The UK’s accounting watchdog has opened an investigation into Ernst & Young’s audit of Shell plc after the firm acknowledged breaches of audit partner rotation rules, adding fresh scrutiny to one of the world’s largest energy companies’.
- •The Financial Reporting Council (FRC) said it is examining EY’s statutory audit of Shell’s 2024 consolidated accounts, focusing on whether the firm violated requirements governing how long a lead audit partner may remain on an engagement.
- •The probe follows Shell’s July disclosure that EY had exceeded permitted time limits under both UK and US auditor independence rules.
- •The lapse forced Shell to amend its 2023 and 2024 Form 20-F filings in the US, after EY concluded its original audit opinions should no longer be relied upon because the lead partner had served beyond the allowed period.
“As disclosed on 2 July 2025, EY UK determined that time limitations under the FRC's Revised Ethical Standard regarding rotation of partners on one engagement had been exceeded and reported this matter to the FRC," EY said in an emailed statement.
New audit opinions were issued by a different partner. Shell’s financial statements themselves were unchanged and the opinions remain unqualified (clean).
EY has said the breach was procedural rather than substantive, concluding that no restatement was necessary and that remedial steps were completed. In the UK, no amended filings were required, though the FRC has now moved to assess whether ethical standards on partner rotation were breached.
Audit partner rotation rules limit how long the same senior auditor can oversee a company’s accounts, forcing periodic changes to preserve independence and professional scepticism. Breaching them can invalidate audit opinions even when the underlying financial statements are unchanged.
The investigation, approved by the FRC’s Conduct Committee in October, will be handled by its Enforcement Division. The regulator stressed that opening the case does not imply wrongdoing or pre-judge the outcome, but it places renewed attention on audit independence rules designed to limit familiarity risks in long-running corporate audits.
