Unlock Editor’s Digest for free
FT editor Roula Khalaf selects her favorite stories in this weekly newspaper.
Four EY partners have left the firm after independence rules were breached in its audit of Shell, resulting in the oil major stripping the accounting firm of a $66 million-a-year contract.
Partners left the Big Four firm in December to avoid repercussions from a compliance failure, according to public records and people familiar with the matter, with one of them linking the exit to an internal review.
The four who left included a partner who had been promoted to EY’s top ranks just months earlier and Gary Donald, who led the Shell audit and whose departure was first reported by the FT.
The departures come as EY struggles to limit the commercial and reputational damage from one of the worst compliance failures in its recent history.
Shell said in July that EY had violated strict auditor rotation rules set by US regulators when Donald remained lead auditor for the oil company’s 2023 and 2024 accounts.
In October, the UK accounting regulator opened an investigation into EY’s 2024 audit. The debacle prompted the oil company to reconsider its decision to use the firm. Shell said on Friday that it has decided to merge with PwC from next year.
Other partners leaving in December were Mark Woodward and He Yu Lee, both auditors with oil and gas expertise; and Alistair Denton, a former auditor whose role was in the national office that oversees EY’s compliance with rules, including independence, according to people familiar with the matter.
Companies House records show that Lee became a member of EY’s equity partnership only in June 2025. Denton and Woodward were in partnership since 2010 and 2017 respectively.
Woodward, Lee and Denton did not respond to requests for comment. EY declined to comment on the circumstances of his departure, including the findings of its review. It is not known whether the former partners were found to have broken any rules or company policies or whether an appeal is in progress.
Rotation rules are designed to ensure that auditors remain independent of the companies whose accounts they examine and generally limit senior auditors to working on a company’s audit for five or seven consecutive years.
Before and during his time as Shell’s principal auditor, Donald was also EY’s global oil and gas assurance leader, with overall responsibility for audit services for companies in the sector.
A person’s work for a client may count toward the deadline, even if he or she is not the lead auditor.
While Donald only began leading the Shell audit in 2021, people familiar with the matter said a whistleblower had informed EY leadership that some of Donald’s prior actions should have “started the clock” on his time on the mandate at an earlier stage. This, he said, means he may be signing off on Shell’s financial statements for fewer years than planned.
Another person familiar with how EY makes its independence decisions said there is “not always a black and white answer” to how to apply parts of the rules and multiple people are often involved in making these decisions.
“Sometimes the wrong conclusion can be reached, even if it seems right to everyone,” the person said. “It can be a fine balancing act, combining rules and practice with knowledge and experience, to figure out where to draw the line.”
Shell, London’s third-most valuable listed company, said in July that EY had appointed a new lead auditor to re-examine its work over the past two years and concluded that no changes to its financial statements were necessary.
PwC was Shell’s auditor until 2016. It failed to win the mandate when it went out to tender for a 10-year contract in 2024.
Following last year’s independence breach, Shell’s audit committee asked PwC and EY to re-bid and evaluated them on factors including independence, team structure, audit scoping and regulatory compliance, according to a person familiar with the process.
