Ernst & Young

EXECUTIVE SUMMARY
Ernst & Young commonly referred as EY, is one of the Big Four professional services firms along with Deloitte, PricewaterhouseCoopers and KPMG
Ernst & Young is a multinational professional services firm headquartered in London, United Kingdom and was the third largest professional services firm in the world by aggregated revenue in 2012. The firm has employed 167,000 people and has more than 700 offices across more than 140 countries, providing assurance (including financial audit), tax, consulting and advisory services. In FY 2012, EY earned a record of $24.4 billion USD in revenue, ranking the third among the Big Four, after PricewaterhouseCoopers and Deloitte, ahead of KPMG.
Ernst & Young offers its services to companies in a vast range of industries, including asset management, life sciences, mining, media and entertainment, retail, technology, and hotel and leisure. The company's financial reporting segment offers an IFRS/GAAP comparison so companies can compare and contrast the international and US accounting standards. The group's members firms are organized in four geographic areas: Europe, the Middle East, India, and Africa; the Americas (including Ernst & Young LLP); Japan; and the Asia/Pacific region. Ernst & Young is increasingly focused on the emerging markets, which have seen more rapid economic recovery than the developed nations. The company sees the trend of growth in the emerging markets as one that will continue for decades to come, and is investing in those markets as such. INTROCDUCTION 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 realized that EY was also the name of racy magazine, EY! Magateen,[24] which features scantily clad young men Early History
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.
In 1903, the firm of Ernst & Ernst was established in Cleveland by Alwin C. Ernst and his brother Theodore and in 1906, Arthur Young & Co. was set up by the Scotsman Arthur Young in Chicago.
As early as 1924, these American firms allied with prominent British firms, Young with Broads Paterson & Co. and Ernst with Whinney Smith & Whinney.[11] 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.
Merger
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.
Recent History
In 2002, EY took over many of the ex-Arthur Andersen 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, LLP, the largest minority-owned accounting firm in the United States.
In 2010, EY acquired Terco, the Brazilian member firm of Grant Thornton.
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”.
SERVICES
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.
FINANCIAL SERVICES ASSURANCE
Financial Accounting Advisory Services practice is a multidisciplinary team of accounting, tax, and IT professionals with deep experience in managing the implementation of accounting changes, ranging from a single accounting standard to the full project planning and global implementation of IFRS.
EY helps CFOs, audit committees, treasurers, and other top financial executives understand the pending changes and assess the impact on their companies. The firm can provide focused technical assistance on planning an orderly, efficient transition — while helping reduce risks in financial and tax reporting, operations and information systems.
EY can provide assistance on many of your current critical issues, including: * IFRS conversion support * Implementation of new accounting standards * Accounting experience during financial due diligence * Accounting control or process support * Assistance with public offerings
CRITICISMS
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 criticized by politicians[42] 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 , 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.
Amazon and Google tax affairs
EY are tax consultants for both Amazon and Google, two multinational companies at the center of investigations into their large-scale tax avoidance. Both Amazon and Google have been called by MPs to account for their tax policies in UK. It remains to be determined if these companies' practices amount to tax evasion

REFERENCES
Hoovers. “Ernst and Young Global Limited” October 3, 2013
<http://subscriber.hoovers.com.proxy.libraries.smu.edu/H/company360/productsOperations.html?companyId=40146000000000>
Ernst & Young. “Assurance Services” September 24, 2013
<http://www.ey.com/GL/en/Services/Assurance/Financial-Accounting-Advisory- Services>
Wikipedia. “Ernst & Young” September 24, 20013 <http://en.wikipedia.org/wiki/Ernst_%26_Young>