The change in EY Europe has colleagues concerned about the damage to the Wirecard

The EY accountancy group is at the center of power of a new European executive team, which has gathered resources across the region but has raised concerns that there will be a financial hit. Wirecard scandal can also be shared.

Changing breaks from the federated business model of Big Four firms in an attempt to cut in half management costs and empower the central team to judge peer compensation, people agree. announced by the plan.

Some partners feared the new structure could lead to Wirecard-related penalties being shared ahead of the German team in charge of the work. EY audited group payments in a decade until it collapsed in a fraud scandal last year.

“French partners are shifting about it because they say“ why do we have to pay now for the Wirecard riot? ‘, “As someone close to the company.

Another person close to the matter said there would be “not much transparency” if any financial hit from Wirecard-related lawsuits or regulatory action ends up being shared with partners in other countries.

However, an EY person involved in creating the new structure said such concerns were “unfounded”, adding that separate legal entities would remain in each country. The Big Four has traditionally defended against the liability that pervades businesses around the world by using different partnerships in each country in which they operate.

EY announced in February that it was creating a new region in Western Europe, without giving details of the implications. The regional gathering, with 27,000 staff and $ 4.7bn in annual revenue, will include Germany, France, the Netherlands, Italy, Spain and 20 other countries in western Europe and northern Africa and is scheduled to launch in July. 1. The UK, Ireland or Scandinavia are not included here.

EY and its three main rivals – Deloitte, KPMG and PwC – are constrained by their traditional business model where revenue and resources are largely tied within national member states or small subregions, as to industry executives.

Under the EY plan, business lines such as M&A consulting and advice will be run on an income statement. The extent to which audit and taxation can be combined is limited by regulations.

The merger goes further than current pay between regions, reflecting work being referred from partners in one country to another. Currently, partners in each country also contribute a small proportion of revenues to fund shared international investment such as technology and salaries of international executives.

European management will decide on the compensation of partners in each country, even if there is a local management consultant, people are said to be familiar with the plans. Partners in the more profitable countries are likely to continue to maintain a higher revenue share.

Someone close to the vigilant colleagues said it was a “strange time” to facilitate German operations in those in other countries.

The Big Four firm faces an avalanche of lawsuits in Germany and has lost a reputation customer audit in Europe’s largest economies, including Deutsche Telekom and Commerzbank.

The structure of EY, part of the “NextWave” strategy that began before Wirecard’s collapse, is intended to reduce costs and improve service for clients by reducing “loop behavior” and allowing teams in different countries work seamlessly, people familiar with the plan said.

International cohesion and staff participation are essential to the consultation.

“This is the thing that all companies want to crack,” said a senior global executive at another Big Four Firm. “It’s the holy grail in a way… If they can deliver it it’s better for clients and it’s a competition.

The new Western European subregion will replace three smaller subregions, with the aim of cutting in half of management costs, said the person involved in the planning.

EY declined to comment.

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