Deloitte’s chief executive has launched a thinly veiled criticism of rival EY after his controversial plans to split the business in two were upended.
EY initially announced plans for a radical break of its global operations last year, which would separate its audit and advisory businesses.
It came as the Big Four accounting giants have come under fire for potential conflicts of interest, given they are supposed to challenge audit clients but sometimes rely on lucrative consultancy contracts , taxation and advice of the same clients.
But EY’s plans – codenamed Project Everest – were thrown into chaos this week over a dispute with senior US executives who worried about its tax experts’ place in the company. split company.
Its rival Deloitte has since taken the opportunity to salute its own strategy.
In a 20-minute video posted on Deloitte’s public website On Thursday, Joe Ucuzoglu, the global chief executive, said that while “one of the other big four” had promoted the idea of separation, his own company was “not going to be looking for a solution to a problem”.
He said: “History is littered with multiple examples of great aspirations around these types of deals that I’m sure sounded good and had some nice slide decks, lots of great promise. It’s easy to get caught up in transaction fever, but it never actually went as planned.
“We looked at how to proceed for a separation if we were ever forced to go this route. You would expect us to have done that.
However, Deloitte management has so far decided against splitting the company. “It’s not even a close call,” Ucuzoglu said.
Despite concerns about conflicts of interest, he said global regulators were unlikely to call for action similar to that undertaken voluntarily by EY. “We don’t see anything ubiquitous that would justify ripping off booming $60 billion [£50bn] organization.”
Although the UK’s accounting and auditing regulator has called for audit operations to be isolated from the rest of the business, this would not require the same comprehensive overhaul that EY is pursuing.
“I talk to many regulators and none have ever suggested or encouraged me in any way that we are going down a structural separation path,” Ucuzoglu said. “In fact, I’ve recently received quite a few questions from regulators, with their concerns about how the separation transaction would work.”
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While some of EY’s partners could receive large payouts if they take the separate consultancy business public, the Deloitte boss says his company’s strategy will benefit all of its employees, not a select few. .
“We make decisions based on the best interests of the entire organization, across all cohorts through a long-term stewardship lens, not what might benefit a narrow cohort at any given time.”
EY did not comment directly on the video of the Deloitte chief executive, but said: “As part of our deliberations and due diligence in connection with the proposed transaction, we are engaging in dialogue with the largest member companies of ‘EY to determine the final form of the transaction.
“This transaction is complex and will be the roadmap to reshape the profession, so it’s important to get it right. We remain committed to the strategic logic behind Project Everest and believe that a deal can and should be struck.