UK Audit Regulator Investigates EY Over Shell 2024 Audit

Key Takeaways

• Investigation Opened: The FRC has launched an investigation into EY’s statutory audit of Shell plc’s 2024 consolidated financial statements.
• Focus on Partner Rotation: The probe will examine potential breaches of UK audit partner rotation rules under the FRC’s Revised Ethical Standard.
• Trigger Event: Shell disclosed the non-compliance to the London Stock Exchange in July 2025.
• No Findings Yet: The FRC emphasized that opening an investigation does not imply wrongdoing or that breaches have been established.

Deep Dive

The UK’s Financial Reporting Council has opened an investigation into Ernst & Young’s statutory audit of Shell’s consolidated financial statements for the year ended 31 December 2024, focusing on potential breaches of audit partner rotation rules.

The regulator confirmed on 15 December that the investigation relates solely to the statutory auditor or auditors involved and does not extend to Shell or any other individuals or entities. The FRC also stressed that the opening of an investigation does not indicate that any breaches have been found, or that enforcement action will ultimately follow.

The probe follows a disclosure made by Shell on 2 July 2025, when the energy group informed the London Stock Exchange that EY had identified non-compliance with UK audit partner rotation requirements. According to that announcement, the issues included exceeding time limits set out under the FRC’s Revised Ethical Standard, which governs auditor independence and partner tenure.

The FRC said its investigation will examine whether relevant requirements relating to audit partner rotation were breached. Partner rotation rules are designed to safeguard auditor independence by limiting how long senior audit partners can serve on an engagement.

The decision to open the investigation was taken by the FRC’s Conduct Committee at a meeting on 21 October 2025. The case will now be handled by the regulator’s Enforcement Division under its Audit Enforcement Procedure.

As with other investigations at this stage, the FRC has not provided a timeline for completion and has made clear that no conclusions should be drawn while the process is ongoing.

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