Pwc vs Ernst & Young

Pwcis the product of two separate Victorian accounting practices. Price Waterhouse was founded in London in 1849 by Samuel Lowell Price and later expanded by Edwin Waterhouse. Coopers & Lybrand was founded by William Cooper in 1854. For nearly 150 years, the two firms were direct competitors — both operating globally, both serving the world's largest companies, both considered among the most prestigious names in the profession.

Price Waterhouse won the audit of U.S. Steel — the world's first billion-dollar corporation — in the early twentieth century, establishing itself as the auditor of choice for America's largest industrial companies. In an era before the SEC existed, the name "Price Waterhouse" on an audit report was the closest thing to a government guarantee of financial credibility.

Price Waterhouse and Coopers & Lybrand completed their merger in 1998, creating Pwc— at the time the largest professional services firm in the world. The merger reduced the Big Six accounting firms to the Big Five. Two firms that had competed for 150 years became one overnight.

At the 89th Academy Awards ceremony in February 2017, PwC accountants mistakenly handed presenters Warren Beatty and Faye Dunaway the wrong envelope. Beatty announced La La Land as Best Picture. Producers and cast members took the stage. Then a PwC representative walked on and announced that the actual winner was Moonlight. The firm had managed the Oscars vote count for 83 years without incident. The two accountants responsible were never allowed to work the Oscars again. PwC retained the contract.

In 2023, PwC Australia became the centre of one of the most damaging scandals in the firm's history. A senior partner had leaked confidential government tax policy information to colleagues, who used it to advise corporate clients on how to avoid new tax rules before they were announced. The scandal triggered parliamentary inquiries, forced the resignation of PwC Australia's CEO, and prompted a global review of how the Big Four's consulting and audit practices conflict with each other.

PwC laid off approximately 5,600 employees globally in 2025 — including 1,500 in the U.S. alone — after global revenue growth slowed to 2.9%, its lowest rate since the pandemic-recovery boom. The firm had aggressively expanded headcount between 2021 and 2023, and with attrition falling sharply, it had more staff than clients demanded. Meanwhile, PwC spent approximately $1.5 billion on AI capabilities between July 2024 and June 2025, attempting to position the firm for a future where AI would do much of the analytical work that had made consulting firms valuable. Advisory revenue grew just 4.5% in 2025. The question facing PwC — and every major consulting firm — was whether AI would eventually replace the human judgment that justified their fees, or whether it would simply be another tool to sell to clients at a premium.

Ernst & Young traces its origins to four separate accounting practices founded in the nineteenth century — including Harding & Pullein in England (1849), Ernst & Ernst in Cleveland (1903), Arthur Young & Company in Chicago (1906), and Whinney, Smith and Whinney in London (1894). None of the founders could have imagined that their small practices would eventually merge into a single firm employing 400,000 people.

Ernst & Whinney merged with Arthur Young in 1989, creating Ernst & Young — the largest accounting merger in history at the time, creating a firm with revenues of $4.3 billion and operations in over 100 countries. The tagline "Quality In Everything We Do" would later attract considerable irony given subsequent audit failures.

EY audited Wirecard, the German payments company, for ten years while the company was conducting a €1.9 billion fraud — booking money in bank accounts that did not exist. German regulators found that EY had failed to properly verify the existence of cash balances that represented a quarter of Wirecard's claimed assets. Wirecard collapsed in June 2020. EY faced investor lawsuits seeking billions in damages and a regulatory ban from new audit engagements in Germany. The scandal became EY's defining reputational crisis.

EY announced "Project Everest" in 2022 — a plan to split the firm into two separate entities: an audit firm and a consulting firm. The rationale was that combining audit and consulting created conflicts of interest and that the consulting business was undervalued inside the partnership structure. EY spent over $100 million and took on $700 million in debt preparing for the split. In April 2023, EY's U.S. partners voted against it — 40% of global revenues giving them effective veto power. The firm that had nearly become two remained one, having spent a year and hundreds of millions of dollars to reach the same conclusion it had started with.

Janet Truncale took over as EY's global CEO in 2024, succeeding Carmine Di Sibio who had championed and then watched Project Everest collapse. EY continued cutting headcount in Germany — where Wirecard's shadow had depressed growth — and in other markets where consulting demand had softened. Germany's accounting watchdog APAS handed EY a €500,000 fine and a two-year ban from taking on new audits of public-interest companies, related to its Wirecard audit work from 2016 to 2018. The firm that had promised quality in everything it did was managing the consequences of a decade-long audit failure and a half-billion-dollar strategic miscalculation simultaneously.