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Ernst & Young Company Profile and Annual Report FY12

Vinitha - 121599

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Vinitha - 121599

MBA I Year E Batch Annamalai University

2012

Ernst & Young


Ernst & Young (EY) is one of the largest professional service firms in the world and one of
the "Big Four" accounting firms, along with Deloitte, KPMG and PricewaterhouseCoopers (PwC). Ernst & Young is a global organization of member firms in more than 140 countries, headquartered in London, England. It was ranked by Forbes magazine as the eighth-largest private company in the United States in 2011. Professional services are an industry of technical or unique functions performed by independent contractors or consultants whose occupation is the rendering of such services. Examples of professional services include those of: accountants, actuaries, appraisers, architects, attorneys, business consultants, business development managers, copywriters, engineers, funeral directors, law firms, public relations professionals, recruiters, researchers, real estate brokers, translators and medical centres.

History
Early history

Ernst & Young 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. In 1979 this led to the formation of Anglo-American Ernst & Whinney, creating the fourth largest accountancy firm
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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. Mergers 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.

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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.

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 "Quality In Everything We Do".

Facts and figures


Global headquarters: London Global Chairman and CEO: James S. Turley. Number of people globally: 167,000 (as of 30 June 2012). Global revenues: US$24.4 billion (Financial Year '12, ending 30 June 2012). Geographic Areas: Americas; Europe, Middle East, India and Africa; Asia-Pacific; Japan. Offices: 700+ in more than 140 countries.

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Ernst & Young recognized as one of the 25 Worlds Best Multinational Workplaces by Great Place to Work

Ernst & Young Ranked 12th, the only Big Four employer on list
London, 14 November 2012 Ernst & Young announced today that it has been recognized as

one of the Worlds Best Multinational Workplaces by Great Place to Work Institute. Now in its second year, the ranking is the worlds largest annual study of workplace excellence and identifies the top 25 best multinationals in terms of workplace culture. Mike Cullen, Global Managing Partner - People, Ernst & Young, says: Its a great honor to be recognized as one of the best global employers by Great Place to Work. We must celebrate this success, which comes as a result of our ability to attract the best people and build them into high performance teams throughout the world. Looking ahead, we will continue to innovate further to address generational, business and technological changes. As a 167,000-strong employer, its important that our people feel empowered whatever their geographical location or level of seniority. Our focus will be on enabling a work environment that delivers the right tools and flexibility to suit various lifestyles and career aspirations. As a people-centric business, this will be the key to help drive competitive edge and deliver future success. Nancy Altobello, Americas Vice Chair People, Ernst & Young, accepted the award on behalf of the global organization at the gala awards ceremony in San Francisco yesterday evening. She added, The exceptional Ernst & Young experience we provide for our people includes the opportunity to work in a truly global and inclusive environment that reaches across geographic borders, cultures, service lines, generations and professional experiences. Our people can work alongside colleagues and clients from different countries or cultures, take advantage of a range of global mobility initiatives and international assignments, or participate in learning and development programs to establish a global mindset. This award is an important acknowledgement of our work to remain the most globalized, integrated professional services organization in mindset and actions, yet it pushes us to aim even higher as we learn from the successes of our fellow honorees. Since launching the first best workplaces lists in the United States and Brazil in 1997, Great
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Place to Work now recognizes leading workplaces in some 45 countries. The Worlds Best Multinational Workplace list is based on a pool of data from some 2,000 companies that were listed on Great Place to Work country best companies lists. Every year, Great Place to Workanalyzes data from surveys taken by more than 2.5 million employees and workplace culture analytics taken from 5,671 companies that represent more than 11 million employees. The companies listed on the second-annual Worlds Best Multinational Workplaces List are creating workplaces dedicated to fostering trust, pride and camaraderie amongst their employees, said Susan Lucas-Conwell, Global CEO of Great Place to Work. Their inclusion on this prestigious list demonstrates their commitment to continually improving the lives of their employees and setting innovative new standards for workplaces of the future.

Ernst & Young today announced combined global revenues of US$24.4 billion for the financial year ended 30 June 2012, compared with US$22.9 billion in 2011. Revenues grew 7.6% in local currency (US$ 6.7%).
Good growth across all service lines Emerging markets saw combined revenue growth of 15.5% Headcount at an all-time high of 167,000

Our business model and strategy continue to weather the economic turmoil and withstand the test of time. All of our service lines showed growth. Assurance revenues were up 4.1%, Tax 7.0%, Transactions 9.4% and Advisory 16.2%, a good performance given the current business climate. Growth in all of our service lines was almost entirely organic, with acquisitions accounting for less than one half of one percentage point. FY12 remained a dynamic and volatile period in the world economy. The ongo ing sovereign-debt crisis in Europe, the impending fiscal cliff in the US, and signs that the emerging-market economies are slowing all point toward a challenging business climate in the months ahead. We will also continue to face regulatory uncertainty in many jurisdictions around the globe. That said, we are pleased that our business showed good results, the best

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since 2008, in the midst of what has been several years of uncertainty, said Jim Turley, Global Chairman and CEO of Ernst & Young. Our strongest performing sectors, all with double digit growth, were: Automotive, Life Sciences, Mining & Metals and Oil & Gas. As a result of the improvement in our business, weve grown our headcount to 167,000, an increase of more than 15,000 people in fiscal 2012. And, while we still have much to do in terms of diversity and inclusiveness, we are making steady improvement. Globally 25% of our new partners this year are women, up from 23% last year and 20% in 2010. Our success in the emerging markets is largely the result of a strategic investment program started six years ago. Since the inception of this program, we have invested more than US$1.8 billion in our geographies, the majority of which has been earmarked for the emerging markets. We are committed to maintaining our investment in the emerging markets, said John Ferraro, Global Chief Operating Officer of Ernst & Young. Every growth orientated company, no matter where they are headquartered, knows their importance. The results of this have been clearly visible in 2012, as Brazil saw organic revenue growth of 17.5%, while India, Africa, China and the CIS increased revenues 19.8%, 10.2%, 11.8% and 15.6%, respectively. Ernst & Young, and our professions role in the worlds capital markets, has never been more important. Given these uncertain economic times we have to remain focused on working with our clients to deliver the best possible service, wherever they are in the world, concluded Turley.

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Ernst & Young revenues by Area - US$ millions

FY12

FY11

% Change Local Currency US$ 9.3% 3.8% 11.1% 2.8% 6.7%

Americas EMEIA Asia-Pacific Japan Total

9,820 2,813 1,328

8,981 2,532 1,292

10.1% 6.5% 8.1% -2.3% 7.6%

10,459 10,075

24,420 22,880

12,000 10,000 8,000 6,000 4,000 2,000 0 Americas EMEIA Asia-Pacific Japan FY12 FY11

Ernst & Young revenues by service line - US$ millions

FY12

FY11

% Change Local Currency US$ 3.4% 6.0% 8.3% 6.7%

Assurance Tax Advisory Transaction Advisory Services Total

10,923 6,370 4,956 2,171 24,420

10,561 6,011 4,304 2,004 22,880

4.1% 7.0% 9.4% 7.6%

16.2% 15.1%

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12,000 10,000 8,000 6,000 4,000 2,000 0 Assurance Tax Advisory Transaction Advisory Services FY12 FY11

Ernst & Young people by Area

FY12 Americas EMEIA Asia-Pacific Japan Total 50,256 81,022 29,294 6,653

FY11 45,010 73,136 27,125 6,570

% Change 11.7% 10.8% 8.0% 1.3% 10.1%

167,225 151,841

90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 Americas EMEIA Asia-Pacific Japan FY12 FY11

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Ernst & Young people by service line

FY12 Assurance Tax Advisory Transaction Advisory Services Practice support Total 66,232 31,988 27,046 8,598 33,361

FY11 60,527 29,118 23,304 7,922 30,970

% Change 9.4% 9.9% 16.1% 8.5% 7.7% 10.1%

167,225 151,841

70,000 60,000 50,000 40,000 30,000 20,000 10,000 0

FY12 FY11

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