EY Consulting Split Aims to Free Firm from Ethics Crackdown

Tighter ethics regulations are holding back the growth of Ernst & Young’s lucrative consulting business, a key reason firm leaders are considering whether to separate its global audit and advisory practices.

Regulators in countries including the US, EU, and India have been clamping down on auditor independence—a major investor safeguard—by barring firms from performing certain outside work for their audit clients and limiting the revenue that the firm’s consulting practice can earn.

“There’s work we can’t do,” a source with knowledge of the matter said. Conflict-of-interest rules limit the type of advisory work the firm can provide, including fast-growth technology ...