EY UK bosses told partners to prepare for a new cost-cutting scheme and a flurry of staff left as they admitted to being confused by the fall of their long-running endeavor company to split its global business in two.
In a call with partners on Wednesday, Anna Anthony, UK managing partner in financial services, said: “We have inefficiencies in our business, which that we can start working on right now so we’re working to keep costs down.”
Anthony said the inefficiencies were one of EY’s “lessons learned” in its failed attempt to separate its audit and consulting activities, and that cost-cutting would be part of the plan. of British companies for the new financial year, which begins in July.
The call, an audio recording shared with the Financial Times, was convened following the collapse this week of the split plan, codenamed Project Everest.
Anthony did not give details of what the cuts would entail. EY has cut back by cutting training and travel costs for internal events.
The UK’s cut announcement comes after EY’s US leaders’ decision to launch a separate $500 million cost-savings program as part of a new strategy following when they refused to put this split plan to the vote of the rating and profile partners.
“It certainly feels like a low point now but it’s important for us to dust off,” said Anthony, who admitted feeling “disappointed and embarrassed” by the deal’s fallout.
Anthony also confirmed that costs incurred in the agreement amounted to $600 million at the global level, including $300 million in internal costs for work done by EY employees themselves. She added that that money was offset by “$400 million in savings” from delaying or delaying other projects. The British firm had incurred an additional £10m in its own costs, she said.
The costs will be capitalized, meaning they won’t be booked in the current year, she said, adding that it has yet to be determined exactly how EY’s bills will be distributed across countries. The final costs will be borne by the partners, who are paid from EY profits.
The total cost if the deal goes ahead has been predicted to rise to $2.5 billion plus bank fees. A senior UK partner told the FT: “The fact that we are pulling the plug now before we spend so much is good news to some extent.
UK President Hywel Ball told partners on the same call that there are risks associated with the demise of Project Everest, including “how our brand will be perceived in the future.” short time”.
While employee retention has improved, he points out that there is likely to be an increase in the number of people heading to the exits: “There will be an inevitable backlog of righteous people. We have already left but are really waiting to see what happens to Everest.”
He told partners to prepare for “a tough period” but added that the UK company is enjoying a third consecutive year of “strong double-digit growth” in the 12 months to May. Six.
Ball added that he had informed the UK accounting regulator, the Financial Reporting Council, of abandoning the split plan. “They are disappointed, but supportive and understanding,” he said.
He said that for some in the UK company, abandoning Everest would be “a relief” as there are some in the UK partner company opposed to the plan.