Ernst & Young has abandoned its proposal to split its auditing and consulting divisions, a plan that was intended to restructure the accounting industry but resulted in internal conflicts at the firm. Global leaders of the Big Four firm announced that they were ceasing work on the project after the heads of EY’s largest member in the global network, the U.S. arm, chose not to proceed.

The firm spent over a year and $100 million on the effort, but a small group of senior U.S. executives overturned the plan. The failure of the project is a setback for EY’s global chairman and CEO, Carmine Di Sibio, who had supported the proposed split and had his retirement extended to lead the newly created consulting firm. EY now faces a potential leadership crisis and client confusion, and it is unclear how a split could be redesigned in a way that achieves consensus.

EY’s plan to borrow billions of dollars and raise funds from an IPO to pay auditing partners and fund pensions for retired partners faced challenges from increasing interest rates and volatile markets. Despite hopes to create a model for the future of the accounting industry, EY’s efforts to split the business have failed, leading to frustration and cost-cutting measures that have affected employee morale.

The U.S. firm, which contributes 40% of EY’s annual global revenue, has been divided over the proposed deal, with most of the executive committee supporting it while U.S. managing partner Ms. Boland refused to override the objections of a few senior audit leaders. While some rival firms may try to poach disaffected EY partners, the global leadership remains committed to moving forward and has given partners the right to vote on whether to proceed.

In their note, the U.S. leaders highlighted the increasing financial challenges facing the deal, with tougher economic and market conditions causing the “transaction economics” to be in doubt. Meanwhile, EY’s CEO, Mr. Di Sibio, initiated Project Everest to address a long-standing issue limiting the growth of the firm’s consulting business.

Due to restrictions in many countries preventing firms from doing consulting work for companies they audit, EY was limited in the pool of prospective consulting clients and companies they could work with, particularly in the tech industry where they audit most of the large tech companies. Despite the breakup plan causing uncertainty among thousands of new graduates EY recruits annually, experts believe the issue of EY’s constraint in partnering with big technology firms remains urgent, and clients continue to seek different delivery models.