EY’s plans to split its business would have “distinct benefits,” the head of the UK’s accounting watchdog has said.
The Big Four accounting firm’s plans to separate its advisory arm from its consulting division could let EY “grow further” by removing “significant conflicts of interest,” Financial Reporting Council (FRC) chief executive Sir Jon Thompson told the Financial Times.
“We can see the distinct benefits of that formal separation of the audit and assurance business from the rest of it,” the FRC chief said.
The comments come as EY is working towards reaching a final decision on plans to divide its business in two by floating its consulting arm on the stock exchange.
Yet, if EY is to go ahead with a global split, the firm will require the approval of partners and accountancy sector regulators from across the globe, including the UK’s FRC.
Sir Jon Thompson’s comments come on the back of claims from EY chief executive Carmine Di Sibio last month that a global split could let the accounting firm bring in an extra $10bn a year in advisory fees from the world’s major tech companies, by freeing it from the rules blocking it from selling advice to audit clients.
Last month, EY also brought in advisors from Rothschild & Co to consult on the implications of its global split.