Company with 500 Conn. employees set to split

EY partners reportedly have approved a split of the company that has more than 500 employees in Connecticut — the biggest change in the U.S. audit industry since the dissolution of Arthur Andersen after the Enron scandal two decades ago.

The Wall Street Journal reported Sunday that senior partners approved a split of the audit and consulting firm, without citing by name its sources.

One spinoff will focus on EY’s tax and audit services, with the other to offer a range of other business and tech consulting services. In July, EY CEO Carmine Di Sibio told The Financial Times that a split would help EY consultants land more contracts by eliminating conflicts of interest with the auditing arm of the business.

A final decision has been in a holding pattern, according to multiple reports over the summer, as partners on each side of the house negotiate how to allocate payouts to partners, how debt would be allocated across the new companies, and any tax implications for the separation. This summer, EY promoted just over 1,000 employees to partner, its biggest cohort ever according to a post to Di Sibio’s LinkedIn page.

EY’s antecedents date back to 1894 when Arthur Young co-founded an accounting firm in Chicago, and 1903 when brothers A.C. and Theodore established their firm Ernst & Ernst in Cleveland. In 1989, Ernst & Whinney merged with Arthur Young & Co. to form Ernst & Young.

Today in Connecticut, EY has offices in Hartford and Stamford, as the case with rivals Deloitte, KPMG and PricewaterhouseCoopers. At last report, EY was the smallest of the Big Four for Connecticut headcount, at about 570 people of its global headcount that totals some 350,000 people.

As of Tuesday, EY listed 10 open job positions in Connecticut, though more are posted on its career page that allow new hires their pick of a U.S. office based on their living preferences.

EY’s managing partner in Stamford Jonathan Lipschutz told CTInsider in August the firm has plans for continued growth in Connecticut. Lipschutz could not be reached immediately Tuesday on the question of how the company anticipates carving up its Connecticut workforce if a split is finalized, and any impact that may have on local hiring.

The Connecticut Department of Consumer Protection lists about 4,900 certified public accountants in Connecticut who have active or pending licenses, with about 1,000 CPAs listing office addresses in other states, primarily New York.

Connecticut is home to one of the most influential entities in the accounting industry — the nonprofit Financial Accounting Foundation based in Norwalk, which sets U.S. standards for corporate and government accounting.

In addition to the Big Four, other large national firms are active in Connecticut including BDO, CLA, CohnReznick, Crowe, Grant Thornton, Marcum and RSM.

Hartford-based Whittlesy is the largest Connecticut firm on an annual ranking by Inside Public Accounting, with nearly $30 million in revenue in 2021. Smaller firms making the IPA 500 list include Fiondella, Marone & LaSaracina and MahoneySabol, both based in Glastonbury; Reynolds & Rowella in Ridgefield; and Harper & Whitfield in Farmington.

Hearst Connecticut Media file photo The First Stamford Place complex in Stamford where “Big Four” auditing firm EY has one of its two Connecticut offices, along with Hartford. The Wall Street Journal reported in early September EY partners have agreed to a split of the firm that would carve out business consulting as a separate company from the auditing and tax services.

Michelle M Liotta / Contributed photo EY employees volunteering in 2015 at the Stamford Museium & Nature Center in Stamford, where the firm has one of its two Connecticut offices.