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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 Shell’s audit of the Big Four firm, which he led for four years.
Gary Donald, who became lead partner on the Shell audit in 2021, exited the EY partnership on Dec. 9, according to a filing with the UK corporate registry this week.
Shell said in a stock market announcement in July that the lead auditor of its 2023 and 2024 accounts had exceeded the period allowed under strict rotation rules set by US regulators, meaning he was not eligible to lead the job.
London’s third-most valuable listed company said EY had concluded the company had also exceeded deadlines under UK partner rotation rules. The UK Financial Reporting Council said last week it was investigating EY’s audit of Shell’s 2024 accounts, including whether partner rotation rules were breached.
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 client for five or seven consecutive years.
People familiar with the matter said that during an internal review, EY had found that elements of Donald’s work before taking over as partner with overall responsibility for Shell audits had affected his eligibility in subsequent years.
According to his LinkedIn profile, Donald, a 31-year veteran of the firm, was EY’s global oil and gas assurance leader since 2014.
He was promoted to partner in 2007 and was a respected figure at the firm, where he audited companies including mining giant BHP, which had an oil business at the time.
EY did not respond to a request for comment or a question about whether Donald continued to work with the firm in any capacity after leaving the partnership. Donald did not respond to requests for comment.
Shell, one of the most lucrative on the FTSE 100, has been audited by EY for almost a decade. The company was paid $66mn for its work on the energy chief 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 opinion on the effectiveness of internal controls over the company’s financial statements and financial reporting for 2023 and 2024 could no longer be relied upon.
Shell said, EY appointed a separate auditor to the lead partner’s role to review the affected years and concluded that no changes to the financial statements were necessary.
The investigation announced by the FRC last week was opened following a decision by its conduct committee in October.
The FRC has now announced six publicly open investigations into EY, which has already paid more than £5 million in fines from the regulator this year.
One of them, on the firm’s audit of Sterling Water Seafield Finance, also resulted in EY breaching deadlines set in independence rules.
Separately, in early December the FRC opened an investigation into two individual EY auditors as well as the firm for issuing “unauthorized” auditors’ reports on unnamed companies. FRC Rival company KPMG fined In June for violating freedom rules.
EY said last week that it had breached audit partner rotation rules and that it would “continue to cooperate fully with the FRC during its investigation”.
Shell declined to comment.
