at Deloitte, KPMG, and PwC in the year to March 2022 so it’s there isn’t much fat to trim should they decide they need to do so. It was always obvious that at least some admin people would have to go once Everest fell apart but it sounds like they aren’t the only ones who should be worried.

The post EY Australia’s Head of HR Abruptly Quits, Rumors Abound That Partners Could Get Chopped appeared first on Going Concern.

WSJ published an exclusive about the post-Everest mess at the crack of dawn yesterday and honestly the whole thing is worth a read, especially so if you have an EY.com email address. The short of it is they spent a lot of money to make Everest happen and now they have to figure out how to patch the giant hole. The plan is to borrow money from banks and use ‘accounting maneuvers’ so that Everest’s failure does not completely destroy partner payouts. Oh and Americas Deputy Managing Principal Steve Payne apparently told staff “We need to do a much better job…in billing every hour we can get our hands on.”

Global leaders of the company sought to reassure partners that they are working to cushion the financial impact from the abandoned project. That cost mostly fell on EY’s U.S. and U.K. partnerships, which did the lion’s share of the work on the breakup.

Executives at EY’s global unit said on an internal call that they plan to use a combination of bank borrowing and accounting maneuvers to ensure that the dead-deal costs have “minimal” impact on partner earnings.

The global unit is funded by the scores of national firms that make up EY’s worldwide network. Under the plan, the global unit would borrow to repay around $300 million of costs incurred by the U.S. and U.K. firms.

“The new funding facility will provide additional flexibility to manage fund flows within our business and navigate the current market environment,” an EY spokeswoman said.

EY put about $600 million into Everest before it fell apart — half of that was internal costs — and leadership said the firm saved about $400 million along the way that would have otherwise been spent on projects that were deferred while they worked out the deal. EY also intends to reduce the impact of the costs by writing them down over several years, rather than take them as a single hit to earnings, said WSJ.

You know what, let’s throw this in too:

EY’s U.S. leaders this week emphasized the need for the firm to “stay close” to its clients, worried about the impact of the high-profile failure of the breakup project.

The appeal for unity from EY’s leaders didn’t convince some staff members. Many partners at EY’s U.S. arm remain furious that their hopes of a multimillion-dollar payout from the deal were thwarted by a handful of senior auditors, according to people familiar with the matter.

Remember on Mad Men when Lucky Strike ended its 30-year relationship with Sterling Cooper and Don had that desperate meeting with Raymond J. Beans of Heinz? Yeah. Are we going to get a full page ad in the New York Times telling us EY will never work with Carmine again?

The post EY’s Gonna Borrow Money and Do Some Accounting Tricks to Spare Partner Payouts From Everest Fallout appeared first on Going Concern.

Let’s be clear: EY was always vulnerable to poaching. Months after the Project Everest news hit business rags everywhere, PwC Global Chairman and 2012 Going Concern Hottest Accounting Firm Leader winner Bob Moritz stated very clearly that his firm would be happy to take unhappy senior managers — who would not get huge payouts from Everest — and another partner told FT there was “a concerted effort” to “unseat EY partners.” Said that partner, “if we don’t unseat them then at least we disrupt them and push up their cost base.” There is no doubt other firms were lurking around in the shadows trying to lure talent away too, they just weren’t as obvious and trollish about it as PwC.

With Everest now a pile of smoldering ashes, there is a new kind of unhappiness rival firms can capitalize on: the disappointment of missing out on the promise of huge payouts. Even for senior managers who weren’t on the Everest money train, leadership believed billions in revenue would be left on the table if they didn’t cut audit off from consulting like Bugs Bunny taking a saw to the state of Florida. There’s no doubt that more than a few folks up the ladder were sticking around to see if those billions of dollars from a liberated consulting business came to fruition.

Anyway, let’s get back to WSJ:

The botched split attempt, after more than a year of work on it, has raised questions over whether rivals will more aggressively seek EY talent and if EY staff will look for an employer with a less embarrassing blemish, academics and advisers said. EY’s top executives, in firmwide calls the day after the split was halted, expressed worry that the failed split had weakened it and would encourage rival firms to poach staff.

“They may want to solicit some of the staff who they perceive were, at the very least, frustrated and unhappy about not being able to split,” said Joshua Ronen, a professor of accounting at New York University, referring to other Big Four firms.

Who is raising these questions? They are not questions, they are exclamation points. TALENT WILL GET JACKED FROM EY! For almost a year now the uncertainty of Everest has scared people away.

Some potential exits could come from employees who delayed plans to depart amid the effort to split. Last week on a call with partners, EY’s U.K. head, Hywel Ball, said he expects a wave of departures from staffers who wanted to leave but were waiting on the fate of Project Everest, as the planned split was known. He said U.K. retention levels were 85% this year, up from 81% a year earlier. Anna Anthony, a senior executive at EY’s U.K. arm, on the same call said the firm is working on reducing costs, which will be reflected in its plan for the fiscal year beginning in July.

Well at least they’re giving people a warning that they may get the axe so they can start working on that resume now.

Here’s an optimistic view: the bank run of talent will mean EY increases incentives to keep people around. You mean like those mid-year bonuses no one got last year?

The staffers most likely to leave EY are senior managers, who are approaching the level at which they typically would buy into the partnership, given the related incentives, [associate professor of accounting at the University of Washington Ed] deHaan said. The instability at the top, disagreements between the U.S. and international entities, and the financial implications over a split collectively could spur these managers to exit for another firm, he said.

Senior managers in the audit business typically serve as intermediaries between partners and the staff. “The more you hear about turnover, that creates kind of a scare from the sense of confidence elsewhere in the firm,” said Dane Dowell, an accounting and auditing consultant, adding he expects EY will work to retain people through bonuses and other incentives.

Scroll all the way down and you find the reality. Working at EY has sucked for a while now, the firm was already watching its wallet before Everest burned a half a billion dollar hole in it, and leadership is going to need to recover all those many millions lost to the pipe dream of a fully-independent consulting arm. Hell yeah they’re gonna lose people.

In addition to the prospect of infighting, the job has become more grueling for some workers. EY partners and staff have been under pressure to help maximize revenue and cut costs in a move to improve financial performance and boost the valuation ahead of the split, a U.K. partner said. Leaving the door open to a future transaction, the partner said, risks ongoing uncertainty and cost cutting when morale needs a significant boost. “It just means the uncertainty and the paralysis will continue,” the partner said.

Considering EY just fired 3,000 people due to “overcapacity,” losing talent to this mess shouldn’t be a problem for them.

The post It’s Gonna Be a Talent Bloodbath at EY appeared first on Going Concern.

It was only days ago that EY released its Empathy in Business Survey results for 2023 and if you remember, the last time they promoted empathy in business it did not go well. Recap on that from last year:

The Thing Workers Want Most Is Not Better Pay But Empathetic Employers Says Employer Unwilling to Pay You More

You can skip the click, this one post sums up the firm’s snafu:

See, they rolled this out weeks after EYers found out they would not be getting discretionary mid-year bonuses, making for a plethora of “can I pay my rent in empathy” jokes across the usual channels.

Here we are a year later and once again EY’s empathy propaganda could not have been released at a worse time. The survey results press release went out on March 30, days before Project Everest failed but months after the firm implemented numerous belt-tightening measures ahead of the split such as travel limits, quiet hiring freezes, and possibly some secret layoffs through indiscriminate use of PIPs on previously high-rated performers. And that’s just the stuff we know about. Days after the news broke that audit and consulting would not be split due to internal strife and an inability to work out big kinks like funding pensions, EY said it was cutting 5% of its workforce. But not because the failed split cost half a billion dollars, rather the firm credited current economic conditions, strong employee retention rates and overcapacity. Phrased another way: a shitty economy (true), too many people sticking around (x), and too many people on the bench. EYers will have to tell us if that last one is true.

Anyway, the survey. With the layoff news yesterday it might be even worse timing than last year.

The majority (86%) of employees believe empathetic leadership boosts morale while 87% of employees say empathy is essential to fostering an inclusive environment.

As many employees face downsizings, restructurings and a looming global recession, most say that empathic leadership is a desired attribute but feel it can be disingenuous when not paired with action, according to the 2023 Ernst & Young LLP (EY US) Empathy in Business Survey.

The study of more than 1,000 employed US workers examines how empathy affects leaders, employees, and operations in the workplace. The survey follows the initial EY Consulting analysis of empathy in 2021 and finds workers feel that mutual empathy between company leaders and employees leads to increased efficiency (88%), creativity (87%), job satisfaction (87%), idea sharing (86%), innovation (85%) and even company revenue (83%).

“A transformation’s success or failure is rooted in human emotions, and this research spotlights just how critical empathy is in leadership,” said Raj Sharma, EY Americas Consulting Vice Chair. “Recent years taught us that leading with empathy is a soft and powerful trait that helps empower employers and employees to collaborate better, and ultimately create a culture of accountability.”

“Time and again we have found through our research that in order for businesses to successfully transform, they must put humans at the center with empathetic leadership to create transparency and provide employees with psychological safety,” said Kim Billeter, EY Americas People Advisory Services Leader. “Empathy is a powerful force that must be embedded organically into every aspect of an organization, otherwise the inconsistency has a dramatic impact on the overall culture and authenticity of an organization.”

Y’all, EYers have been cagey ever since the split was announced last summer. Countless soon-to-be graduates posted frantic Reddit posts asking what the split might mean for them and if they should take a different offer instead. Retired partners came out of the woodwork to question leadership’s motivations for a split. Current employees, still butthurt about the bonus thing, understood all too well that a liberated consulting arm would require buckets of capital to get off the ground which means stingier raises and bonuses. All delivered with some ambiguous promise that IF circumstances conspired to make the consulting business successful, that success would trickle down to the grunts. The grunts in consulting, that is. Audit was always going to get screwed in this deal.

I think it’s safe to say that EY leadership needs to take their own advice. It brings to mind this quote from Shakespeare’s The Merchant of Venice: “If to do were as easy as to know what were good to do, chapels had been churches and poor men’s cottages princes’ palaces. It is a good divine that follows his own instructions: I can easier teach twenty what were good to be done, than be one of the twenty to follow mine own teaching.”

The post Empathetic Leadership Is So 2022 appeared first on Going Concern.

Ernst & Young’s U.S. arm said on Monday it was shedding 5% of its workforce, less than a week after the unit’s objection torpedoed the global accounting giant’s plan to break up its audit and consulting units.

The layoffs will affect around 3,000 of the company’s U.S. employees.

The decision was taken after assessing the impact of current economic conditions, strong employee retention rates and “overcapacity” in parts of the company, EY U.S. said.

Not many more details out yet, we’ll keep you posted.

The post EY US Just Fired 3000 People, Totally Not Related to Everest Falling Apart appeared first on Going Concern.

EY has reportedly told UK staff to brace for a wave of cuts, after the business spent $600m (£480m) globally preparing for a now-scrapped breakup of its operations.

Bosses at the accounting firm told staff during a phone call on Wednesday that it felt like a “low point” for the business, and admitted they were “disappointed and embarrassed” by the deal’s collapse.

Yeah, Andy Baldwin should be especially disappointed and embarrassed. Tremendously. He’s the one who said “it may come to timing point, so our plan is that we will continue to what we call soft separation next year, and continue to start to run these two businesses separately, albeit they will continue to be part of the single enterprise of EY” in December.

While it was not immediately clear how the costs would be spread across its global operations and over time, UK bosses said they would start cutting costs from July.

“We have inefficiencies in our business, which we can start to address now so we are already working on reducing our costs,” the EY’s UK managing partner for financial services, Anna Anthony, reportedly said on the call.

Start cutting costs? They’ve been cutting costs since last year. While EY has been somewhat open about belt tightening since Everest was first announced last spring, we’ve also heard of secret layoffs, hiring freezes, and of course the whole thing with mid-year bonuses that people are still angry about. How much tighter can the belt get?

The question is: will we see vocal pro-Everest leadership get drawn and quartered before the fallout trickles down to the lower level grunts? Are there even any spare grunts to cut? Will the drawings and quarterings be publicized??

EY tells UK staff to expect cuts after breakup failure [The Guardian]

The post EY Tells Staff to Get Ready for Some Cuts After the Everest Embarrassment appeared first on Going Concern.

Financial Times reported moments ago:

EY has called off the plan to break up its audit and consulting businesses after months of internal disagreement.

The decision is set to be communicated to partners in a note on Tuesday, said people with knowledge of the matter.

More to come shortly.

The post The EY Split Is Officially DEAD appeared first on Going Concern.

As you may recall, last June the SEC levied its largest fine against an audit firm ever — $100 million — and the lucky recipient of this record-breaking punishment was EY. The crime? Cheating. Specifically, a significant number of EY audit professionals cheated on the ethics exams one takes to become a CPA and various CPE courses required to maintain CPA licenses. (Related: here’s someone who says they were fired for sharing answers to a module entitled “Introduction: Microsoft Word” so it wasn’t just critical ethics learning but also stupid and pointless elective WBLs caught up in EY’s sweep of answer sharing prior to completion of the SEC investigation)

Additionally, EY essentially told the SEC they didn’t have a cheating problem knowing full well they did. Because of course they did, everyone does if we’re counting sharing answers to WBLs as cheating. “EY further admits that during the Enforcement Division’s investigation of potential cheating at the firm, EY made a submission conveying to the Division that EY did not have current issues with cheating when, in fact, the firm had been informed of potential cheating on a CPA ethics exam,” read the SEC order. “EY also admits that it did not correct its submission even after it launched an internal investigation into cheating on CPA ethics and other exams and confirmed there had been cheating, and even after its senior lawyers discussed the matter with members of the firm’s senior management. And as the Order finds, EY did not cooperate in the SEC’s investigation regarding its materially misleading submission.” If you care, here’s a more detailed explanation of the EY cheating scandal timeline.

How Exactly Did EY Auditors Cheat on CPE Exams? Details From the SEC Order

In its June 28, 2022 news release, Director of the SEC Enforcement Division Gurbir S. Grewal expressed shock that a protector of capital markets would engage in such unethical behavior. “This action involves breaches of trust by gatekeepers within the gatekeeper entrusted to audit many of our Nation’s public companies. It’s simply outrageous that the very professionals responsible for catching cheating by clients cheated on ethics exams of all things,” he said. “And it’s equally shocking that Ernst & Young hindered our investigation of this misconduct. This action should serve as a clear message that the SEC will not tolerate integrity failures by independent auditors who choose the easier wrong over the harder right.”

Although we didn’t know it at the time, it seems obvious in hindsight that an April 2021 all-hands call in which then-EY US Chair Kelly Grier informed staff they would be required to sign a pledge that “reinforces the commitment” to EY values may have been related to the digging around to get to the bottom of the widespread cheating at EY. The firm even produced a video that literally spells out in simple language: “We don’t cheat. On anything. Ever.” Notice how the “ever” is in bigger text, that’s how you know it’s serious.

EVER.

In its order [PDF], the SEC required EY to “engage in extensive undertakings, including retaining two separate independent consultants to help remediate its deficiencies. One consultant will review the firm’s policies and procedures relating to ethics and integrity. The other will review EY’s conduct regarding its disclosure failures, including whether any EY employees contributed to the firm’s failure to correct its misleading submission.” The order is embedded at the bottom of this post if you would like to see all actions EY was supposed to undertake, the mammoth list begins on page 9.

Anyway, it seems EY missed the deadline. Reports FT:

[The SEC] originally set a January deadline for the completion of the investigation and for EY to begin implementing any recommendations, such as disciplinary action against those involved.

The SEC settlement also ordered an independent consultants’ review of EY’s testing procedures, to be submitted by the end of March.

But the work has not been concluded, and the SEC has given the independent consultants more time to complete their review, according to people familiar with the matter.

Props to people familiar with the matter for feeding FT that information because honestly everyone totally forgot about that cheating thing.

The independent consultants are supposed to review EY’s policies and procedures to make sure cheating doesn’t happen in the future and examine “whether any members of EY’s executive team, general counsel’s office, compliance staff or other EY employees contributed to the firm’s failure to correct its misleading submission.”

“We have met every deadline required of us, with the agreement of the SEC staff, and extensions are not uncommon,” EY told FT.

EY has been understandably focused on Project Everest this past year, currently bickering amongst themselves about how to fund $7.5 billion in pensions and allocate tax professionals among the separated audit and consulting businesses. Last we heard, leadership is “making progress on the key elements needed to move forward on Project Everest” per a statement sent to the firm’s 13,000 partners a week ago.

So now you’re caught up on where we’re at with the cheating thing. Some say the spirit of answer sheets haunts overwhelmed EYers who ain’t got time for WBLs to this day.

SEC Order against EY for cheating on ethics exams and CPE by Adrienne Gonzalez on Scribd

The post EY Hasn’t Finished That Independent Review Into Procedures to Prevent Another Cheating Scandal appeared first on Going Concern.

This reporting requirement means Australian Financial Review can publish articles like this:

More than one in three staff members, or 2700 workers, resigned from consulting giant EY in the year to March 2022, a rate of departures that far outstripped the firm’s big four rivals and the overall business average where one in four employees exited during the same period.

EY’s total staff numbers fell between the 2021 and 2022 reporting periods, data submitted by EY to the Workplace Gender Equality Agency (WGEA) shows. In contrast, employee numbers rose strongly at its rivals, Deloitte, KPMG and PwC.

Although EY provided the data itself, the firm has challenged the data and “provided alternative figures from different time frames and alternative calculations to show the firm ‘aligned with our industry in terms of turnover, and staff numbers have increased steadily over the last three years’,” says AFR

Deloitte, KPMG, and PwC accept the WGEA data and say they too experienced peak turnover during the time period EY is pissy about. PwC Australia CEO Tom Seymour says the reporting requirement “holds our feet to the fire” and serves an important role in “driving lasting, system-wide change” at his firm.

The percentage of employee resignations at EY was 37 per cent, or 2723 staff, in the year to March 2022, and 21.2 per cent, or 1593 staff, in the year to March 2021, WGEA data shows.

EY’s WGEA data also shows the total number of employees in the year to March 2021 was 7501 and fell to 7287 in the year to March 2022. The firm grew revenue by 9 per cent to $2 billion in 2020-21 and by 18 per cent to $2.4 billion in 2021-22.

EY countered its own WGEA data with alternative calculations about employee exits and different total headcount figures.

“WGEA data reflects a range of timeframes with headcount provided in a one-day snapshot,” said Kate Hillman, EY Oceania’s people, place and culture leader.

Hillman said staff turnover peaked at 23 percent coming out of the pandemic. “Since then, the trend has returned to a level of staff turnover at around 20 percent,” she said She also offered some headcount numbers: 7588 average annual headcount in June 2020, 7546 in June 2021, and 8623 in June 2022.

“The higher rate of exits at EY raises questions about why the firm is unable to retain staff at a similar rate to its peers and the cost of rehiring and training new staff, wrote Edmund Tadros. “Meanwhile, the falling staff numbers during the surveyed periods also raises questions about staff workloads.”

EY disputes data showing more than one in three staff quit in a year [AFR]

The post Turnover at EY Australia Was Significantly Higher Than Competitors’ Turnover Last Year appeared first on Going Concern.

Wall Street Journal reports that EY Global CEO Carmine Di Sibio and EY US Chair Julie Boland will be going head-to-head in Palo Alto this week to hash things out. As you may remember, Boland dared to raise some questions about the split in a partner call a few weeks back so when this whole thing falls apart it will be her over whom the bus drives.

Though the history books will no doubt record Boland as the split’s biggest nemesis (despite her being in support, should the issues get worked out), up until her explosive partner call the split was held up by $7 billion-something in unfunded pensions, the issue of how to share legal liabilities without the firm’s traditional partnership structure, and even former partners sniffing around asking where their payouts were. And if all of that isn’t enough, there’s the issue of divvying up the tax people, with the audit side fighting to make sure they get enough of them.

It’s a lot. Maybe they’ll be able to work it out this week.

WSJ:

The fate of Ernst & Young’s proposed split may be determined in Silicon Valley this week when feuding executives meet to hash out a deal that is acceptable to all factions.

One of those powerful factions won’t be represented at the meeting and doesn’t even work for the global auditing firm. Yet some of EY’s retired partners are playing a key role in trying to block the deal.

This week’s meeting in Palo Alto, Calif., sets the stage for a potential showdown between the breakup plan’s architect, EY’s global leader Carmine Di Sibio, and the person most likely to derail it, EY’s U.S. leader Julie Boland. Tensions between the two senior executives have escalated sharply in recent weeks, the people familiar with the matter said.

Ms. Boland, EY’s U.S. chair and managing partner, last week said the firm still needed to resolve questions affecting the financial strength of both businesses that will be created by the split. Mr. Di Sibio responded with a direct appeal to EY’s 13,000 partners, telling them in an email they had “the right to vote on whether to proceed with a transaction,” according to a copy of his message reviewed by The Wall Street Journal.

Side note: is anyone hearing about a coup brewing at EY? Because we’re hearing things about Carmine.

So the WSJ piece tells us something interesting: Turns out Julie Boland’s dad Jim Boland is among the retirees holding up the split. The retired partners don’t get to vote but they do have quite a bit of influence and though they won’t profit from the split, their futures are tied up in it anyway:

Their central concern involves money. EY has around $7 billion of promised payouts to its retired U.S. partners that aren’t backed by a specific pot of money. Retired partners worry the audit-focused firm, weakened by the sale of the consulting arm, may not generate sufficient earnings to meet these pension-style commitments in future, according to memos reviewed by the Journal.

“We are the largest creditors of the company and want to make sure our rights are protected,” one retired U.S. partner said.

The firm told retired partners in an email in February that it was considering boosting pension payouts or even giving them shares in the consulting business if the split goes ahead. Prior to this, the retirees expressed concern that a split would weaken both sides of the business, particularly audit.

Good luck with all that, guys.

The post EY Split Update: There’s a Battle Royale Going Down This Week appeared first on Going Concern.

Last spring, administrators for collapsed healthcare group NMC Health filed a big ole negligence lawsuit in London against EY, who audited NMC for 14 years and missed a billion and a half dollars that were inappropriately transferred into NMC founder Dr. Bavaguthu Raghuram Shetty’s bank account before NMC went bust. Shetty, who is in his own legal trouble, is himself suing Bank of Baroda, EY and Credit Europe Bank of the Netherlands in a New York court for $8 billion in damages.

But we’re not here to talk about him, we’re talking about NMC administrators and how they want their couple billion dollars should the court agree with them that EY was negligent in its professional duties. This is from Law.com in May 2022:

Administrators for NMC Health, the one-time London Stock Exchange-listed entity that emerged from a UAE-based restructuring deal last month, have filed a $2.5 billion claim against Big Four auditor EY for alleged negligence.

The claim, which relates to a seven-year period in which EY was engaged to oversee the hospital operator’s accounts, was filed at the High Court in London on Thursday, according to press reports.

“The issues that we found at NMC Healthcare following our appointment were broad, complex and multi-layered,” a spokesperson for Alvarez & Marsal, the joint administrators, told Law.com International.

“As part of our wide ranging investigation into the situation, we have looked at the role of the auditors and have now launched formal legal proceedings against EY in the U.K. for audit negligence with regards to its work with the company between 2012 and 2018. As administrators, we have an obligation to maximise returns for creditors and this action is part of those wider efforts.”

EY naturally does not agree with any of this and has said that “reasonable assurance” does not cover the falsification and concealment of accounting records and other documents.

Obviously these court battles take time and NMC administrators at Alvarez & Marsal want to be sure there will be a cool $2.whatever billion for them to be awarded should the eventual ruling work out in their favor. EY has been understandably quiet about split specifics, though a few weeks ago Global Managing Partner Andy Baldwin did tell Bloomberg Radio that legal liabilities — as in, how to spread around liability currently neatly handled by the partnership structure — and the firm’s unfunded $7.5 billion pension liability were the two big things standing in the way of the partner vote. This was before we found out about internal tensions (“a shitshow”) and fighting over tax people that led to the split being put on pause.

Now on top of their own drama, EY has the Ghost of Clients Past gumming things up.

FT reports:

The administrators asked a judge on Monday to force EY to disclose details of its finances or insurance cover, which would indicate its ability to pay any potential penalty, before going ahead with the planned global split.

The legal claim is not due to reach a full trial until next year at the earliest but lawyers for the administrators on Monday asked the High Court in London to order EY to disclose details of the planned spin-off of its global consulting arm, including in the UK, at least 28 days before it calls a vote on the transaction or, if there is no vote, 28 days before the separation goes ahead.

“NMC harboured concerns that the effect of EY’s planned separation would be to reduce EY’s assets and future income such that EY would be unable to meet the substantial judgment debt (more than $2.7bn) that would arise if NMC prevails,” the administrators said in a written submission to the court during Monday’s preliminary hearing.

“EY has provided nothing in the way of confirmation or comfort that following the separation, it will be in a position to meet the damages award in these proceedings, including by reference to EY’s insurance cover,” they added.

Basically they just want to know that they’ll get their money, just like everyone else in this situation (including former partners).

Lawyers for the NMC administrators said they had asked EY to confirm that it had insurance to cover the amount claimed by NMC’s administrator. If EY could not give this confirmation, the administrators said it should disclose its net asset position in the UK, which stood at £248mn in July 2021.

The administrators said that if EY’s UK net assets were less than the $2.7bn claimed, it should confirm that it would not diminish or dissipate its assets by transferring its audit operations “for less than full market value” or make distributions to its partners. The final request would in effect prevent EY from paying its partners in the UK, who are remunerated out of the firm’s profits.

EY lawyers — who unsurprisingly think this lawsuit is a joke — said that the firm would provide “relevant information” to administrators “in good time.” The lawyers added that this move by NMC adminstrators was “premature and unnecessary” because planning for the separation “is paused”, and said the administrators’ request for information should be dismissed or adjourned, said FT. Take that how you will.

Those comically oversized bags of money partners were dreaming about when the split was first announced last year seem to be getting further and further from their reach…

The post Former Client Cockblocks the EY Split to Make Sure They Get the $2.7 Billion They’re Suing EY For appeared first on Going Concern.

It was less than a year ago that EY put $3 million Aussie bucks into a space business in partnership with Swinburne University of Technology that “will solve big business problems by utilizing space-derived data and services for terrestrial benefit” per its lead partner Anthony Jones. Let’s check out the June 2022 announcement from Swinburne and figure out what’s going on here, the details of which are way beyond our paygrade:

Protecting our environment, supporting resilient communities, and solving real-world problems will be the focus of a new Space Tech hub created by Swinburne University of Technology and EY Australia.

Supported by $3 million from EY, the hub will leverage Swinburne’s global leadership position in space, its renowned academics and researchers, and innovative technology such as the OzSTAR supercomputer to provide tech solutions to industry partners.

Director of Swinburne’s Space Technology and Industry Institute, Professor Alan Duffy, said the pioneering hub was all about applying the knowledge gained from research across the universe to solve complex problems faced on Earth.

“We are excited to be combining Swinburne’s world-leading research, technology and education capabilities with EY’s deep global connections and end-user insights to create sustainable space tech solutions to real-world issues,” Professor Duffy said.

“Through the use of ground-breaking technology, like the Swinburne OzSTAR supercomputer, and our access to the next generation of talent, this partnership will position Australia’s space industry at the forefront of global economic, environmental and social opportunity.”

The Space Tech hub will initially have three key focus areas:

• Improving community resilience and environmental health
  Helping communities and businesses effectively respond to the impact of natural disasters (fire, flood, climate) and climate change-related pressures.
• Improving productivity
  Boosting the safety and performance for industry partners through the adoption of space technology for managing critical infrastructure and assets under challenging conditions.
• Creating an ecosystem to solve problems of national interest
  Positioning Australia to lead globally in space technology to resolve issues of climate impact, land management, logistics and defence.

A dedicated EY team of 15 staff – comprised of scientists, data and analytics professionals, and AI specialists – will work on the hub, led by EY partner Anthony Jones, with support from Swinburne talent and technology.

“The Space Tech hub will solve big business problems by utilising space-derived data and services for terrestrial benefit,” Mr Jones said.

“We’ll be leveraging the capability of EY’s own astrophysicists, machine learning engineers and data scientists, as well as working with academics from Swinburne University of Technology, to help solve community resilience issues, drive decarbonisation initiatives, and aid in reducing the impact of natural disasters on communities.”

The hub builds on the Swinburne Space Technology and Industry Institute’s work with the EY Data Science Challenge, developing AI to help spot bushfires from space for the Country Fire Authority.

It forms part of the Institute’s pledge to build the engine room for space innovation and economic growth in a sector projected to be worth $1 trillion globally by 2040.

That OzSTAR supercomputer they mentioned? It is one of the fastest supercomputers in Australia and in the top 500 supercomputers worldwide with over 5,000 processing cores, 230 GPUs, a collective 25 Terabytes of system memory and access to over 6 Petabytes of storage (one petabyte = 1,024 terabytes).

Shall we assume that NewCo will get the space geeks if audit and consulting get divorced (a possibility looking less and less possible by the day)? We shall.

Bringing us back to current day, AFR reported yesterday that the burgeoning space business has scored former NASA engineer Brian Killough for the team. Killough retired from public service last December and brings several decades of experience to the table. His bio:

Dr. Brian Killough, former NASA engineer and Earth scientist, has compiled 35 years of experience at NASA with the last 15 years leading the international Committee on Earth Observing Satellites (CEOS) Systems Engineering Office (SEO). This office developed Earth observation data technologies and applications for global benefit. Dr. Killough has played a significant role in the evolution of the Open Data Cube initiative and the development of regional data cubes in Africa, and the Pacific Islands. Dr. Killough has authored over 30 technical papers and received the NASA Exceptional Service Medal in 2016 and the 2021 Group on Earth Observations (GEO) Individual Excellence Award. If he is not consulting and working with satellite data, you might find him on a golf course. Outside of work, this is one of his lifelong passions.

His official title per LinkedIn is “Executive Consultant, Satellite Data and Applications.”

The future has arrived and you can bill for it! WOO.

Former NASA exec joins EY’s satellite image processing service [Australian Financial Review]

The post TIL EY Has Commoditized Space appeared first on Going Concern.

Then there’s this — unconfirmed and now removed — post on Fishbowl a couple days ago:

“This will be resolved within weeks, not months, because we not only need momentum across the deal but we need clarity for all our stakeholders,” said Patrick Winter, EY’s Asia-Pacific managing partner a few days ago (AFR). “Globally we remain committed to the transaction. It’s in everyone’s interest to get this resolved as quickly as we can.”

Oh, we know. In the meantime, all of EY is basically in a holding pattern.

Poor Carmine, up at 4 in the morning sending desperate emails to make sure this gets done.

Earlier:
Deloitte Global CEO Joe Ucuzoglu Just Mic Dropped EY’s Messy Split DramaThe EY Split is Falling TF Apart
Legal Liabilities and Pensions Are Holding Up the EY Split
EY Israel Has Rejected the Split
EY UK Chair Insists Audit Will Not Be the Red-Headed Stepchild of Professional Services if the Split Goes Forward
EY China: We Are Not Splitting, Sorry
And:
All Project Everest coverage

Elsewhere:
EY US boss signalled wide-ranging concerns over split [Financial Times]
‘Frustration and chaos’: EY fights to save Project Everest after US rebellion [Financial Times]
To split or not to split: EY confronts the question [Financial Times]
EY split threatens to weaken both sides of firm, say retired partners [Financial Times]
EY plan to split audit and consulting arms slowed down by leadership shifts, debt [Financial News]
Brand value at risk in planned accounting split of Ernst & Young audit and consulting lines [Canadian Accountant]

The post With Project Everest on Pause, Let’s Pause a Sec to Shed a Tear For EY’s Reputation As Transaction Advisors appeared first on Going Concern.

Can’t embed it so you’ll have to head over to Deloitte.com to see the whole thing but I did transcribe the first two minutes up until he offered the TL;DR. Quick thank you to Joe for speaking clearly and slowly enough for my old arthritic fingers to keep up.

The success you’re driving is extraordinary and sitting at the foundation of that success is our multidisciplinary private partnership model. Our choice to keep this incredible breadth of expertise and capabilities together under one Deloitte umbrella. This is a topic with a lot of visibility right now. One of the other Big 4s is talking about structurally separating their organization. The complexities surrounding that have been in the press recently and some of their senior leaders are out suggesting not only do they think this is a good idea for them, but they think others in the Big 4 would want to do this also and that their path is the roadmap for reshaping the profession. That is a direct quote.

I’ve had conversations on this topic with so many partner groups around the world. And in light of all this public attention I thought it was important and timely to synthesize all those discussions to make sure all of you have access to the complete picture with full transparency. The strength of conviction we have in our model. The depth of thinking and analysis we’ve put into this. The alignment we have on this topic around the world. And some candid detailed answers to the questions that come up most often. And being that we’re in the business of trust and transparency, I’m gonna put this very same video up on our website. We are exceptionally proud of the Deloitte we’ve all collectively built, we are confident it is serving our stakeholders well.

Here comes the TL;DR:

For those who just want the short version, I will be unequivocal right up front. Our multidisciplinary model is allowing us to deliver incredible impact across so many different stakeholders. Our clients value the breadth and capabilities, our people value the diversity of career paths, the markets value the quality we deliver, and our communities value the impact that we make on so many big societal issues. This model is going to continue to be foundational to our strategy going forward. It has some complexities we have to manage, we invest a lot in doing that.

[short snip]

When you take a step back and you look at the power of our combined organization, the results speak for themselves.

The Guardian has better transcription capabilities than we do and added this:

He said: “History is littered with multiple examples of grand aspirations around these types of transactions that I’m sure sounded great and had pretty slide decks, lots of big promises. It’s easy to get swept up in deal fever but this has actually never once played out as intended.

“We’ve looked at how we go about a separation if we were ever compelled to go down that path. You’d expect us to have done that.”

Deloitte’s leadership has so far decided against splitting the business, however. “It’s not even a close call,” Ucuzoglu said.

Did someone say pretty slide decks with lots of big promises?

When the news of a potential EY split first broke late last spring, rumors immediately began flying that Deloitte would be next in line to break consulting off from audit. Whoever told the Wall Street Journal that information was obviously not as familiar with the matter as they purported to be, Deloitte quickly squashed the rumor.

Since then, various publications have repeated statements from Deloitte, KPMG, and PwC that no matter what happens with EY, they do not plan to split. Meanwhile, some of these firms are eagerly lurking in the wings hoping to poach talent abandoning ship before the split happens.

In the last several months, EY has pushed back the partner vote on the split, citing details in need of hammering out. Up until last week it appeared to be moving forward as planned despite these delays, and EY Global Managing Partner Andy Baldwin went so far as to say “our plan is that we will continue to what we call soft separation next year, and continue to start to run these two businesses separately, albeit they will continue to be part of the single enterprise of EY” in December when the legal details and market conditions were really beginning to hold things back. But just this week the cracks started to show and insiders say split discussions among partners are now plagued with “chaos”, “low morale” and “infighting.”

Said EY in a comment to The Guardian:

As part of our deliberation and due diligence in connection with the proposed transaction, we are engaging in a dialogue with the largest EY country member firms to determine the final shape of the transaction.

This transaction is complex and will be the roadmap for reshaping the profession, so it is important we get this right. We remain committed to the strategic rationale that underpins Project Everest and believe that a deal can and should be done.

This is getting juicy!

The post Deloitte Global CEO Joe Ucuzoglu Just Mic Dropped EY’s Messy Split Drama appeared first on Going Concern.

During Wednesday’s partner call, [Julie] Boland expressed a desire to move forward with the split, said two of the people familiar with the matter, although it was unclear how long the pause may last.

But her comments are a clear indication of the tensions that have simmered during internal talks, which have effectively pitted two sides of the business against each other.

Reminder: Julie Boland, who has no experience in audit, was chosen as future head of assurance for the spun-off audit business.

The plan was for tax folks to make up about 14 percent of the audit business, though someone who knows what they’re talking about told FT that number was more likely to be 20 to 25 percent, possibly more in the U.S. where rules about offering tax advice to audit clients are a bit softer than other countries. Said FT, EY’s US auditors have been pushing for more of its overseas tax practices to be retained in the audit firm as well so that they can work for international subsidiaries of crucial US clients.

Not even a day after FT said there was trouble in paradise they followed up with another article to say EY is “in disarray as internal war over break-up plan bursts into open.” Geez. What now?

Global chair and chief executive Carmine Di Sibio sought to reassure staff on Thursday that the separation of the businesses would go ahead.

But current and former EY partners and staff said Di Sibio and other senior leaders who masterminded the break-up plan should leave if they cannot make it happen. There would be a leadership transition if it did not go ahead, a person familiar with EY’s plans said.

Boland’s intervention has sparked frustration among partners and staff over possible delays or the collapse of the deal, with some describing “chaos”, “low morale” and “infighting” at the firm in recent days, as the audit and advisory sides attempted to resolve their differences.

In a message to staff on Thursday morning, seen by the Financial Times, Di Sibio said the firm’s leaders would spend the “next few weeks” trying to resolve the impasse.

He added he had a “high degree of confidence” that the plan, known as “Project Everest” and designed to liberate the consulting business from conflict of interest rules that prevent accounting firms from advising audit clients, would go ahead.

Since yesterday’s partner call the emails have been flying. The message seems to be “don’t worry, we’ll figure this out and the split will happen.” The information FT is getting seems to contradict those assurances.

Can we safely assume that Julie Boland will be forced out? Worse, that the split is going off the rails and Project Everest should be renamed to Project Krakatoa? And what will happen to all those new hires who are allegedly excited about the split?

For months now even the most optimistic of EY leaders have gone on record to say even if the details get hammered out to the satisfaction of voting partners there is still the issue of market conditions that could delay the consulting IPO, a critical component of the split. Maybe that won’t be an issue.

Stay tuned. I’m sure there will be more drama in the days and weeks ahead.

The post The EY Split is Falling TF Apart appeared first on Going Concern.

When the news of the split first broke in May of last year, it was rumored the vote would go down that summer. Then the winter. And, most recently, the vote was expected to take place by the end of this quarter. As we approach March, Global Managing Partner Andy Baldwin says the firm wants to hold the vote in April or May, though the split may not happen until the end of the year or possibly into 2024.

Bloomberg reports:

The break up of the Big Four accounting firm is “inevitable” due to regulatory and capital return pressure, Andy Baldwin, a global managing partner at EY, said in an interview with Bloomberg Radio on Monday. The firm stands by its plan — codenamed Project Everest — for the split and wants to ballot in April or May.

“This is probably the most complex corporate transaction in history,” he said. “The plan is we will be putting this to the vote probably in April or May,” and target “some form of capital transaction” by the end of the year, although that timetable may slip.

You can hear Andy Baldwin’s Bloomberg Radio interview here. In it, he’s asked if the split is something EY wants to do or if it is a necessity due to regulatory pressure (read: independence rules), to which he says regulatory and capital pressures are mostly driving the decision. Standing in the way currently are some details yet to be worked out, the main ones being a hammering out of the legal liabilities that are currently shared among partners and sorting out pensions, which he says “at different points of time run deficits” like many corporate entities. The split “involves effectively 77 simultaneous deals so inevitably we’re sort of working through a lot of complex issues with the teams and obviously for the partners,” he said.

The liberated consulting business is expected to raise $30 billion when it goes public.

So that’s where we’re at with the EY split in current day, consider yourself sufficiently caught up.

See also:
Previous Project Everest updates

The post Legal Liabilities and Pensions Are Holding Up the EY Split appeared first on Going Concern.

Dear Partners and Leaders,

I am Nicole Wang, a manager from Hong Kong Core Business Consulting – Supply Chain & Operations Team. Hearby I would like to report Steven Xiong, the senior partner in Greater China, who sexually has harassed me and my colleague. In addition to Hong Kong SC&O Consulting Team Director Hilbert Tsang and Senior Manager Florence tang for using female subordinates as sexual resources for the benefit of their superior, as well as workplace bullying behaviors including maliciously smearing and stigmatizing victims afterwards. It is a pity to get in touch with you for such a reason, and I hope you can take a few minutes to read this email.

Details

At 9:00 pm on February 8, 2023, I received a message from Florence Tang to invite me to a KTV party at 9:30 in Causeway Bay with Steven Xiong. There were Nelson Chow (Hong Kong partner of my team), Hilbert Tsang, Florence Tang and Steven Xiong in the room.

9:45-11:00
During this period, another five or six colleagues joined us one after another. I sat and chatted with Steven, and he asked to add me on WeChat. Florence took the lead in making inappropriate jokes, for example: “Nicole (myself) is single, she lives alone, Boss Xiong can go to her house tonight.” Although I felt that it was uncomfortable to make such a joke in front of a senior leader whom I met for the first time, I did not want to affect the current atmosphere, so I laughed it off with everyone.

It was later learned that Hilbert called and sent messages several times at around 8:00 and 10:40 that night to urge another junior female colleague A, who was working overtime, to come to “accompany the boss” as soon as possible, even though A was working overtime at the client company until late that night. He said: “I was very drunk with the big boss, you come faster!” “Boss Xiong is very drunk now, he will agree to anything you say.” But he did not urge to invite other male colleagues to come. It is obvious that he has a clear choice and direction for who needs to come and “accompany the boss”.

11:00-11:15
A arrived at the scene around 11pm. As soon as she entered the room, Hilbert told her, “Sit down next to the big boss.” Then he arranged for her to sit on Steven’s right. Florence said to Steven after A sat down: “Boss Xiong can hug her!”

The “joke” gradually escalated. Florence asked Steven loudly many times, “Do you like Nicole or A more?” Steven answered A for a few times then answered Nicole for a few times, and gradually began to say loudly, “My favorite is Nicole”, “She is my type”, “I have feelings”. I can only answer: “Thank you boss for your appreciation.”

Nelson (Hong Kong partner of the team) left around 11:15.

11:15-11:30
The situation suddenly escalated at an unimaginable speed.

Steven, Hilbert, another female colleague and I sat together and sang a few songs together. During the period, Steven, who was sitting on my right, moved his left hand to my waist, and then he started to move his hand upwards. I realized that Things got serious, I started twisting my body and clamping my arms to stop it. He didn’t stop and his left hand turned around to catch my shoulder and slid to my breast to caress. I twisted more and grabbed his hand to stop it. He took my hand easily. Sweating all over from fright, I felt he kissed my face. Then he tried to put his hand through the bottom of my clothes. I couldn’t bear it and turned my head to him and said, “Steven, no.” He kept trying and didn’t stop until I repeated it. Finally he got up and went to the bathroom.

I was still in shock, and a few colleagues sitting on the left immediately came to ask me if I was ok. Only then did I know that the colleagues sitting on my left felt my gradually increasing movement. They suggested to go to the bathroom and switch seats with me when I came back.

When I got up to go to the toilet, I passed by Hilbert and said, “I can’t take it anymore, let’s end it as soon as possible.” He immediately rejected my requests, and I said, “His wandering hands are all over me.” He lightly smiled and said, “Oh really?”

I told the female colleague who rescued me in the toilet what had happened in detail and said that we had to pay the bill and leave immediately. After returning to the room a few minutes later, I found that Steven had already thrown himself on A who was sitting on his right.

According to A’s description afterwards, Steven suddenly put both his arms around her. One of the arms went around her shoulder to touch her breast. She kept trying to pull it away but felt Steven insisting strongly. At this time, she began to ask Florence and another male colleague for help. Florence, the only female executive in the room, not only did not help, but also pointed her mobile phone at A and Steven. Only the male colleague came over and suggested go home with A. During the period, two female colleagues also offered to toast with Steven and take a group photo so that A can escape.

I found out afterwards that one of the female colleagues couldn’t stand it anymore and asked Hilbert to pay the bill to end the night several times. Hilbert finally agreed, and Florence said to the female colleague: “The real world is this dark.”

After 11:30
Before leaving the room, Steven stood up and hugged A again (more than 10 seconds). Then he came to hug me, and he tried to find my lips. I was able to escape by blocking with my hands. A told me afterwards that Steven also tried to kiss her while hugging.

Before leaving the room, Steven asked me: “Nicole, you are not going to send me back to the hotel?” I said it’s not on my way home and rejected.

The evening was over, but the bullying and malice continued.

Florence said below words on the taxi home, in front of three other colleagues:

“I think Nicole was enjoying it.”
“Actually, who knows if she wants to go higher position through this, I saw her exchanged WeChat with the boss as soon as she came.”
“Nicole is not young, she must have experience with these men and women’s physical contact. So she much [sic] know where are the boundaries. From my understanding, if she doesn’t say no then it’s tacit consent.”

The night is over. This incident had a serious impact on the body and mind of A and me. We were depressed and negative for several days in a row, and A could still feel the StevenAt that time, she squeezed her breasts hard, and decided to seek help from a psychiatrist.

My Voice

Sexual harassment in the workplace is the unscrupulous bullying and trampling of subordinates by superiors using resources and power. Nowadays, Metoo Movement is in full swing around the world, and the voices supporting women in society are deafening. As an executive who has worked in a top multinational auditing and consulting firm for more than ten years, they can use their power and position to make such indecent and shameless actions and make such indifferent and vicious remarks in public. It’s really shocking.

The reason why the book “Black Box: Shame of Japan” is called “Shame of Japan” is because this incident is by no means the shame of a male perpetrator, but the shame of the whole system of society, judiciary, administration, and media. Judging from this incident I experienced, the perpetrator is certainly shameful, but the organizers, instigators, cold-eyed bystanders, whitewashers are even more shameful. It is also a shame to the team’s values and culture, and a shame to the performance appraisal system for promotion and salary increase.

Steven directly manages SC&O in Greater China including Mainland China, Hong Kong, and Taiwan team. He has the direct power of deciding Hilbert and Florence’s promotion, in my team in Hong Kong, everyone knows that apart from the partner, Hilbert and Florence have the absolute power of deciding the performance appraisal and promotion for the team. Steven’s behavior is certainly shameful, but the development of the situation is absolutely inseparable from Hilbert and Florence who has actively organized, abetted and contributed by calling and urging female colleagues to come to entertain the boss and encourage the boss to have physical contact with female colleagues in extended work occasions. When the sexual harassment happened, these two, as the core leaders of the team in the room, not only did not immediately stop and protect their subordinates, but were happy to see the success of their plan. After what happened, Florence still tried to stigmatize the victims to excuse what they did. Till now, these two are still obsessed with it and don’t take it seriously. The next day after the incident, they have already started to arrange the “Team Dinner with Steven” in March.

After the incident, I kept thinking that all the male executives have daughters. And the senior manager who smeared the victims afterwards is also a woman. Did they ever think that their daughters would enter the workplace on day? Can they accept their daughter being treated like this? Do they speculate that maybe their daughter enjoys it and uses it as a shortcut to the top? Would they blame their daughter for not refusing immediately? Will they encourage their daughters to stand up to identify the perpetrators, and speak out bravely for women? I am really confused.

I joined the Big 4 Consulting Firm when I graduated and have worked in the Big 4 for nearly 7 years. During these years, I have been working diligently, performing well, and treating my subordinates kindly. Colleagues from the previous Big 4 firm and EY who have worked with me are all aware of my character and conduct. I have repeatedly expressed my recognition of the Big 4 corporate culture and employee values in private and in public, but I did not expect to be trampled on by the regional senior executives and be used as sexual resources by my direct superiors. I also feel extremely disappointed and saddened by the organizers and abettors who watched with cold eyes and slandered maliciously.

The education I have received and the value I hold do not allow me to swallow my anger and let things go. I cannot tolerate the existence of such people, behaviors, words, and values in the world of 2023. I cannot tolerate being trampled and maliciously smeared in a team that I used to love and trust so much. And I cannot tolerate seeing the junior who has only worked for less than two years feeling overwhelmed by such bullying. I had to speak out. If I don’t, these perpetrators, organizers and bystanders will continue to rely on their positions to distort the facts, bully more weak people, continue to smear the victims, promote the theory that the victims are guilty, and continue to contribute to the toxic team culture and influence EY core values and corporate image.

I was planning to report this after I resign, but I couldn’t sleep at night and had to fight back immediately. I am not as senior as these people and my voice might be soft, but I understand in the core values of the Big 4 in and out. I have reason to trust EY, and I have reason to believe that the senior management team can hear my voice and uphold justice for us. We are not wrong, why should we be afraid?

I hope that the firm will not only severely punish the perpetrators, but also the organizers, instigators and malicious smearers. I do not accept any apology or compensation. I just hope that the truth can be restored, justice will be given to the victims, fairness can be given to women in the workplace. And the upright corporate values, culture full of justice and a safe working environment can be given to all EY coworkers.

Best regards,
Nicole

On the r/consulting thread, a user who says they have worked with everyone named in Nicole’s letter shares some info about these colleagues and the overall culture at the firm:

This email from EY China Chairman Jack Chan addressing the accusations has not been verified, though parts of it are referenced in the South China Morning Post report. It too has been transcribed in its entirety.

Subject: Greater China leadership communication to all people
17 February 2023 at 20:42

Dear colleagues,

I am sure most of us are aware of a recent serious ethics report relating to sexual harassment claims against a partner circulating in the social and news media.

I appreciate that many of you may be concerned and would like to know what is happening. On behalf of the Greater China Leadership Team (GCLT), I would like to communicate with you directly to address this serious matter.

At EY, our Global Code of Conduct provides an ethical framework for everyone in the organization, regardless of their individual role, position or practice. We understand that deviation from, or violations of, the Code are unacceptable and that we must speak up whenever we are aware of such behavior. I and the GCLT cannot express enough that Greater China has a zero-tolerance position with regards to unethical behavior, and are committed to upholding our core values, including integrity and respect. There is no compromise nor negotiation as we stand against any such action of behavior.

EY has created a support network that is available for consultation and advice, to help each of us live up to our commitments under the Code. This includes our provision of an Ethics Hotline allowing a means to report safely any activity or behavior that is inconsistent with our Global Code of Conduct. All reports received will be given careful attention by the organization to ensure matters raised in the reports are thoroughly investigated in strict confidence.

We can confirm that this recent ethic report has been received internally and we have commenced a formal process to look expeditiously and comprehensively into the matters raised in the report. Pending the results of a thorough and impartial investigation, any identified breach of the Code will result in strong, decisive and proportionate disciplinary actions.

We have also arranged for immediate and continued support and counselling for the concerned personnel.

I am sure we all agree that we need to respect the personal privacy of our people throughout this process and therefore we are unable to share additional details of this matter.

Let’s work together to build a workplace culture that is free from harassment and where everyone feels safe and respected.

Thank you for your attention.

This is not the first time EY and sexual harassment have been together in the same sentence, and in fact the firm has had several incidents over the last couple years around the globe. I’ve included links to these stories below.

We commend Nicole for her bravery in speaking up and hope justice is adequately served. We’ll keep you updated on any developments.

Related articles:

If EY Treats a Partner Who Reports Sexual Misconduct Like This, What Hope Do Other Employees Have?
Another Former EY Partner Has Filed a Sexual Harassment Complaint Against the Firm
Ex-EY Partner to CEO Mark Weinberger: ‘Let’s Make EY a Better Place to Work for Women’
EY Switzerland Suspends Chief Talent Officer Accused of Sexual Harassment
EY Switzerland Managing Partner Accused of Sexual Harassment Has Been Relieved of His Duties
EY Won’t Waive Arbitration Provision for Ex-Partner Who Says She Was Victim of Sexual Harassment
Oh Look, EY Is On the Receiving End Of Another Sexual Harassment Complaint

The post EY Hong Kong Consultant Alleges Sexual Assault, Bullying, and Ghislaine Maxwelling By Her Superiors in This Detailed Account appeared first on Going Concern.

As the firm’s global partners prepare for a vote to advance the split, EY staffers are contemplating their next career moves. Their options include jumping to other firms or perhaps starting their own practices, said Geremy Cepin, a principal in the professional services practice at Korn Ferry.

“For EY people, it’s been a very trying year,” Cepin said. “There’s been a lot of back and forth and a lot of strains and stresses and sleep lost, I’m sure, wondering, ‘What’s going to happen to me? I’m not a partner, I’m not getting a big payout at the end. Maybe it’s time to do my own thing.”

So far, fewer than 10% of the EY staffers who’ve left the firm in recent months cited the planned split as a reason for quitting, said Trent Henry, vice chair for talent with EY’s global arm. The decoupling has helped the firm to recruit new hires and keep current workers, he said, with retention rates rising in the second half of 2022.

“The brand potential that that has for people to work through a transaction like this is really exciting,” Henry said. “Our new recruits tell us when they join, they’re really motivated by Everest,” he said, a reference to the firm’s moniker for its restructuring strategy.

Poor kids probably think they’re going to get the cool NewCo clients and work at a fun startup.

In November, Trent told Bloomberg Law the firm was on track to hire 220,000 people by their year end in July. That number was recently revised down by about 60,000 warm bodies due to a hiring freeze no one is talking about because, the firm says, fewer people are jumping ship so they don’t need to replace as many bodies. This makes EY’s 2023 hiring target about the same as 2022. It’s worth noting that when Mr. Henry talked to Bloomberg Law about the adjusted hiring target earlier this month, he made similar comments about the split’s affect on retention.

Retention has also been helped by EY’s planned split of its consulting and assurance businesses. “People like our Everest transaction, they understand the value in it,” Henry said, referencing the project’s codename.

We buying this? Because it’s not what we’re hearing on the streets.

The post New Recruits Are Allegedly Telling EY They’re Really Excited About the Split appeared first on Going Concern.

The Wall Street Journal has written a pretty detailed account of comments EY Global Chairman and CEO Carmine Di Sibio made to WSJ’s CFO Network Summit earlier this week, scroll down to skip past a bunch of words and watch the clip.

Of note, the split vote is now expected to happen in April. “I do see potential [further] delays because the deal is complicated,” Di Sibio said. Up until now we have heard “by the end of the first quarter.” As has always been the case, a worsening of market conditions could delay the vote but besides that, Di Sibio sees “no tremendous hurdles” standing in the way of the split. Nor have we heard of any.

We also found out that EY has chosen BDO to audit the liberated consulting arm and a bit about potential future branding. WSJ:

EY is hiring rival accounting firm BDO to check the books of the planned public consulting company, Mr. Di Sibio said. The new company—advising clients on tax issues, deals and more—needs a new brand, as the audit-focused partnership will keep the EY name.

Choosing a brand for the consulting arm is proving tricky, because most regular words have already been taken by brands, Mr. Di Sibio said. So the new EY consulting company name will have to be a made-up word, or a combination of two or three words, he added.

“I’ve lowered my expectations,” he said. “The way the name thing works is you’re going to hear the name. And you’re going to be like, ‘What?’ And then little by little it will grow on you, and eventually it will be a household name.”

Anyone else thinking about this?

When I close my eyes, I see this thing, a sign, I see this name in bright blue neon lights with a purple outline. And this name is so bright and so sharp that the sign – it just blows up because the name is so powerful… It says, “Dirk Diggler.”

Anyway, that’s your Project Everest update for the week. Video:

EY’s Split Faces ‘No Tremendous Hurdles,’ CEO Says [Wall Street Journal]

The post BDO Will Audit EY Consulting, or Whatever That Business is Gonna Be Called appeared first on Going Concern.

Hopefully Burkavage and his gang in Philly have a better outcome Sunday than they did last fall when he had a similar food bet with EY Houston’s office managing partner Esi Akinosho for the World Series between the Phillies and the Astros:

Are any other firms’ Philadelphia and Kansas City offices doing something similar for Sunday’s game?

Related article:

EY U.S. Chair Kelly Grier Is Super Excited About EY’s Super Bowl Ad, You Guys

The post EY OMPs in Philadelphia and Kansas City Have a Food Wager on Super Bowl LVII appeared first on Going Concern.

She tells a story about a candidate who stood out to her:

I’ll never forget this one candidate who came in and completely won me over through his story and taught me a valuable lesson about looking beyond a résumé.

He was a full-time accounting student who also bartended to support his family and was interviewing for a role on our assurance-services team. He offered up his story at the start of the conversation by talking about how his work as a bartender had prepared him for a career in professional and client services. He told me why he was working so hard and his aspirations for continuing to help out his family while pursuing his goal of becoming an assurance professional.

Over the course of our conversation, he owned his narrative by focusing on how his experience would set him up for success at EY. He painted a compelling picture of how the skills he acquired bartending would translate to being a high performer at EY. This experience wasn’t necessarily “traditional,” but his mindset, positive attitude, and clear ability to overcome hurdles made him stand out.

When candidates share their thought process and the actions they took when faced with new and challenging situations, we can better understand their ability to adapt, overcome obstacles, and navigate uncertainty. For instance, they can share an example of how they handled a project where all the information was not known, or what happened when an assignment suddenly changed, requiring a significant pivot.

While you probably aren’t listing after-school jobs in fast food and minimum wage gigs you took to help you through college on your résumé, as evidenced above those jobs do teach you skills that you can apply to the professional services environment. Like acceptance for being underpaid, teamwork, and working with a hostile public without losing your temper. More on how to apply unrelated experience to your CV here.

Read all her advice:

I’m a head of talent for Big 4 accounting firm EY. Here are the qualities I look for in candidates and how to showcase them in interviews. [Insider]

The post Advice on How to Get Hired at EY From the Vice Chair of Talent appeared first on Going Concern.

Now we learn from Financial Times that EY Germany is planning to cut 40 partners and 380 staff “to improve profitability.”

Most of the job cuts are aimed at reducing back-office costs at the German business, one of the largest in EY’s 150-country operations, four people familiar with the matter told the Financial Times.

The majority of the 40 partners heading for the exit are in the firm’s audit practice. The cuts account for about 5 per cent of the roughly 800 equity and salaried partners in the German business.

Some of this is directly related to the fallout from Wirecard, the failed payments company EY Germany audited up until 2020 when the company failed spectacularly, owing creditors almost $4 billion and leaving €1.9 billion ($2.1 billion USD) completely unaccounted for. Former EY client Commerzbank announced a suit against the firm last week, looking to recoup the 200 million euros ($216 million) it lost from the failure. Several partners on the Wirecard engagement have left EY and surrendered their licenses, avoiding any potential punishment as German audit regulators won’t go after anyone who has left the profession, even those under investigation. For years, EY failed to spot fraud risk indicators at Wirecard, didn’t fully implement professional guidelines and, on key questions, relied on verbal assurances from executives, among other things.

So you see, costs must be cut and EY Germany needs to be cleaned up before the split.

Said FT:

The German cost-cutting project was referred to internally as “Zugspitze”, said people with knowledge of the plans, a reference to the country’s highest mountain. The audit and consulting split has been codenamed “Everest”.

The job cuts, which are subject to negotiations with an employee works council, were part of a restructuring to improve EY’s profitability in the country by reducing bloated back-office operations, said three people familiar with the plans.

The fallout from Wirecard has hit EY’s growth in Germany, leaving it with more staff than it needed, said two people at the firm.

Someone who spoke to FT said that the EY Germany cuts are specific to German operations, due in part to Wirecard but also low utilization and a touch of over-hiring. “Germany is in a very specific and unique situation . . . I do not expect material restructurings in any other location,” they said. Another person told FT the business has been “very quiet . . . with a lot of staff on the bench.” EY Germany employs about 11,000 people. Er, about 10,580 now.

The bulk of the 380 non-partners recently cut loose come from Core Business Services, so non client-facing roles. For a post-split EY, it’s assumed there will be less need for admin staff “because it would have a more centralised structure than the existing network of locally owned firms,” said FT.

EY Germany to axe hundreds of jobs in post-Wirecard cost-cutting push [Financial Times]

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While their employees were quietly boasting about not losing their jobs, it seems EY leadership was waiting in the wings hoping to snap up some of the newly-liberated tech talent. Hilariously, that didn’t work out for them.

At the World Economic Forum in Davos this week, EY CEO and future King of Advisory Carmine Di Sibio told Bloomberg that “it’s business as usual” when it comes to hiring, which means the firm is having trouble finding talent though he didn’t say as much. In fact he said the opposite. Gotta keep up appearances for that consulting IPO after all.

“We’re not struggling to source talent, but it’s not like we’re seeing a rash of talent that’s all of a sudden available,” he said. “If you just read the headlines around what’s going on, you might think, there’s all kinds of people who know technology out there.”

According to layoffs.fyi, 1035 tech companies laid off 158,951 employees in 2022. This week, Google and Microsoft laid off 22,000 people between them, making the total 55,863 for 2023 so far. That’s a lot of talent! Talent that isn’t running to EY.

The firm said last year that it expects to sift through three million resumes this year and is on track to hire 220,000 people by its fiscal year-end in July. We were hearing some grumblings of hiring freezes at EY in the last few months so who knows, maybe they really are the only accounting firm on the planet not having big hiring problems (other than when it comes to tech talent, that is).

Perhaps tech workers aren’t desperate enough. Wrote WSJ only a few weeks ago:

Most laid off tech workers are finding jobs shortly after beginning their search, a new survey shows, as employers continue to scoop up workers in a tight labor market.

About 79% of workers recently hired after a tech-company layoff or termination landed their new job within three months of starting their search, according to a ZipRecruiter survey of new hires. That was just below the 83% share of all laid-off workers who were re-employed in the same time frame.

Nearly four in 10 previously laid off tech workers found jobs less than a month after they began searching, ZipRecruiter found in the survey.

“Despite the widespread layoffs, hiring freezes, and cost-cutting taking place in tech, many tech workers are finding reemployment remarkably quickly,” said Julia Pollak, chief economist at ZipRecruiter. “They’re still the most sought-after workers with the most in-demand skills.”

Do these tech workers know about the unlimited PTO?? Tell them about the unlimited PTO!

Jobs Market Is Still Tight Despite Layoffs, EY CEO Says [Bloomberg]

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Now we have learned that EY has a consulting CFO all picked out and ready to go. Reports Wall Street Journal:

Ernst & Young recruited Jamie Miller, the departing chief financial officer of Cargill Inc., to lead the finances of its consulting arm, which the Big Four accounting firm is spinning off.

EY on Tuesday said Ms. Miller would serve as its global chief financial officer and eventually as CFO of the consulting division that is set to be hived off as a stand-alone, publicly traded entity, leaving behind a business focused on audits. EY executives devised the separation more than a year ago as regulators increase their scrutiny of potential conflicts of interest in the audit profession.

Cargill announced on Monday that Ms. Miller will step down as Chief Financial Officer “to accept an opportunity outside the company,” Friday will be her last day. The press release says very little else about her and focuses instead of the company’s acting CFO who will be replacing her.

Miller spent 15 years at PwC according to LinkedIn, joining in 1990 and leaving briefly in 2003 to serve as Vice President, Controller, and Chief Accounting Officer for Genworth Financial before returning in 2005 to put in another two years.

The split vote was supposed to take place late last year, EY continues to hold off as it hammers out the fine details. For now, the vote is supposed to take place at the end of this quarter.

EY Hires Cargill CFO to Manage Finances of Consulting Spinoff [Wall Street Journal]

The post Woman Quits Her Job to Be CFO For Big 4 Business That Doesn’t Exist Yet appeared first on Going Concern.

In its 2022 Transparency Report, which was released in late October, EY noted that the PCAOB would be “issuing Part I of its report on the 2021 inspection of EY US in the coming months,” but the firm provided no hints as to how well it did or what to expect. Now that its 2021 auditing report card is out, we know why EY stayed mum on its results: they weren’t very good (bold part added by us for emphasis):

In the 2021 inspection of Ernst & Young LLP, the PCAOB assessed the firm’s compliance with laws, rules, and professional standards applicable to the audits of public companies.

We selected for review 56 audits of issuers with fiscal years generally ending in 2020. For each issuer audit selected, we reviewed a portion of the audit. We also evaluated elements of the firm’s system of quality control.

We also selected for review three reviews of interim financial information (“interim reviews”). Our reviews were performed to gain a timely understanding of emerging financial reporting and auditing risks associated with issuers that were formed by mergers between non-public operating companies and special purpose acquisition companies (SPACs). We did not identify any instances of non-compliance with PCAOB standards related to the interim reviews that we reviewed.

[…]

Twelve of the 56 audits we reviewed in 2021 are included in Part I.A of this report due to the significance of the deficiencies identified. The identified deficiencies primarily related to the firm’s testing of controls over and/or substantive testing of revenue and related accounts, long-lived assets, and equity and equity-related transactions.

So for those of you scoring at home, that’s a deficiency rate of 21.4%—the firm’s worst since 2018. Nine audits had problems in both internal control over financial reporting and in the financial statement, one had deficiencies in the financial statement only, and two had deficiencies in ICFR only. The most common Part I.A deficiencies in 2021 related to testing the design or operating effectiveness of controls selected for testing, identifying controls related to a significant account or relevant assertion, and testing the accuracy and completeness of information used to make selections for testing controls, according to the PCAOB.

There were four areas of the audit that confounded EY auditors the most:

• Revenue and related accounts: The deficiencies in 2021 (as well as in 2020 and 2019) primarily related to substantive testing of, and testing controls over, revenue, including controls over information technology systems associated with revenue.
• Long-lived assets: The deficiencies in 2021 related to testing controls over the valuation of long-lived assets and the evaluation of misstatements related to long-lived assets.
• Equity and equity-related transactions: The deficiencies in 2021 related to substantive testing of, and testing controls over, the appropriateness of the issuer’s accounting for certain warrants and transactions.
• Inventory: The deficiency in 2021 related to substantive testing of, and testing controls over, inventory.

Three of EY’s 10 audits of issuers in the industrials sector were screwed up, while two of its eight audits of issuers in health care and two of its 10 audits of issuers in the consumer discretionary sector had mistakes. Errors were found in one audit each for issuers in the energy, financials, materials, and real estate sectors. EY auditors did get a 100% on their four audits of issuers in communication services, so they got that going for them.

If you’re looking for something to read over the holiday weekend, we’ve included EY’s 2021 inspection report below.

The post EY’s Auditing Has Reverted Back to Being Bad, 2021 PCAOB Inspection Report Shows appeared first on Going Concern.

Bloomberg Tax wrote up the announcement yesterday, filling it with ambitious quotes from Presiding Partner of EY’s Global Governance Council Trent van Veen:

The council and the firm’s global governing executive met over the last two days to consider who should steer the firm forward; Di Sibio and Boland garnered unanimous support, and EY staff learned of the appointments today, van Veen said.

Firm leaders wanted executives who were ready to lead global organizations and also understood the worldwide reach of EY clients, van Veen said.

“It should be a message to the market and our competitors that we are doing this seriously. We are going to take it forward and deliver on this to the market,” van Veen said of the likely initial public offer and resulting separation. EY’s governance bodies, he added, have “the utmost confidence in the leaders that we’ve appointed to be able to do that.”

EY staff still sore about no holiday bonus this year are no doubt pleased to hear about this appointment and as excited as firm leaders are about the future po$$ibilities.

Yep, this is going to go over well.

EY Global, US Leaders to Run Advisory, Audit After Split [Bloomberg Tax]

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In September, EY announced revenue of $45.4 billion for the fiscal year ended June 30, 2022, an increase of 13.7% from prior year and the most year-over-year growth the firm has seen in 20 years. The Americas region specifically brought in revenues of $21.1 billion, up 19% from FY21. “EY has achieved significant growth and continues to operate from a place of strength,” said EY Global Chairman and CEO Carmine Di Sibio in the obligatory revenue press release. “We have tremendous momentum right now, and growth means opportunity – for EY people, clients and broader stakeholders.”

So you can understand the disappointment that poured forth when staff heard on Friday that mid-year bonuses would not be coming.

In comments to Financial Times, EY acknowledged that they made a lot of money (YAY EY) but, you know, the economy sucks and all so better to be cautious:

For the past two years, EY US has paid merit bonuses to top performers around this time, on top of the main bonuses awarded at the end of its fiscal year in June, but there would not be funds available for the scheme in 2022, executives said.

“While EY continues to experience strong revenue growth, we have elected at this time not to fund our additional, discretionary mid-year program given the changing economic environment,” EY confirmed in a statement to the Financial Times.

“We remain steadfast in our commitment to being a leader in recognition and rewards. This includes our intention for planned annual performance-based bonuses and ongoing recognition awards,” it said. The mid-year scheme could be resurrected in future years.

Predictably, Redditors at competing firms are offering referrals to any unhappy folks at EY.

Some are assuming the firm is tightening its belt in anticipation of significant one-time costs that will arise should partners vote to move forward with the Project Everest split. A spun-off consulting arm could cost in the hundreds of millions of dollars to get off the ground.

As a reminder, this is what staff heard from up high this past February when EY issued its year-end compensation update (word for word from the email):

• As a result of our strong business performance, we allocated additional funding to our RAC program this year, allowing our partners to recognize more people for their individual performance and contribution. In addition to our RAC program, beginning next year in FY23, we plan to implement a discretionary mid-year recognition bonus program. This program will be separate from our annual PBB and will be funded based on firm performance as of mid-year. This provides an opportunity for our partners to recognize individuals based on their extraordinary performance and contributions throughout the year. We will share more about this program in the months ahead.

• Thanks to our strong year-to-date results and projections through year-end, we anticipate fully funding our PBB program for FY22. And similar to FY22, we expect FY23 compensation increases to be strong, competitive in the markets and aligned with the cost of living. You’ll receive notification of your base salary increase and applicable bonus amounts in your compensation statement on August 5.

*whomp whomp*

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