The Financial Reporting Council (FRC) has initiated a formal inquiry into whether Ernst & Young (EY) adhered to UK audit partner rotation requirements during its examination of Shell’s consolidated financial statements for the year ending 31 December 2024. This investigation is focused on evaluating compliance with regulations governing the tenure of lead audit partners.
In July 2025, Shell disclosed to the London Stock Exchange that EY had identified issues with adherence to audit partner rotation requirements. The report highlighted that the time limits for the rotation of audit partners, as outlined in the FRC’s Revised Ethical Standard, had been exceeded. In response, Shell announced plans to revise its annual reports for both 2023 and 2024 due to EY’s failure to comply with US Securities and Exchange Commission rules on partner rotation. However, Shell clarified that the underlying financial statements would remain unchanged.
EY notified Shell in July that the US audit opinions issued for 2023 and 2024 should not be relied upon, according to a report by Reuters. EY subsequently reassigned responsibility to another partner and began reissuing these audit opinions. The decision to launch the investigation was confirmed at an FRC Conduct Committee meeting on 21 October 2025.
The Enforcement Division will conduct a review in accordance with the Audit Enforcement Procedure. EY was quoted by Reuters as acknowledging the breach of time limitations under the FRC’s Revised Ethical Standard regarding partner rotation and reporting this matter to the FRC.
Recently, the FRC commenced an investigation into EY over the unauthorized issuance of auditor’s reports to clients. The original article, “UK’s FRC probes EY’s audit of Shell 2024 financial statements,” was first published by International Accounting Bulletin, a brand owned by GlobalData.
Please note that the information provided on this site is intended for general informational purposes only. It is not meant to constitute advice on which you should base decisions, and we do not guarantee the accuracy or completeness of the content. It is advisable to seek professional or specialist advice before taking any action based on the information on our site.
