Deloitte’s chief executive has launched a thinly veiled criticism of rival EY after its controversial plans to split the business into two were thrown into turmoil.
EY initially announced plans for a radical breakup of its global operations last year, that would separate its audit and advisory businesses.
It came as the big four accounting giants faced criticism over potential conflicts of interest, given they are meant to challenge audit clients, but sometimes rely on lucrative consulting, tax and deal advisory contracts from the same customers.
But EY’s plans – under the codename Project Everest – were thrown into chaos this week over a dispute with some senior US staff who have been concerned over where its tax experts would sit within the split business.
Rival Deloitte has since taken the opportunity to hail its own strategy.
In a 20-minute video posted to Deloitte’s public website on Thursday, Joe Ucuzoglu, the global chief executive, said that while “one of the other big four” had been promoting the idea of separation, his own firm was “not going to be in search of a solution for a problem”.
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.
Despite concerns over conflicts of interests, he said global regulators were not likely to call for similar moves as those being undertaken voluntarily by EY. “We’re not seeing anything pervasive that would warrant ripping apart a thriving $60bn [£50bn] organisation.”
While the UK’s accounting and audit regulator has called for auditing operations to be ringfenced from the rest of the business, it would not require the same global overhaul as EY is pursuing.
“I speak to a lot of regulators and not one has ever suggested to me or encouraged me in any way that we go down a path of structural separation,” Ucuzoglu said. “In fact, I have received quite a few questions from regulators recently, with their concerns about how the separation transaction would work.”
While some of EY’s partners could be due big payouts if they floated the separated advisory business on the stock market, the Deloitte boss claimed his firm’s strategy would benefit all of its employees – not a select few.
“We make decisions based on the best interests of the entire organisation, across all cohorts through a long-term stewardship lens, not based on what might benefit any narrow cohort at a particular point in time.”
EY did not comment directly on the Deloitte chief executive’s video, but said: “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.”
