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The UK accounting regulator has launched an investigation into EY’s audit of Shell’s accounts for last year, the third time it has targeted the Big Four firm this year for potentially unauthorised auditors being involved in signing off accounts.
The Financial Reporting Council’s decision to open a probe comes after Shell said in July that EY had breached independence rules in the US and UK that set strict periods for how long a partner at an accounting firm can lead an audit.
Referring to Shell’s July statement, the FRC said on Monday that its probe would “include consideration of whether relevant requirements relating to partner rotation have been breached”, without giving further details.
EY said on Monday that it had breached the rules governing the rotation of partners on an audit, adding that it would “continue to fully co-operate with the FRC throughout the investigation”.
The audit of Shell, one of the biggest on the FTSE 100, has been carried out by EY for almost a decade. The firm was paid $66mn for its work for the energy major in 2024, according to Shell’s annual report.
The rules on rotation are designed to ensure that auditors remain independent of the companies whose accounts they check.
The FRC probe is the third time EY has come under scrutiny this year for potentially unauthorised auditors signing off companies’ books. Last week the watchdog opened an investigation into two individual EY auditors, as well as the firm itself, for issuing “unauthorised” auditors’ reports to unnamed companies.
In April, the Big Four firm was fined £325,000 for auditing Stirling Water Seafield Finance for more than the 10-year time limit.
EY has already paid more than £5mn in fines this year following the April fine and “serious breaches” of audit standards in its work on failed travel group Thomas Cook’s accounts in 2017 and 2018.
The new investigation means EY is sustaining six investigations simultaneously. They include probes into EY’s work for the scandal-hit Post Office, collapsed furniture retailer Made.com and former FTSE 100 hospital operator NMC Health.
The NMC Health audit is also being scrutinised in London’s High Court after its administrators accused EY of negligence. They are seeking damages of about £2bn on behalf of NMC creditors who lost money when the hospital operator collapsed.
The litany of probes means EY could face millions of pounds in financial penalties if it is found to have breached audit rules.
Shell said it had “disclosed this EY non-compliance matter in July 2025 and immediately refiled its Form 20-Fs for 2023 and 2024. Shell’s financial statements remain unchanged and the EY audit opinions remain unqualified.”
