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EY is already the subject of six active investigations by the Financial Reporting Council - Deborah MacDonald/Alamy EY is facing fresh regulatory scrutiny after the Financial Reporting Council (FRC) launched an investigation into its audit of Shell’s accounts.
The Big Four firm is now the subject of six active investigations by the FRC, including scrutiny of its work for the Post Office, collapsed online furniture retailer Made.com and NMC Health, the former FTSE 100 hospital operator.
EY has already paid more than £5m in fines this year, including a £4.9m fine in April for “serious breaches of standards” in its audits of failed travel company Thomas Cook.
The latest investigation follows Shell’s disclosure earlier in the year that senior partners at EY had been leading the audit process for longer than allowed.
Under rules in both the US and UK, regulators limit how long senior partners can serve as the lead audit partner on a particular account to prevent them from becoming too close to management.
In July, EY told Shell that Gary Donald, its partner who heads up the team signing off the energy giant’s accounts, had “exceeded the period allowed under partner rotation rules”.
Despite this, Mr Donald continued to sign off on Shell’s accounts for 2023 and 2024.
Upon discovery of this, Shell was forced to republish its annual report in the US, signed off by a different EY partner.
The FRC said on Monday that it had launched an investigation into EY’s 2024 audit to consider whether “requirements relating to partner rotation have been breached”.
The investigation is the third time this year that EY has come under scrutiny for potentially unauthorised audits.
The FCR announced a separate investigation into two EY auditors last week for issuing “unauthorised” auditors’ reports to unnamed companies.
EY was also fined £325,000 in April for signing off the accounts of Stirling Water Seafield Finance, a listed Scottish water company, for longer than the required 10-year period.
Banks and publicly listed companies are considered to be “public interest entities” by the regulator, meaning they require stricter audit oversight.
A spokesman for EY said that it had determined that time limitations regarding rotation had been exceeded and reported the matter to the FRC.
“We take compliance with these standards extremely seriously and will continue to fully co-operate with the FRC throughout the investigation,” they added.
A spokesman for Shell said: “Shell disclosed this EY non-compliance matter in July 2025 and immediately re-filed its Form 20-Fs for 2023 and 2024. Shell’s financial statements remain unchanged and the EY audit opinions remain unqualified.”
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