Ernst & Young
|Type||Member firms have different legal structures, USA and UK: Limited Liability Partnership|
|Founded||1989 through the merger of Ernst & Whinney and Arthur Young & Co. Oldest component from 1849 |
|Headquarters||London, United Kingdom|
|Revenue||US$ 25.8 billion (2013)|
|Employees||175,000 (2013) |
|Divisions||Assurance, Advisory, Tax, Transactions|
Ernst & Young (trading as EY) is a multinational professional services firm headquartered in London, United Kingdom. It was the third largest professional services firm in the world by aggregated revenue in 2012 and is one of the "Big Four" accounting firms.
The organization operates as a network of member firms which are separate legal entities in individual countries. It has 175,000 employees and more than 700 offices in over 150 countries. It provides assurance (including financial audit), tax, consulting and advisory services to companies.
The firm dates back to 1849 with the founding of Harding & Pullein in England. The current firm was formed by a merger of American firms Ernst & Whinney (a successor firm of Harding & Pullein) and Arthur Young & Co. in 1989. It was known as Ernst & Young until 2013, when it underwent a rebranding. The acronym "EY" was already an informal name for the firm prior to its official adoption.
- 1 History
- 2 Global structure
- 3 Services
- 4 Name and branding
- 5 Staff
- 6 Criticisms
- 7 Sponsorship
- 8 Notable current and former employees
- 9 See also
- 10 References
- 11 External links
EY is the result of a series of mergers of ancestor organizations. The oldest originating partnership was founded in 1849 in England as Harding & Pullein. In that year the firm was joined by Frederick Whinney. He was made a partner in 1859 and with his sons in the business it was renamed Whinney Smith & Whinney in 1894.
As early as 1924, these American firms allied with prominent British firms, Young with Broads Paterson & Co. and Ernst with Whinney Smith & Whinney. In the year 1979, this led to the formation of Anglo-American Ernst & Whinney, creating the fourth largest accountancy firm in the world. Also in 1979, the European offices of Arthur Young merged with several large local European firms, which became member firms of Arthur Young International.
In 1989, the number four firm Ernst & Whinney merged with the then number five, Arthur Young, on a global basis to create Ernst & Young.
In October 1997, EY announced plans to merge its global practices with KPMG to create the largest professional services organization in the world, coming on the heels of another merger plan announced in September 1997 by Price Waterhouse and Coopers & Lybrand. The merger plans were abandoned in February 1998 due to client opposition, antitrust issues, cost problems and difficulty of merging the two diverse companies and cultures.
EY had built up its consultancy arm heavily during the 1980s and 1990s. The U.S. Securities and Exchange Commission and members of the investment community began to raise concerns about potential conflicts of interest between the consulting and auditing work amongst the Big Five and in May 2000, EY was the first of the firms to formally and fully separate its consulting practices via a sale to the French IT services company Cap Gemini for $11 billion, largely in stock, creating the new company of Cap Gemini Ernst & Young, which was later renamed Capgemini.
In 2006, EY became the only big four to have two member firms in the United States with the inclusion of Mitchell & Titus, LLP, the largest minority-owned accounting firm in the United States.
In 2013, EY agreed to pay federal prosecutors $123 million to settle criminal tax avoidance charges stemming from $2 billion in unpaid taxes from about 200 wealthy individuals advised by four Ernst & Young senior partners between 1999 and 2004.
In 2013, EY changed its brand name from Ernst & Young and tagline to "Building a better working world".
On July 1, 2013, Mark A. Weinberger became Chairman and CEO succeeding Jim Turley who had retired.
EY is the most globally managed of the Big Four firms. EY Global sets global standards and oversees global policy and consistency of service, with client work being performed by its member firms.
The four areas are:
- EMEIA: Europe, Middle East, India and Africa
Each area has an identical business structure and one management team that is led by an Area Managing Partner who is part of the Global Executive board. The aim of this structure is to effectively cater for an increasingly global clientele, who have multinational interests.
EY has four main service lines and share of revenues in 2011:
- Assurance Services (46%): comprises Financial Audit (core assurance), Financial Accounting Advisory Services, Fraud Investigation & Dispute Services, and Climate Change & Sustainability Services.
- Tax Services (26%): includes Business Tax Compliance, Human Capital, Customs, Indirect Tax, International Tax Services, Tax Accounting & Risk Advisory Services, Transaction Tax.
- Advisory Services (19%): consisting of four subservice lines: Actuarial, IT Risk and Assurance, Risk, and Performance Improvement.
- Transaction Advisory Services (TAS) (9%): deals with companies' capital agenda – preserving, optimizing, investing and raising capital.
Name and branding
The firm's name arises from the global merger between Ernst & Whinney and Arthur Young in 1989. The motto of the firm is "Building a better working world". The new brand name of EY made headlines when it was realised that EY was also the name of racy magazine, EY! Magateen, which features scantily clad young men.
EY was ranked No. 1 in the Forbes Magazine's The Best Accounting Firms to Work For in 2012, claiming that EY treats its employees better than other big firms. It was ranked 57 overall 
The firm was ranked No. 1 in BusinessWeek's annual list of Best Places To Launch a Career for 2008.
The firm was ranked No. 44 in the Fortune list of 100 Best Companies to Work For, and the highest among the Big Four, for 2009.
The firm was No. 34 in ComputerWorld's 100 Best Places To Work For In IT for 2009.
The firm was also placed among the top 50 places in the Where Women Want to Work awards for 2007.
The firm was named as one of the 10 Best Companies for Working Mothers by Working Mothers magazine in 2012 for 7th straight year.
In April 2009, Reuters reported that EY launched an initiative encouraging its staff in China to take 40 days of low-pay leave between July 2009 and June 2010. Those who participate get 20 percent of regular salary plus benefits of full-time employee. It applies to employees in Hong Kong, Macau and mainland China where the firm employs 8,500 in total.
In early 2012, it was reported that EY has 10,000 staff in mainland China and Hong Kong, which has quadrupled in a decade. It has about 11,200 staff in the UK.
In 2012, the firm was ranked number 1 in the Stonewall Top 100 Workplace Equality Index, a list of Britain's top 100 gay-friendly employers. In 2013, the firm was ranked number 6 in the same Workplace Equality Index.
In the year 2013, EY earned 100% rating on the Human Rights Campaign Corporate Equality Index.
In the year 2013, EY was named one of DiversityInc magazine's Top 50 companies for diversity.
In the year 2013, EY was ranked 4th in Universum Top 100 IDEAL™ Employer.
Equitable Life (2004)
In April 2004, Equitable Life, a UK life assurance company, sued EY after nearly collapsing following a House of Lords judgement that it had to pay guaranteed annuities held by its policyholders. Equitable claimed that EY neglected its duty as auditor and demanded £2.6bn in compensation. Equitable abandoned the case in September 2005. EY described the case as "a scandalous waste of time, money and resources for all concerned."
Bally Total Fitness (2008)
Following allegations by the Securities and Exchange Commission that EY had committed accounting fraud in its work auditing the books of Bally Total Fitness, EY reached two settlements in 2008, including a fine of $8.5million.
Anglo Irish Bank (2009)
In 2009, in the Anglo Irish Bank hidden loans controversy, EY was criticised by politicians and the shareholders of Anglo Irish Bank for failing to detect large loans to Sean FitzPatrick, its Chairman, during its audits. The Irish Government had to subsequently take full ownership of the Bank at a cost of €28 billion. The Irish Chartered Accountants Regulatory Board appointed John Purcell to investigate. EY said it “fundamentally disagrees with the decision to initiate a formal disciplinary process" and that "there has been no adverse finding made against EY in respect of the audit of Anglo Irish Bank." 
Sons of Gwalia (2009)
In 2009, EY, the former auditors of Sons of Gwalia, agreed to a $125m settlement over their role in the gold miner’s collapse in 2004. Ferrier Hodgson, the company's administrator, had claimed EY was negligent over the accounting of gold and dollar hedging contracts. However, EY said that the proposed settlement was not an admission of any liability.
Akai Holdings (2009)
In 2009, EY reached a legal settlement where they agreed to pay US$200m to the liquidators of Akai Holdings. It was alleged that EY falsified court documents to avoid negligence charges which led to police raiding the Hong Kong office.
Lehman Brothers (2010)
The Valukas Report issued in 2010 charged that Lehman Brothers engaged in a practice known as repo 105 and that EY, Lehman's auditor, was aware of it. New York prosecutors announced in 2010 that they have sued the firm. EY said that its last audit of Lehman Brothers was for the fiscal year ending 30 November 2007 and that, Lehman’s financial statements were fairly presented in accordance with Generally Accepted Accounting Principles.
In 2010 EY, in a letter to the firm's key clients, defended its audit work for Lehman Brothers. In June 2012 the Accountancy & Actuarial Discipline Board concluded that no action should be taken against EY or any individuals in connection with the auditing of the Wall Street firm before it collapsed in September 2008.
Without admitting liability it still settled the matter for $99m.
EY's publicity activity includes its worldwide Entrepreneur Of The Year program, run in 50 countries.
EY UK also publicizes itself by sponsoring exhibitions of works by famous artists, such as Cézanne, Picasso, Bonnard, Monet, Rodin and Renoir. The most recent of these was Maharaja: the Splendour of India's Royal Courts at the Victoria and Albert Museum.
In addition, EY publicizes itself by sponsoring the educational children's show Cyberchase on PBS Kids under the PBS Kids GO! television brand, in an effort to improve mathematics literacy in children.
EY in the UK has set up the National Equality Standard, an initiative developed for business which sets clear equality, diversity and inclusion (EDI) criteria against which companies are assessed. The National Equality Standard (NES) is currently the only industry recognised national standard for EDI in the UK.
On 8 September 2011, Rio 2016 made the announcement that EY will be an official sponsor of the XXXI Olympic Summer Games to be held in Brazil, as the exclusive provider of professional services – consulting and auditing – for Rio 2016 organizing committee. EY also has a longstanding relationship with the 2011 Tour de France winner Cadel Evans.
Notable current and former employees
- Arthur Blank—co-founder of Home Depot, owner of the Atlanta Falcons
- Jim Balsillie—Former co-CEO of Research In Motion (1992–2012)
- Andrew Gould—Chairman and former CEO of Schlumberger (2003–2011)
- Ed Grier—Dean of VCU School of Business, Former President of the Disneyland Resort (2009–present)
- Chris Kubasik—COO of Lockheed Martin (2001–2012)
- Sean Wise—venture capital commentator
- Patricia A. Woertz—CEO of Archer Daniels Midland (2006–present)
- Michael T. Strianese—CEO of L-3 Communications (2006–present)
- Karan Bilimoria, Baron Bilimoria—Founder of Cobra Beer
Politics and public service
- Jan Peter Balkenende—Prime Minister of the Netherlands (2002–2010)
- John B. T. Campbell III—Member of the U.S. House of Representatives (2005–present)
- Jun Choi—Mayor of Edison, New Jersey (2006–present)
- Christopher Chope—Member of the British Parliament (1983–92; 1997–present)
- Sheila Fraser—Former Auditor General of Canada (2001–2011)
- Cheryl Gillan—Member of the British Parliament (1992–present)
- Edward H Ntalami—CEO at his Kenyan Capital Markets Authority (2002–present)
- John Howell—Member of the British Parliament (2008–present)
- Hugo Schiltz—Belgian Senator (1992–1995)
- Jeff McWaters—Member of the Virginia State Senate (2010–present)
- Tin Pei Ling-Member of Parliament for Marine Parade GRC, Singapore (2011–present)
- Kimberly Clarice Aiken Miss America 1994
- Geneviève Brame – author
- Jeff Moss (born c. 1975) founder of the DEF CON and Black Hat technology conferences and member of the Homeland Security Advisory Council
- Joyce Carol Vincent - employee in London, notable for the circumstances of her unexplained death
- "Facts & Figures". Ernst & Young. 30 June 2011. Retrieved 14 November 2013.
- "Facts & Figures". Ernst & Young. 30 June 2011. Retrieved 8 December 2011.
- Mark Weinberger. Ernst & Young. Retrieved 23 April 2013.
- John Ferraro. Ernst & Young. Retrieved 23 April 2013.
- "Ernst & Young". Ernst & Young. Retrieved 2 October 2012.
- Ernst & Young difference: high-performing teams delivering exceptional client service - Ernst & Young - United States
- Aubin, Dena (2012-10-01). "Ernst's revenues rise 6.7 percent on advisory growth". Reuters. Retrieved 2013-07-03.
- Roxburgh, Helen (2012-12-13). "Tax and advisory boosts KPMG global revenues". Economia (ICAEW). Retrieved 2013-07-03.
- "EY at a glance". EY. Retrieved 2013-07-03.
- "A timeline of our history". EY. Retrieved 2013-07-03.
- Reddan, Fiona (2013-07-01). "Ernst & Young re-brands". The Irish Times. Retrieved 2013-07-03.
- "Ernst & Young – History". Ernst & Young. Retrieved 9 July 2011.
- "Reports Say Arthur Young and Ernst May Merge". The New York Times. May 1989.
- "Accountancy Merger Off". BBC News. 23 February 1998. Retrieved 9 July 2011.
- "Cap Gemini to Acquire Ernst & Young Consulting Business". The New York Times. March 2000.
- "Ernst & Young Acquires Anderson India". Findarticles. 8 April 2003. Retrieved 9 July 2011.
- "Maintaining a Diverse Culture". Ernst & Young. Retrieved 9 July 2011.
- "Mitchell & Titus Joins Ernst & Young Global as a Member Firm". Prnewswire. Retrieved 9 July 2011.
- Grant Thornton confirms departure of Brazilian member firm Grant Thornton, 3 August 2010
- Bowers, Simon (3 March 2013). "Ernst & Young to pay US regulators $123m over tax avoidance schemes". The Guardian. Retrieved 23 March 2013.
- EY is committed to doing its part in building a better working world
- New at the top: Mark Weinberger, chief executive-elect of Ernst & Young Washington Post, 5 February 2012
- "Ernst & Young Consolidates Global Structure". Webcpa. Retrieved 9 July 2011.
- "Facts and Figures". EY Global Review. Retrieved 4 February 2012.
- Ernst & Young Website. Ernst & Young. Retrieved 9 July 2011.
- "EY! Magateen". "EY! Magateen". Retrieved 24 July 2013
- "Ernst & Young now EY, has a sexy boys problem". Los Angeles Times. 8 July 2013. Retrieved 24 July 2013.
- "The Best Accounting Firms to Work For". Forbes. Retrieved 27 April 2012.
- "BusinessWeek: The Best Places to Launch a Career". BusinessWeek. Retrieved 9 July 2011.
- "Ernst & Young LLP Named to Fortune's '100 Best Companies to Work For' List for the 12th Year in a Row". Ernst & Young. 21 January 2010. Retrieved 9 July 2011.
- "America's Ideal Employers 2011". Universum.
- "The World's Most Attractive Employers 2010". Universum.
- "100 Best Places to Work For in IT". Computerworld. 26 June 2008. Retrieved 9 July 2011.
- "Where Women Want to Work". The Times. Retrieved 9 July 2011.
- For the seventh straight year, Ernst & Young LLP ranks among the top 10 companies for working mothers
- Chen, George (16 April 2009). "Ernst & Young China Staff to Take Low-Pay Leave". Reuters.
- Jones, Adam (25 January 2012). "China Headcount to Overtake UK at Top Firms". Financial Times.
- "Stonewall Workplace Equality Index 2013". Stonewall.
- Corporate Equality Index
- Ernst & Young LLP named to the top 10 of The Diversity Inc Top 50 Companies for Diversity for the fifth-consecutive year
- Universum Global Undergraduate rankings
- "Equitable Drops High Court Action". BBC News. 2005. Retrieved 26 August 2006.
- Norris, Floyd (18 December 2009). "Ernst to Pay the S.E.C. $8.5 Million". The New York Times. Retrieved 21 April 2011.
- "Where Were the Auditors?". Shane Ross. 12 January 2009. Retrieved 9 July 2011.
- "The Cost of Anglo-Irish Bank". The Irish Times. 12 August 2010. Retrieved 9 July 2011.
- "Anglo's board and auditors criticised at egm Shareholders Told Kyle Swartzlander Owed Bank a Total of €129M in 2007". The Irish Times. 1 January 2009. Retrieved 9 July 2011.
- "Drumm Resigns as Chief Executive of Anglo Irish". The Irish Times. 12 December 2008. Retrieved 9 July 2011.
- "E&Y Faces Probe on Anglo Irish Bank Audit". Financial Times. 14 September 2011.
- "Ernst & Young Agrees to $125m Sons of Gwalia Settlement". The West Australian 4 September 2009. Retrieved 4 September 2009.
- "Ernst & Youngs US$200m snag". South China Morning Post (Hong Kong). 12 October 2009. Retrieved 12 October 2009.
- "Lehman Directors Did Not Breach Duties Examiner Finds". DealBook (blog of The New York Times). 11 March 2010. Retrieved 9 July 2011.
- "Attorney General Cuomo Sues Ernst & Young for Assisting Lehman Brothers in Financial Fraud". New York Attorney General. 21 December 2010.
- "Lehman Cooked Books before Collapse, Report Finds". CBS News. 12 March 2010. Retrieved 9 July 2011.
- Court-Appointed Lehman Examiner Unveils Report. DealBook (blog of The New York Times). 11 March 2010. Retrieved 9 July 2011.
- "Lehman Smoking Gun Leaves E&Y Facing Questions". Accountancy Age. Retrieved 9 July 2011.
- Ernst & Young defends its Lehman work in letter to clients. accountingweb.com. Retrieved 30 May 2012.
- Treanor, Jill (22 June 2012). "Lehman Audit Investigator Takes No Action Against Ernst & Young – Accountant Will Not Be Penalised for Role in Auditing European Banking Arm of Lehman Brothers, After 18-Month Investigation". The Guardian. Retrieved 22 August 2012.
- Ernst & Young to pay $99 million to end Lehman investor lawsuit Reuters, 18 October 2013
- "Ernst & Young Entrepreneur of the Year Awards". Ernst & Young. Retrieved 9 July 2011.
- "Maharaja: The Splendour of India's Royal Courts". Victoria and Albert Museum. 20 July 2009. Retrieved 9 July 2011.
- Cyberchase – PBS Kids Official PBS Kids Website with corporate sponsorships.
- Ernst & Young Item Club appoints new Chief Economist. Prnewswire.co.uk 16 June 1997. Retrieved 9 July 2011.
- "Hope that National Equality Standard (NES) will turn tide for D&I". The HR Director magazine.
- "Rio 2016 Unveils Ernst & Young as Tier 2 Sponsor". Aroundtherings.com. Retrieved 8 December 2011.
- Ernst & Young renews relationship with Cadel Evans
- "Schlumberger CEO to Retire, Remains as Chairman". Forbes. Retrieved 1 August 2011.[dead link]
- [dead link] (Dutch) "Former Dutch PM to Be Partner in Accountancy Firm". Bloomberg.
- "Joyce Carol Vincent: How could this young woman lie dead and undiscovered for almost three years?". The Guardian. 2011-10-09. Retrieved 2013-02-14.
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