The Financial Reporting Council (FRC) announced on December 15 2025 that its Conduct Committee had opened an investigation into Ernst & Young’s audit of Shell plc’s 2024 financial statements. The decision to launch the probe was made on October 21 2025 after the council received concerns that the audit firm had breached the UK’s audit partner rotation rules.
Shell’s own July 2025 statement disclosed that Ernst & Young had reported a partner rotation breach to the FRC. The audit partner in question had exceeded the allowable tenure for an engagement, a violation of the FRC’s Revised Ethical Standard. Ernst & Young confirmed the issue, saying it would fully cooperate with the regulator and that it had already assigned a new partner to reissue the U.S. audit opinions for 2023‑24.
Shell has reiterated that its audited financial statements remain unchanged and that the investigation targets only the auditor, not the company itself. The firm’s management has indicated confidence in the integrity of its reported results, suggesting that the regulatory matter is a technical compliance issue rather than a sign of financial misstatement.
The investigation follows a history of audit partner rotation scrutiny for Ernst & Young, including a fine imposed by the FRC for a similar breach with Stirling Water Seafield Finance. The probe underscores the regulator’s focus on audit quality and the importance of adherence to partner rotation requirements.
Investor reaction has been muted, with the market viewing the investigation as a procedural matter that does not alter Shell’s underlying business fundamentals. The FRC’s decision to investigate the audit firm, rather than the company, signals that the regulator is concentrating on audit governance rather than Shell’s financial performance.
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