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Hundreds could go as a result of the millions spent on failed Project Everest, sources say.
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EY Australia staff in job cuts firing line
19 April 2023
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10 minute read
Sweeping job cuts at EY’s US division will flow through to Australia as partners in the firm attempt to recoup the millions spent pursuing the failed Project Everest, according to sources close to the business.
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The plan to split the firm into separate audit and consulting operations cost more than $US600 million and would directly hit the remuneration of the firm’s 13,000 partners, the source said.
“They’ll make up the $US600 million by sacking people,” they said, and Australia’s almost 9,000 employees would be just as vulnerable as its US staff.
“The cuts will come from core business services such as marketing, communications and HR,” they added.
The US division of the accounting giant is expected to slash around 3,000 jobs – or about 5 per cent of its workforce – just days after it was instrumental in derailing the project.
The US branch reportedly believed the split, which aimed to avoid conflict of interest rules, was flawed because the audit part of the business would struggle to go it alone.
If a similar level of redundancies flowed through to Australia, more than 400 jobs would be at stake.
EY Australia denied it planned to reduce its headcount and declined to comment further.
“The announcement overnight related to the US business. EY Oceania is in a strong position with no plans to reduce our headcount,” a local spokesperson said.
“We will continue to make decisions as we always have – protecting the business and striking a balance between current performance and investing for the future.”
However, EY in the UK has told its staff to brace for cutbacks after being “disappointed and embarrassed” by the collapse of the split plan, the Guardian reported last week.
It quoted a UK managing partner as saying it would target “inefficiencies” in the business and start cost-cutting in July.
Project Everest had been about a year in the planning and the firm’s partners were due to vote on the plan later this year.
When the project collapsed, EY issued a confusing statement that said it was still committed to “changes that allow all of our businesses to thrive”.
“A core tenet of Project Everest has been that we have businesses that need to be operated differently to reach their full potential,” it said in an email to staff. “Winning in a rapidly evolving market and better preparing ourselves for a future transaction will require us to adapt our governance, operating model, cost structures, capital investments, and go-to-market approach.”
The job cuts come after a series of scandals involving the firm that have resulted in fines and bans.
Early this month, EY’s German branch was fined €500,000 and restricted in the work it could undertake after its failure to uncover fraud at failed payments company Wirecard.
Last year, that fine was dwarfed by the $US100 million penalty imposed by the US Securities and Exchange Commission after it uncovered years of exam cheating involving hundreds of staff.
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