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The EY accounting team will centralize power in a new European executive team, pooling resources in the region, but it will raise concerns Wirecard scandal could also be shared.
The revision of the federated business model of the four large companies will try to halve management costs and allow the central group to decide on the remuneration of the partners, according to information on the plan.
Some partners fear that the new structure could lead to shared sanctions beyond the German team for work associated with the Wirecard. EY inspected the payment team for a decade until he fell into a fraud scandal last year.
“French partners are ballistically saying this,‘ why should we pay for the Wirecard mess now? “, Said a person close to the company.
Another person on the subject said there is “no great transparency” in whether Wirecard-related disputes or regulatory actions are shared by partners in other countries.
However, a person from EY who was involved in the creation of the new structure said that these concerns are “baseless” and added that separate legal entities will be maintained in each country. The Big Four have traditionally defended themselves against widespread responsibilities in their global businesses, using separate partnerships in each country in which they operate.
In February, EY announced that it would create a new Western European region without giving details of the implications. The regional group, which includes 27,000 employees and $ 4.7 billion in revenue, will include 20 other West and North African countries from Germany, France, the Netherlands, Italy, Spain and Italy, and is expected to launch on July 1. United Kingdom, Ireland or Scandinavia.
EY and its three main rivals – Deloitte, KPMG and PwC – are based on the traditional business model, where profits and resources are largely within small member states or sub-regions that are members of the state, industry executives said.
Under the EY plan, business lines such as consulting and M&A consulting will be focused on a single income statement. The regulations limit the measure of merging audit and tax.
Integration will go further than inter-regional payments, as it reflects the work mentioned by partners in one country and another. At the moment, each country’s partners also contribute a small portion of their income to finance international shared investments, such as the salaries of technology and international executives.
The European management will decide on the remuneration of the partners in each country, although there will be consultations with the local management, said those familiar with the plans. It is likely that partners in more profitable countries will continue to hold a larger share of the profits.
A person close to the caring partners said it was a “strange time” to reconcile German operations with those of other countries.
The Big Four company is facing a snowstorm in Germany and has lost several reputable companies customer inspection The largest economy in Europe, including Deutsche Telekom and Commerzbank.
The EY restructuring, which was part of the “NextWave” strategy that began before the collapse of Wirecard, aims to reduce costs and improve customer service by reducing “silo behavior” and enabling teams from different countries to work seamlessly. the plan said.
International integration and the distribution of staff is particularly important in consulting.
“It’s the thing that has tried to crack all of these companies,” said another four senior executives at another major company. “It’s the holy grail somehow. . . If they are able to deliver, it’s better for customers and competition is an advantage. ”
The new Western European sub-region will replace three smaller sub-regions with the aim of halving management costs, the person involved in the planning said.
EY has not commented.
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