Senior leaders of the company have expressed embarrassment after abandoning the proposal to separate its consulting and accountancy divisions.

During a call with partners, Anna Anthony, EY’s UK managing partner for financial services, stated: “We have inefficiencies in our business, which we can start to address now so we are already working on reducing our costs.”

While Ms Anthony did not disclose specific details of the cost-reduction measures, a source close to the firm revealed that the inefficiencies were identified during the preparations for the failed break-up, mainly relating to “duplication in processes and technology”. EY has already been restricting travel for internal events and training expenses, the Financial Times reports.

Ms Anthony admitted feeling “disappointed and embarrassed” by the deal’s collapse and emphasised the importance of moving forward. The decision to scrap the break-up plan, dubbed Project Everest, came after months of internal disagreements and resistance from US executives.

A vote on the proposal was postponed last month due to a divide among EY’s US partners regarding the tax division’s future within the auditing business.

Hywel Ball, EY’s UK chairman, warned that an increase in staff departures was likely and advised partners to prepare for “a bit of a tough period.” Ball also shared that the accounting watchdog expressed disappointment but understanding in response to EY’s decision to abandon the plan.

Despite these challenges, he emphasized the firm’s solid financial performance, with the UK business on track to post its third consecutive year of strong double-digit growth.

In the wake of the deal’s collapse, EY’s US partners were informed earlier this week that the firm needs to implement $500 million (£400m) in cost reductions.