“My message to everyone about Everest is, it’s behind us,” Kevin Flynn, head of tax at EY’s U.S. arm, told his staff recently, according to a recording of a webcast heard by The Wall Street Journal. “Let’s not spend time in the rearview mirror.”

Dividing the tax unit was a major sticking point in the breakup. “We did go down the road of splitting the tax practice, and that…caused some division,” Mr. Flynn said on the call. “Tax has been through a lot around the Everest transaction and now it has ended we need to stabilize…and what I mean by that is not jumping right into the next thing, not looking to break tax apart.” 

EY’s U.K. leadership appears to also lack any appetite for a short-term revival of plans, after their support for the split was stymied by their U.S. colleagues.

Carmine Di Sibio, the firm’s global leader, had said that the overwhelming majority of partners backed a breakup. Photo: Kyle Grillot/Bloomberg News

“We now need a period of reflection, to…reinforce trust across the network,” Hywel Ball, U.K. chair, told his partners on a recording heard by the Journal. His strategy is to continue operating under the current model for the next few years, people familiar with the matter said. In an email to partners, Mr. Ball said the strategic questions driving the breakup project still need to be answered in the longer term.

Abandoning a split would appear to go against the wishes of EY’s 13,000 partners. The “overwhelming majority” of them backed a breakup, according to an internal email sent in March by Carmine Di Sibio, the firm’s global leader.

Instead of a split, one major short-term change at the firm is expected to be revamping the structure of the U.S. firm. The breakup plan was in effect vetoed by a handful of U.S. audit leaders, leading to angry demands for change from U.S. partners, according to people familiar with the matter.

After the breakup plan ended, EY’s U.S. leader Julie Boland and her senior executive team pledged to take action on “modernizing our governance structure,” according to a copy of an internal email viewed by the Journal. The review of corporate governance was started last year, one of the people familiar with the matter said. 

The U.S. firm, the biggest of the scores of separate national firms that make up EY’s global network, is run by an executive committee. Partners don’t get to vote on who sits on that committee, apart from the leader, and lack any obvious mechanism to oust executives they aren’t happy with, the people familiar with the matter said.  

Promises of change are viewed skeptically by at least some partners, according to people familiar with the matter. “They will offer us a fig leaf to cull the rebellion,” one U.S. partner said. 

The dismal mood in the U.S. firm has been worsened by the leadership’s decision to spread the 3,000-person job cuts announced in April over a period of up to six months, people familiar with the matter said. The cuts will include people let go for poor performance, which is expected to affect up to 350 of the 8,500 “core tax” professionals in the U.S., according to a recording of a webcast heard by the Journal. 

“I know this creates a lot of angst for all of you,” Sandra Wells, the tax talent leader for EY’s U.S. firm, said on the webcast.

Rivals are seeking to capitalize on EY’s woes. “Are there opportunities for us when a competitor gets destabilized internally? Of course,” a senior executive at one other Big Four firm said. The number of EY partners looking to potentially jump ship to the rival firm dipped when they were hoping for windfalls from a possible breakup, but has increased significantly in the last couple of weeks, the executive said. “Are there people [at EY] who are unhappy with what’s happened and talking to us? Yes.”