Financial Services

Deloitte’s US chief fails to win support of board members

Leadership at the auditor thrown into question less than a year before end of term

US partners at Deloitte were told by email that Cathy Engelbert had not been put forward for a second term in her job.

Fri Jun 29 2018 - 09:14

Deloitte's US chief executive, Cathy Engelbert, has failed to receive the support of board members for a second term at the helm of the auditor, throwing the leadership of the firm into question less than a year before her first term expires.

Ms Engelbert became the first female chief executive of a major US accounting firm when she assumed the role in 2015, taking charge of a partnership that now views its role as far more expansive than the statutory audit assignments on which she spent the bulk of her career.

US partners at Deloitte were told by email that Ms Engelbert had not been put forward for a second term in her job, people familiar with the situation said.

Deloitte said in a statement that it was “in the early, board nominating committee stage” of a succession process that takes place every four years and involves broad consultation ahead of a formal leadership election in early 2019. It added: “We will provide an update at that time.”

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Insiders characterised the impasse as the result of disagreements among strong-willed partners, and said Ms Engelbert could yet be nominated for another term if the internal strife can be resolved.

Deloitte operates as a constellation of independent businesses in more than 150 countries, with more than 250,000 employees and global revenue of nearly $40 billion in 2017. About half of that total was generated by the US firm that Ms Engelbert runs.

The email to US partners disclosing her failure to win renomination was first reported by the Wall Street Journal.

Deloitte denied that the discord reflected any disagreement about the firm’s strategy of diversifying beyond audit, which now accounts for less than one-third of the partnership’s US revenue.

The “multidisciplinary model is central to our strategy, enabling us to capitalise on market leading expertise and deliver technology-enabled services of the highest quality to our clients and the capital markets”, Deloitte said.

However, the idea of a one-stop shop for audit, consulting and technology services has powerful critics.

Deloitte, along with all its Big Four competitors, has drawn up contingency plans for a break-up of its UK business - an outcome urged by a parliamentary report that lambasted auditors as a “cosy club incapable of providing the degree of independent challenge needed”. - Copyright The Financial Times Limited 2018

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