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The Financial Reporting Council (FRC) has opened an investigation into EY’s audit of Shell, following disclosures that audit partner rotation rules were breached.
The FRC said it has commenced an investigation into the statutory audit conducted by EY of Shell’s consolidated financial statements for the year ended 31 December 2024.
The probe will examine whether requirements relating to audit partner rotation were breached under the FRC’s Revised Ethical Standard.
Shell disclosed to the London Stock Exchange on 2 July 2025 that EY had identified non-compliance with partner rotation rules, including exceeding permitted time limits.
The FRC said the decision to open the investigation was taken by its Conduct Committee at a meeting on 21 October 2025.
The investigation will be carried out by the FRC’s Enforcement Division under its Audit Enforcement Procedure.
Separately, EY has advised Shell that it was also not compliant with US Securities and Exchange Commission (SEC) auditor independence rules for the audits of Shell’s financial statements for the years ended 31 December 2023 and 2024.
As a result, Shell said it will file amended Form 20-Fs for both years with the SEC, including new US audit opinions issued by EY. The company said the underlying financial statements for 2023 and 2024 remain unchanged and that the audit opinions remain unqualified.
EY concluded that the partner who led the audits for the relevant years had exceeded the period allowed under SEC audit partner rotation rules and was therefore not eligible to serve as lead engagement partner.
EY subsequently appointed a different lead audit partner and carried out additional procedures.
Following that work, no changes were required to Shell’s previously issued financial statements and that appropriate remediation had been completed. According to EY, it was able to exercise objective and impartial judgment in issuing the new US audit opinions included in the amended filings.
EY also informed Shell’s audit and risk committee that time limits under the UK FRC’s Revised Ethical Standard on audit partner rotation had been exceeded. Shell said no amended filings are required in the UK, with the matter now subject to regulatory follow-up between EY and the FRC.
EY told Accountancy Today: “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. We take compliance with these standards extremely seriously and will continue to fully co-operate with the FRC throughout the investigation.”
