The debts of EY’s failed Project Everest have taken longer than expected to clear

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EY has taken longer than expected to clear the debts it incurred as a result of the failure of its consulting arm, according to annual reports filed by the Big Four firm.

A $700mn credit facility opened to cover the cost of Project Everest – which would have split the firm in two and reshaped the global services industry – still has $270mn remaining at the end of the financial year of EY in June.

Including other loans, interest paid by EY’s global business during the year totaled $74mn, more than double the amount in the previous 12 months.

The accounts, filed at Companies House UK, say the three-year-old agency was finally paid after the financial year ended. A person familiar with the matter said the last refund was made in October.

“Through our financial planning, and regular reviews that guide our financial decisions, we have decided to pay off this loan 16 months early, as opposed to 20 months early,” the person said. .

Last year, EY said that “costs incurred during Project Everest will be paid in full by July 1 2024”.

Like the other big four, the firm had more lazy year more than expected. It increased revenue by 3.9 per cent worldwide, to $51.2bn, with audit and tax work spanning the new year in its consultancy business.

Project Everest was designed to enhance the growth of consulting and auditing, by freeing them from conflict of interest laws that prevent the sale of consulting services to their clients.

The high-profile project collapsed in April 2023 after failing to sign up EY’s leadership in the US.

Unlike the international standard, EY is a network of national partnerships linked by a global organization that sets policies and manages shared services such as IT. The company’s global operations, based in the UK, are managed on a limited basis, funded through national member firms.

$600mn had already been spent on planning Project Everest before it was cancelled. The 2024 reports show a significant drop in spending on professional fees, such as lawyers, which fell to $972mn from $1.4bn in the year to June 2023.

The new world director, Janet Truncale, promised otherwise strategic approach increasing revenue, including new investments in turnaround and operational advisory services, and growing EY’s managed services business.