EY has taken on an additional $700 million (£554.27 million) of debt across its global operations, most of which was spent on failed plans to split the company.
The plan, known as “Project Everest,” would have broken up EY’s audit and consulting divisions and would have been the biggest restructuring in the audit sector in over twenty years.
But the proposals, which followed calls for industry reform due to conflicts of interest and poor working practices, failed in April.
The debt figures, which emerge from the financial statements filed with the commercial register and which were first reported by the Financial Times, shed light on the enormous costs of the cancelled spin-off.
About $600 million was spent preparing for Project Everest. EY’s borrowings rose to $983 million last June, up from $269 million a year earlier, as the company expanded its existing variable-rate credit facility and added a second one.
EY employs over 365,000 people in 150 countries.
EY has a different structure than other multinational corporations and follows a global strategy to manage its entities. The company consists of a network of member firms structured as separate legal entities in a partnership.
The national member companies of the “Big Four” paid the global group fees of around $6.4 billion in 2023, up from $5.3 billion in the previous year.
In a statement, EY said: “It is common practice for a $50 billion global company like EY to maintain a modest financing framework on its balance sheet.
“The finance facility has been used to support previous investments in new technology, manage cash flow and expand specific practices. The credit facility is managed in line with our agreed financial position. The accounts for EYGS have been signed off by our external auditor.”
“As we have already communicated to our partners, the costs incurred in Project Everest will be almost fully paid off by July 1, 2024. Nothing will change that.”
