Ernst & Young is one of the largest
professional services networksProfessional services networks are networks of independent firms who come together to cost-effectively provide services to clients through an organized framework. They are principally found in law and accounting. They may also be found in investment banking, insurance, real estate and architectural...
in the world and one of the "Big Four"
accountancyAccountancy is the process of communicating financial information about a business entity to users such as shareholders and managers. The communication is generally in the form of financial statements that show in money terms the economic resources under the control of management; the art lies in...
firms, along with Deloitte,
KPMGKPMG is one of the largest professional services networks in the world and one of the Big Four auditors, along with Deloitte, Ernst & Young and PwC. Its global headquarters is located in Amstelveen, Netherlands....
and
PricewaterhouseCoopers (PwC)PricewaterhouseCoopers is a global professional services firm headquartered in London, United Kingdom. It is the world's largest professional services firm measured by revenues and one of the "Big Four" accountancy firms....
.
Ernst & Young is a global organization of member firms in more than 140 countries, headquartered in London, UK.
It was ranked by
ForbesForbes is an American publishing and media company. Its flagship publication, the Forbes magazine, is published biweekly. Its primary competitors in the national business magazine category are Fortune, which is also published biweekly, and Business Week...
magazine as the 9th largest private company in the United States in 2010.
Early history
Ernst & Young 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.
In 1903, the firm of
Ernst & Ernst was established in Cleveland by
Alwin C. ErnstAlwin Charles Ernst was an American businessman who co-founded the accounting firm of Ernst & Ernst in 1903 and who is credited with inventing management consulting....
and his brother Theodore and in 1906
Arthur Young & Co. was set up by the Scotsman Arthur Young in
ChicagoChicago is the largest city in the US state of Illinois. With nearly 2.7 million residents, it is the most populous city in the Midwestern United States and the third most populous in the US, after New York City and Los Angeles...
.
As early as 1924 these American firms allied with prominent British firms, Young with Broads Paterson & Co. and Ernst with Whinney Smith & Whinney. In 1979 this led to the formation of Anglo-American Ernst & Whinney, creating the fourth largest
accountancyAccountancy is the process of communicating financial information about a business entity to users such as shareholders and managers. The communication is generally in the form of financial statements that show in money terms the economic resources under the control of management; the art lies in...
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.
Mergers
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
KPMGKPMG is one of the largest professional services networks in the world and one of the Big Four auditors, along with Deloitte, Ernst & Young and PwC. Its global headquarters is located in Amstelveen, Netherlands....
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 '90s. 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
CapgeminiCapgemini is a French global IT services company, one of the world's largest management consulting, outsourcing and professional services companies with a staff of 114,274 operating in 40 countries. It is headquartered in Paris and was founded in 1967 by Serge Kampf, the current chairman, in...
.
Recent history
In 2002 EY merged with many of the ex-
Arthur AndersenArthur Andersen LLP, based in Chicago, was once one of the "Big Five" accounting firms among PricewaterhouseCoopers, Deloitte Touche Tohmatsu, Ernst & Young and KPMG, providing auditing, tax, and consulting services to large corporations...
practices around the world, although not those in the UK, China or the Netherlands.
In 2006 EY became the only big four to have two member firms in the United States with the inclusion of
Mitchell & Titus, LLPMitchell & Titus, LLP is a member firm of Ernst & Young Global Limited and the largest minority-owned accounting firm in the United States. Headquartered in New York City, the company provides professional services in assurance, tax, and advisory to Fortune 1000 companies, entrepreneurial...
, the largest minority-owned accounting firm in the United States.
In 2011 EY acquired Partake Consulting, an enterprise intelligence firm.
Global structure
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.
Each EY member country is organised as part of one of four areas. This is different from other
professional services networksProfessional services networks are networks of independent firms who come together to cost-effectively provide services to clients through an organized framework. They are principally found in law and accounting. They may also be found in investment banking, insurance, real estate and architectural...
which are more centrally managed.
The four areas are:
- EMEIA: Europe, Middle East, India and Africa
- Americas
- Asia-Pacific
- Japan
Each area has an identical business structure and one management team that is led by an Area Managing Partner 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.
Services
EY has four main service lines and share of revenues in 2010:
- Assurance (47%): comprises Financial Audit
The general definition of an audit is an evaluation of a person, organization, system, process, enterprise, project or product. The term most commonly refers to audits in accounting, but similar concepts also exist in project management, quality management, and energy conservation.- Accounting...
(core assurance), Fraud Investigation & Dispute Services, and Climate Change & Sustainability Services.
- Advisory Services (17%): consisting of four subservice lines: Actuarial
An actuary is a business professional who deals with the financial impact of risk and uncertainty. Actuaries provide expert assessments of financial security systems, with a focus on their complexity, their mathematics, and their mechanisms ....
, IT Risk and Assurance, Risk, and Performance Improvement.
- Tax Services (27%): includes Business Tax Compliance, Human Capital, Customs, Indirect Tax
The term indirect tax has more than one meaning.In the colloquial sense, an indirect tax is a tax collected by an intermediary from the person who bears the ultimate economic burden of the tax...
, International Tax Services, Tax Accounting & Risk Advisory Services, Transaction TaxA transfer tax is a tax on the passing of title to property from one person to another.In a narrow legal sense, a transfer tax is essentially a transaction fee imposed on the transfer of title to property. This kind of tax is typically imposed where there is a legal requirement for registration of...
.
- 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 "Quality In Everything We Do".
Staff
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.
Ernst & Young was ranked 4th in Universum's America's Ideal Employers list 2011 and 3rd in its Global Top Employers list.
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 2006.
In April 2009, Reuters reported that Ernst & Young 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.
Equitable life
In April 2004, Equitable Life, a UK life assurance company, sued EY after nearly collapsing following a
House of LordsThe House of Lords is the upper house of the Parliament of the United Kingdom. Like the House of Commons, it meets in the Palace of Westminster....
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 and each side agreed to pay their own legal costs. EY described the case as "a scandalous waste of time, money and resources for all concerned."
Anglo Irish Bank
In January 2009, in the
Anglo Irish Bank hidden loans controversyThe Anglo Irish Bank hidden loans controversy began in the Republic of Ireland in December 2008 when the chairman of Anglo Irish Bank, Ireland's third largest bank, admitted he had hidden a total of €87 million in loans from the bank, triggering a series of incidents which led to the eventual...
, EY was criticised by politicians and the shareholders of Anglo Irish Bank for failing to detect large loans to
Sean FitzPatrickSeán FitzPatrick was chairman of Anglo Irish Bank until he resigned in December 2008 amid mounting revelations over hidden loans...
, its Chairman, during its audits. The share price fell by almost 99% and the Irish Government had to subsequently take full ownership of the Bank, at a cost of €5,500 for every man, woman and child in the country. The then Chief Executive of Financial Regulation at the Central Bank of Ireland told a parliamentary committee that "a lay person would expect that issues of this nature and this magnitude would have been picked up” by the external auditors. EY declined to appear before the same committee after receiving legal advice. EY subsequently said their non-appearance was due to wanting not to be part of the media debate around the issue. The Chartered Accountants Regulatory Board appointed John Purcell, former comptroller and auditor general, to investigate into the "circumstances around the issue of inappropriate directors' loans at Anglo Irish" and into the performance of its auditors, EY.
Sons of Gwalia
On 4 September 2009, EY, the former auditors of
Sons of GwaliaSons of Gwalia was a Western Australian mining company which mined gold, tantalum, spodumene, lithium and tin.Sons of Gwalia was Australia's third-largest gold producer and also controlled more than half the world's production of tantalum, before entering administration in August 2004 following a...
, agreed to a A$125m settlement over their role in the gold miner’s collapse in 2004.
Ferrier HodgsonFerrier Hodgson is a group of Accounting firms specialising in Insolvency in the Australian and Asia Pacific region, with offices in all major capital cities in Australia, Singapore, Malaysia, Indonesia, and Japan...
, 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
On 11 October 2009, EY reached a legal settlement where they agreed to pay US$200 million 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
The Valukas Report by bankruptcy court examiner,
Anton R. ValukasAnton R. Valukas was the United States Attorney for the Northern District of Illinois from 1985 to 1989. In 2007, he became the chairman of Chicago law firm Jenner & Block, in which capacity he gained notoriety in 2009, when he was appointed bankruptcy examiner in the bankruptcy of Lehman...
, issued on 11 March 2010, charged that
Lehman BrothersLehman Brothers Holdings Inc. was a global financial services firm. Before declaring bankruptcy in 2008, Lehman was the fourth largest investment bank in the USA , doing business in investment banking, equity and fixed-income sales and trading Lehman Brothers Holdings Inc. (former NYSE ticker...
engaged in a practice known as
repo 105Repo 105 is a repurchase agreement which results in an accounting maneuver where a short-term loan is classified as a sale. The cash obtained through this "sale" is then used to pay down debt, allowing the company to appear to reduce its leverage by temporarily paying down liabilities—just long...
and that Ernst & Young, Lehman's auditor, was aware of it. New York prosecutors, headed by Governor-elect Andrew Cuomo, announced on 21 December 2010 that they have sued the firm for fraud charges related to
repo 105Repo 105 is a repurchase agreement which results in an accounting maneuver where a short-term loan is classified as a sale. The cash obtained through this "sale" is then used to pay down debt, allowing the company to appear to reduce its leverage by temporarily paying down liabilities—just long...
and the collapse of
Lehman BrothersLehman Brothers Holdings Inc. was a global financial services firm. Before declaring bankruptcy in 2008, Lehman was the fourth largest investment bank in the USA , doing business in investment banking, equity and fixed-income sales and trading Lehman Brothers Holdings Inc. (former NYSE ticker...
. Charles Perkins, a spokesman for the firm said that last audit of Lehman Brothers was for the fiscal year ending 30 November 2007 and that in EY's opinion, Lehman’s financial statements for that year were fairly presented in accordance with Generally Accepted Accounting Principles (GAAP).
Bally Total Fitness
In December, 2009, Ernst & Young agreed to pay an $8.5 million fine – one of the highest settlements ever paid by an accounting firm – to the Securities and Exchange Commission for its work auditing the books of
Bally Total FitnessBally Total Fitness is an American fitness club chain which operates 100 gyms, in several U.S. states. In November of 2011, competitor L.A. Fitness took over operation of 171 former Bally locations...
. The firm agreed to an order that it
cease and desistA cease and desist is an order or request to halt an activity and not to take it up again later or else face legal action. The recipient of the cease-and-desist may be an individual or an organization....
from violating securities laws. Six current and former Ernst partners, including Randy G. Fletchall, the partner in charge of the firm’s national office, were also sanctioned by the commission in one of its most sweeping actions against auditors involved in a failed audit. Two current Ernst partners who had worked for the national office and been involved with Bally audits, Mark V. Sever and Kenneth W. Peterson, were barred by the S.E.C. from auditing public companies for at least two years. The three former partners named by the commission were Thomas D. Vogelsinger, William J. Carpenter and John M. Kiss. Each was barred from auditing public companies, Vogelsinger for at least nine months, Carpenter for at least two years, and Kiss for at least three years.
Sponsorship
Ernst & Young'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,
BonnardPierre Bonnard was a French painter and printmaker, as well as a founding member of Les Nabis.-Biography:...
, Monet,
RodinFrançois-Auguste-René Rodin , known as Auguste Rodin , was a French sculptor. Although Rodin is generally considered the progenitor of modern sculpture, he did not set out to rebel against the past...
and
Renoir-People with the surname Renoir :* Pierre-Auguste Renoir , French painter* Pierre Renoir , French actor and son of Pierre-Auguste Renoir* Jean Renoir , French film director and son of Pierre-Auguste Renoir...
. The most recent of these was Maharaja: the Splendour of India's Royal Courts at the
Victoria and Albert MuseumThe Victoria and Albert Museum , set in the Brompton district of The Royal Borough of Kensington and Chelsea, London, England, is the world's largest museum of decorative arts and design, housing a permanent collection of over 4.5 million objects...
.
In addition, EY publicizes itself by sponsoring the educational children's show
CyberchaseCyberchase is an American educational television series for children age 6-12, that teaches children discrete mathematics. The show airs on Public Broadcasting Service and PBS Kids GO! in the United States. Seasons one through five were produced by Thirteen/WNET New York and Nelvana...
on
PBS KidsPBS Kids is the brand for children's programming aired by the Public Broadcasting Service in the United States founded in 1993. As with all PBS programming, PBS Kids programming is non-commercial. It is aimed at children ages 2 to 10...
under the
PBS Kids GO!PBS Kids GO! is an educational television brand used by PBS for programs intended for older children, rather than the original PBS Kids. It is primarily broadcast on PBS stations during the afternoons...
television brand, in an effort to improve mathematics literacy in children.
EY sponsors the
ITEM clubThe ITEM club or Independent Treasury Economic Model is an economic forecasting group based in the United Kingdom. It produces quarterly forecasts, which are often mentioned in the UK news media. It was founded in 1977 and is sponsored by Ernst & Young a leading firm of business and financial...
.
Sports Sponsorship
On September 8, 2011, Rio 2016 made the announcement that Ernst & Young will be a tier 2 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.
Business
- Karan Bilimoria, Baron Bilimoria
Karan Faridoon Bilimoria, Baron Bilimoria CBE is an entrepreneur and a life peer. He is best known as one of the two founders and chairman of Cobra Beer.-Early life:Bilimoria was born in Hyderabad, India of Parsi Zoroastrian descent....
—Founder of Cobra Beer
- Andrew Gould
Andrew Gould is the chairman and former chief executive officer of Schlumberger, a global oilfield services company supplying technology, information solutions and integrated project management.-Career:...
—Chairman and former CEO of SchlumbergerSchlumberger Limited is the world's largest oilfield services company. Schlumberger employs over 110,000 people of more than 140 nationalities working in approximately 80 countries...
(2003–2011)
- Ed Grier
Ed Grier was named dean of the Virginia Commonwealth University School of Business on February 8, 2010. Previously, he was President of the Disneyland Resort in Anaheim, California, which comprises the Disneyland and Disney's California Adventure theme parks, the Disneyland Hotel, Disney's Grand...
—Dean of VCU School of Business, Former President of the Disneyland ResortThe Disneyland Resort is a recreational resort in Anaheim, California. The resort is owned and operated by The Walt Disney Company through its Parks and Resorts division and is home to two theme parks, three hotels and a shopping, dining, and entertainment area known as Downtown Disney.The area now...
(2009–present)
- Chris Kubasik
Christopher E. Kubasik is President and Chief Operating Officer of Lockheed Martin Corporation. He also serves as the Vice Chairman of the Lockheed Martin Diversity Council.Mr. Kubasik was appointed to his current position in 2010...
—CEO of Lockheed MartinLockheed Martin is an American global aerospace, defense, security, and advanced technology company with worldwide interests. It was formed by the merger of Lockheed Corporation with Martin Marietta in March 1995. It is headquartered in Bethesda, Maryland, in the Washington Metropolitan Area....
(2001–present)
- Sean Wise
Sean Wise is a Canadian expert on venture capital. He uses this expertise in his various roles as mentor capitalist , international business speaker, business columnist for The Globe and Mail, and as a consultant for CBC on the venture reality show Dragons' Den...
—venture capital commentator
- Patricia A. Woertz
Patricia Ann Woertz became CEO of Archer Daniels Midland in 2006, beating out 4 other competitors. Formerly an Executive Vice President at Chevron Corporation, Woertz left to pursue CEO opportunities...
—CEO of Archer Daniels MidlandThe Archer Daniels Midland Company is a conglomerate headquartered in Decatur, Illinois. ADM operates more than 270 plants worldwide, where cereal grains and oilseeds are processed into products used in food, beverage, nutraceutical, industrial and animal feed markets worldwide.ADM was named the...
(2006–present)
- Arthur Blank
Arthur M. Blank is an American businessman and a co-founder of The Home Depot. Today he is known for his philanthropy and his ownership of the Atlanta Falcons in the National Football League.-Early life:...
—co-founder of Home Depot, owner of the Atlanta FalconsThe Atlanta Falcons are a professional American football team based in Atlanta, Georgia. They are a member of the South Division of the National Football Conference in the National Football League...
- Jim Balsillie
James Laurence "Jim" Balsillie is a Canadian businessman and co-CEO of the Canadian company Research In Motion. He is a member of the Trilateral Commission, a private political organization...
—co-CEO of Research In MotionResearch In Motion Limited or RIM is a Canadian multinational telecommunications company headquartered in Waterloo, Ontario, Canada that designs, manufactures and markets wireless solutions for the worldwide mobile communications market...
(1992–present)
- Michael T. Strianese—CEO of L-3 Communications
L-3 Communications Holdings, Inc. is a company that supplies command and control, communications, intelligence, surveillance and reconnaissance systems and products, avionics, ocean products, training devices and services, instrumentation, space, and navigation products. Its customers include...
(2006–present)
Politics and public service
- Jan Peter Balkenende
Jan Pieter "Jan Peter" Balkenende is a Dutch politician of the party Christian Democratic Appeal .He was the Prime Minister of the Netherlands from 22 July 2002 until 14 October 2010, having led four coalition governments, cabinets Balkenende I, II, III and IV, none of which served a full...
-Prime Minister of the NetherlandsThe Prime Minister of the Netherlands is the chairman of the Council of Ministers of the Netherlands. He is the de facto head of government of the Netherlands and coordinates the policy of the government...
(2002–2010)
- John B. T. Campbell III—Member of the U.S. House of Representatives (2005–present)
- Jun Choi
Jun H. Choi is an American politician and the former Mayor of Edison, New Jersey, a community of over 100,000 people and the fifth largest municipality in the state. He was sworn in on January 1, 2006 as the youngest mayor in Edison history...
—Mayor of Edison, New JerseyEdison Township is a township in Middlesex County, New Jersey. What is now Edison Township was originally incorporated as Raritan Township by an Act of the New Jersey Legislature on March 17, 1870, from portions of both Piscataway Township and Woodbridge Township...
(2006–present)
- Christopher Chope
Christopher Robert Chope OBE is a British barrister and Conservative politician. He is the Member of Parliament for Christchurch.-Early life:...
—Member of the British Parliament (1983–92; 1997–present)
- Sheila Fraser
Sheila Fraser served as Auditor General of Canada from 2001 to 2011.Ms. Fraser was born in Dundee, Quebec, Canada. She earned a Bachelor of Commerce degree from McGill University in 1972. She then became a chartered accountant in 1974 and FCA in 1994...
—Auditor General of Canada (2001–present)
- Cheryl Gillan
Cheryl Elise Kendall Gillan is a British Conservative Party politician. She is currently the Secretary of State for Wales, and the Member of Parliament for the constituency of Chesham and Amersham in Buckinghamshire....
—Member of the British Parliament (1992–present)
- Edward H Ntalami
Edward Haggai Ntalami is a leading business executive and the former CEO of the Capital Markets Authority , which is an an equivalent of the Securities Exchange Commission in the U.S. or the Financial Services Authority in the UK...
—CEO at his Kenyan Capital Markets Authority (2002–present)
- John Howell
John Michael Howell OBE is a British Conservative Party politician and the Member of Parliament for Henley, having won the seat with an increased share of the vote in the Henley by-election, 2008....
—Member of the British Parliament (2008–present)
- Hugo Schiltz
Hugo Schiltz was a Belgian lawyer and politician. He was Belgian MP from 1965 to 1988 and senator from 1992 to 1995. He was also twice minister, from 1981 to 1985 in the first Flemish Government and between 1988 and 1991 in the Belgian federal government Martens VIII...
—Belgian Senator (1992–1995)
- Jeff McWaters
Jeffrey L. McWaters is a Republican member of the Senate of Virginia. He represents the 8th district, which includes a portion of Virginia Beach...
—Member of the Virginia State Senate (2010–present)
- Tin Pei Ling
Tin Pei Ling is a Chinese Singaporean who is one of five Singapore People's Action Party Members of Parliament for the Marine Parade Group Representation Constituency. She is in charge of the MacPherson ward....
-Member of Parliament for Marine Parade GRC, Singapore (2011–present)
Other
- Kimberly Clarice Aiken
Kimberly Clarice Aiken Cockerham was Miss America 1994. Aiken was 18 years old when she won the coveted title, and was only the fifth woman of African descent to get the crown...
—Miss AmericaThe Miss America pageant is a long-standing competition which awards scholarships to young women from the 50 states plus the District of Columbia, Puerto Rico and the US Virgin Islands...
1994
- Geneviève Brame
Geneviève Brame is a French author who writes in Paris and Normandy. She lives with her husband in the former residence of the Comtesse de Ségur....
—author
- Jeff Moss
Jeff Moss, also known as The Dark Tangent, is the founder of the Black Hat and DEF CON computer hacker conferences.Moss graduated from Gonzaga University with a BA in Criminal Justice...
(born c. 1975) founder of the DEF CON and Black HatThe Black Hat Conference is a computer security conference that brings together a variety of people interested in information security. Representatives of federal agencies and corporations attend along with hackers. The Briefings take place regularly in Las Vegas, Barcelona and Tokyo...
technology conferences and member of the Homeland Security Advisory CouncilThe Homeland Security Advisory Council is part of the Executive Office of the President. It was created by an Executive Order on March 19, 2002.-Council Members:* William H. Webster , Partner, Milbank, Tweed, Hadley & McCloy, LLP...
See also
- Professional services networks
Professional services networks are networks of independent firms who come together to cost-effectively provide services to clients through an organized framework. They are principally found in law and accounting. They may also be found in investment banking, insurance, real estate and architectural...
- Accounting networks and associations
Accounting networks and associations are professional services networks whose principal purpose is to provide members resources to assist the clients around the world. The networks and associations operate independently of the independent members. The largest accounting networks are known as the...
External links