On Monday, Ernst & Young’s U.S. branch announced a reduction in its workforce by 5%, impacting roughly 3,000 employees. This announcement came less than a week after the unit’s objection led to the collapse of the global accounting giant’s plan to split its audit and consulting segments.
EY U.S. explained that the decision to downsize was made after considering the current economic climate, high employee retention rates, and “overcapacity” in certain parts of the company.
EY had been attempting to persuade partners for several months, but the London-based company abandoned its intended restructuring last week in response to regulatory concerns over potential conflicts of interest. EY’s U.S. Executive Committee had chosen not to approve the plan.
Following the Federal Reserve’s quantitative tightening, the American business landscape has seen a wave of layoffs. KPMG, EY’s “Big Four” competitor, is reportedly reducing its workforce. Deloitte and PricewaterhouseCoopers are also part of the Big Four.
Ernst & Young, which is one of the Big Four accounting firms, had been working on a project called “Project Everest” aimed at restructuring the company’s businesses to address regulatory concerns over potential conflicts of interest and poor working practices. However, the firm announced it was halting the project, following its U.S. branch’s decision not to move forward, ending a year-long battle to build internal support to split the units.
The Big Four, which includes Deloitte, EY, KPMG, and PwC, dominate the global accounting market share. If “Project Everest” had gone through, it would have been the most significant shake-up in the accountancy industry for over two decades.