They spun it off as a separate entity and it’s called Accenture today. In fact, the company gave up its auditing license and filed for bankruptcy soon after.īut here’s the thing - they did hive off their consulting business much before the scandal came to light. This shattered A-A’s reputation and they never regained their former glory. They soon found multiple instances of fraud precipitating at companies including Sunbeam, Waste Management Inc and WorldCom. If they believed a client could bill them for advisory services, they’d go easy on the audits - to build a sweet business relationship.īut when the Enron scandal came to light, people began looking at A-A’s auditing practices. But in the 1990s, they started pushing their advisory business, so much so that they began compromising on the auditing aspect. At the time A-A was one of the biggest accounting firms. Their auditor - Arthur Anderson LLP or A-A in short. Alongside Enron, we had another casualty. But when it became evident that they’d cooked the books, the ship began to sink rather quickly. The Energy giant Enron inflated revenues and buried bad debts, to project a very rosy picture of the company. In 2001, the world witnessed one of the biggest accounting scandals of all time. Well, let’s go back a couple of decades and see how we got here. So, the big question here is - Why is EY flirting with the idea of a split? Especially when none of its peers seems to be considering it. The EY split could change that - the Big 4 could become the Big 3! It would shake up the Big 4 - Deloitte, PricewaterhouseCoopers, KPMG, and EY - companies that have dominated the accounting, and strategic advisory landscape for decades now. if they split their business, it would be an unprecedented event. In the email, the CEO remained non-committal, stating that they hadn’t made a decision, yet. A rumour about a potential breakup of its audit and advisory businesses. It will go a long way in keeping the lights on here :)Ī few days ago, employees of global audit and advisory giant EY received an email from their CEO Carmine Di Sibio. So if you want to keep supporting us, please check out the website and maybe tell your friends about it too. And we’ve managed to do it in large parts thanks to Ditto - our insurance advisory service where we simplify health and term insurance and make it easy for people to purchase the product. At Finshots we have strived to keep the newsletter free for everyone. In today’s Finshots we talk about EY’s plan to initiate one of the biggest breakups in the history of big accounting firms.Īlso, a quick sidenote before we begin the story.
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