Money Talks: Why oh why EY?
Money Talks from The Economist
The Economist
4.4 • 1.2K Ratings
🗓️ 20 April 2023
⏱️ 34 minutes
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Summary
The professional services firm EY reportedly spent hundreds of millions of dollars preparing to split itself into separate audit and advisory companies. Then earlier this month it abruptly called the divorce off. EY is not unique. All of the "big four" accounting firms - including PwC, KPMG and Deloitte - combine the stodgy traditional business of audit with a fast-growing free-wheeling consultancy wing.
On this week’s podcast, hosts Tom Lee-Devlin, Alice Fulwood and Mike Bird ask whether all four firms find themselves stuck in unhappy marriages. Professor Laura Empson of Bayes Business School retells how these one-time frumpy low-margin audit firms were beguiled by the glamour and big fees of corporate advisory work. Meanwhile Tom Rodenhauser, managing partner at Kennedy Research Reports, explains why the consulting units have now outgrown their auditing counterparts, and would do well to ditch them and go it alone.
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Transcript
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| 0:00.0 | Listen to the incredible Wii Transform Lives podcast to hear about the extraordinary impact |
| 0:05.1 | of entrepreneurship and the business innovations driving social and environmental change in |
| 0:09.4 | communities across Africa, South Asia and beyond. |
| 0:12.4 | I think as a founder, to also grow yourself so you can inspire the team around you to grow |
| 0:21.1 | is hard. |
| 0:22.1 | You have to question yourself. |
| 0:23.7 | Find it wherever you listen to podcasts and for more information visit www.transform.global. |
| 0:30.0 | How can your bold vision be transformed into long-term value? |
| 0:44.3 | EY is a giant of the professional services world. |
| 0:48.3 | With its vast range of services, it promises big things to its clients. |
| 0:53.3 | Realize your transformation with EY. |
| 0:56.3 | This appealing are the scandals that have rocked the firm in recent years. |
| 1:00.4 | Former CEO of Wirecard has been arrested on suspicion of falsifying accounts. |
| 1:04.6 | EY found itself in hot water after the collapse of the German FinTech Wirecard in 2020. |
| 1:11.7 | It turned out Wirecard had a $2 billion dollar hole in its balance sheet, which EY, its |
| 1:17.5 | auditor, had failed to spot. |
| 1:19.9 | Wirecard's auditor EY is also facing scrutiny for failing to check Wirecard's bank statements |
| 1:24.8 | for three years. |
| 1:26.3 | Very same year, it emerged that another client, NMC Health, had $4 billion of hidden debt, |
| 1:33.4 | forcing the company into administration. |
| 1:36.6 | In 2021, hot on the heels of those two audit blunders, EY announced a plan to separate |
| 1:42.9 | its audit and consulting businesses. |
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