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Shell has dropped EY as its auditor just weeks after the UK accounting regulator announced an investigation into the Big Four firm’s audit of the oil major.
London’s third most valuable listed company said on Friday that its audit and risk committee had launched a fresh audit tender process last autumn, despite EY being in the first year of a potential 10-year term.
The accounting regulator launched an investigation in December into EY’s audit of Shell’s 2024 accounts. 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.
One of EY’s top accountants who had led the Shell audit from 2021 left the partnership just six days before the Financial Reporting Council announced its investigation.
The auditor switch-up came just over a year after EY was reappointed by Shell for another term of up to 10 years. In December 2024, Shell invited audit firms to bid for the job. As EY had audited Shell since 2016, regulations around auditor independence required Shell to open a new tender.
However, last autumn Shell asked EY, as well as PwC — the only other firm to make it through to the final stage during the 2024 tender — to resubmit their tenders, according to a person familiar with the matter.
The criteria the two firms were judged on included independence, team composition, audit scoping and regulatory compliance, the person said.
PwC won the bid and will begin for the financial year ending December 2027, Shell said, subject to shareholder approval. EY will continue as external auditor for the financial year to December 2026, also subject to shareholder approval.
The rules on rotation are designed to ensure that auditors remain independent of the companies whose accounts they check. Shell’s audit committee came to a decision in about five months, while previous audit tenders have taken more than a year.
EY was paid $66mn for its work for the energy major in 2024, according to Shell’s annual report.
EY said: “We remain focused on delivering a high-quality audit for the remainder of our term.”