The Financial Reporting Council (FRC) is investigating EY over the statutory audit of the consolidated financial statements of Shell plc for the financial year ended 31 December 2024 focusing on whether audit engagement partner rotation rules were breached.

Under UK rules, key audit partner rotation rules require engagement partners on listed audits to rotate after a maximum of five years, then they are not allowed to return to the role for five years.

EY has been auditor for nine years and was reappointed as auditor of the oil giant in December 2024 following a competitive tender which saw the Big Four firm retain the £55m annual audit it first took over in May 2016. The renewed contract is due to start from the FY26 financial statements onwards.

The FRC investigation will focus on non-compliance with audit partner rotation rules by EY, including exceeding the time limitations for partner rotation under the UK FRC’s Revised Ethical Standard and breaches of the Relevant Requirements relating to partner rotation.   

It was back in July when the issue with the partner rotation on the Shell audit came to light. The oil giant issued a statement on 2 July 2025 informing shareholders that EY had reported non-compliance with audit partner rotation rules, including exceeding the time limitations for partner rotation under the UK FRC’s Revised Ethical Standard.

At the time, Shell also said EY had informed the company that ‘for the years ended 31 December 2023 and 2024, EY was not in compliance with the SEC [US Securities & Exchange Commission] auditor independence rules’. Under US audit partner rotation rules, the named partner has to come off the audit after seven years, and cannot return to the audit engagement role for two years.

As a result, Shell submitted an amendment to its filed Form 20-Fs for those years with new US audit opinions issued by EY. The financial statements for 2023 and 2024 remain unchanged. The EY audit opinions remain unqualified and after a review, EY concluded that it was ‘not in compliance with the SEC’s auditor independence rules for the audits of the applicable years’. 

In the July statement, Shell noted: ‘EY has determined that the partner who led the audit for the applicable years had exceeded the period allowed under SEC audit partner rotation rules and hence was not eligible to serve as lead engagement partner for those audits.’

After discovering the breach, EY then assigned a different partner as lead audit partner for the audits and ‘concluded that no changes to the previously issued financial statements for the applicable years are necessary’, Shell said in the statement.

EY also told Shell the ‘appropriate remediation has been completed, and it is capable of exercising objective and impartial judgment with respect to the US audit opinions included in the amended Form 20-Fs for the applicable years to be filed with the SEC’.

This is the second FRC investigation into EY in a week, with a probe into unauthorised sign-offs on several audits for unnamed listed companies by the Big Four firm announced on 10 December. 

The decision to open the Shell investigation was made at a meeting of the FRC’s conduct committee on 21 October 2025 and will be conducted by FRC’s enforcement division under the Audit Enforcement Procedure.

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