Four partners have departed global accounting and consulting firm EY in the wake of issues tied to its audit of Shell, with the exits taking place in December as the firm sought to contain the consequences of a compliance breach related to the Shell engagement.
Those who left included Gary Donald, who led the audit of Shell, and a partner who had been promoted into EY’s senior leadership only months before the departures. Public records and people familiar with the situation indicate the moves were part of an effort within the firm to manage the fallout from the apparent breaches.
Shell has said it will appoint PricewaterhouseCoopers as its auditor following a competitive tender process. PwC is scheduled to replace EY beginning in 2027. In a prior regulatory filing in July, Shell stated that EY had violated rules that mandate changing the lead audit partner every five to seven years, a rotation requirement intended to preserve auditor independence.
Separately, Britain’s Financial Reporting Council announced in December that it had opened an investigation into EY’s audit of Shell’s 2024 financial statements to examine whether the audit partner rotation rules were followed. Both EY and Shell were not immediately available for comment.
Key points
- Four EY partners left the firm in December after potential breaches related to its Shell audit were identified.
- One of the departing partners was the lead on Shell’s audit; another had been promoted to EY’s top ranks months earlier.
- Shell announced it will appoint PwC as its auditor from 2027, citing a breach of audit partner rotation rules by EY and prompting a regulator investigation into the 2024 audit.
Risks and uncertainties
- Regulatory outcome uncertainty: The Financial Reporting Council’s investigation into the 2024 audit could result in findings that affect EY’s reputation and operations - impacting the accounting sector.
- Client and market reaction: Shell’s decision to change auditors underscores potential trust and governance questions that may affect investor perception in the energy sector.
- Internal disruption: The departure of senior audit partners may create short-term capacity or leadership challenges within EY’s audit teams - relevant to professional services and corporate clients relying on audit continuity.
The sequence of events — partner exits in December, a regulatory probe, and Shell’s selection of a new auditor — underscores the practical consequences of alleged rotation-rule breaches for major audit clients and their auditors. At the time of reporting, neither EY nor Shell had provided comment on the developments.