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One of EY’s top accountants left the partnership this month just six days before UK regulators announced an investigation into the Big Four firm’s audits of Shell, which he had led for four years.
Gary Donald, who became lead partner on the Shell audit in 2021, exited the EY partnership on December 9, according to a filing at the UK’s corporate registry this week.
Shell said in a stock market announcement in July that the lead auditor on its 2023 and 2024 accounts had exceeded the period allowed under strict rotation rules set by US regulators, meaning he had not been eligible to lead the work.
London’s third most valuable listed company added that EY had concluded that the firm had also exceeded time limits under UK partner rotation rules. The UK’s Financial Reporting Council said last week it was probing EY’s audit of Shell’s 2024 accounts, including whether partner rotation rules had been breached.
The rotation rules are designed to ensure that auditors remain independent of the companies whose accounts they check and generally limit senior auditors to working for five or seven consecutive years on a client.
People familiar with the matter said that during an internal review, EY had found that elements of Donald’s work before he took over as partner with overall responsibility for the Shell audit had affected his eligibility in later years.
Donald, a 31-year veteran of the firm, had been EY’s global oil and gas assurance leader since 2014, according to his LinkedIn profile.
He was promoted to partner in 2007 and was a respected figure in the firm, where he went on to audit companies including mining company BHP, which had an oil business at the time.
EY did not respond to a request for comment or to questions over whether Donald still worked with the firm in any capacity after leaving the partnership. Donald did not respond to requests for comment.
The audit of Shell, one of the most lucrative on the FTSE 100, has been carried out by EY for almost a decade. The firm was paid $66mn for its work for the energy major in 2024 and $264mn over the four years Donald was lead auditor.
Shell said in July that EY had informed the energy group’s audit and risk committee that its opinions on the company’s financial statements and effectiveness of internal control over financial reporting for 2023 and 2024 could no longer be relied upon.
EY appointed a different auditor to the role of lead partner to review the affected years and concluded that no changes to the financial statements were necessary, Shell said.
The investigation announced by the FRC last week had been opened after a decision by its conduct committee in October.
The FRC now has six publicly announced open investigations into EY, which has already paid more than £5mn in fines from the regulator this year.
One of those, over the firm’s audit of Stirling Water Seafield Finance, was also a result of EY breaching time limits stipulated in independence rules.
Separately, in early December the FRC opened an investigation into two individual EY auditors, as well as the firm itself, for issuing “unauthorised” auditors’ reports on unnamed companies. The FRC fined rival firm KPMG for breaching independence rules in June.
EY said last week that it had breached audit partner rotation rules and that it would “continue to fully co-operate with the FRC throughout the investigation”.
Shell declined to comment.
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