The audit and consulting firm EY, which hit the headlines because of the Wirecard scandal, want to part with 40 of its 800 partners and hundreds of employees in Germany. At the same time, it intends to hire 2000 new employees. According to the Financial Times, most of the 40 partners affected by the downsizing program will be from the audit division.
The fact is that revenue generated from auditing and audit-related consulting fell by 3.7% in the past fiscal year. Numerous major clients left the list of top companies audited by EY during the same period. However, EY announced in December that it intended to hire 2,000 employees in the current fiscal year. In addition to traditional auditors and tax advisors, specialists for sustainability (ESG), digitization or cybersecurity would also be sought. This remains the goal.
The company says that there is no hiring freeze. Nevertheless, 380 full-time equivalents were to be eliminated for cost reasons. This would mainly affect employees in central departments such as accounting, personnel administration, and marketing. As a rule, employees who process orders from EY clients in the audit and consulting business areas are not affected.
The reason for the job cuts is not the Wirecard scandal but the separation of the audit from the consulting lines of business planned by the international EY network. During the preparatory work for the EY executives’ vote on the split, which is due at the end of March, it was noticed that the costs for administration in Germany were above average. EY now wants to counteract this, he said. Better financial ratios are gaining importance because after the split-up of EY, an IPO of the consulting division is to be aimed for.