BY COMFORT OGBONNA
Oil major Shell has selected PricewaterhouseCoopers as its next external auditor following a competitive tender process, with PwC set to take over the role from EY starting in 2027, the company said on Friday. The decision comes amid heightened scrutiny of audit practices and regulatory compliance in the wake of concerns surrounding EY’s handling of Shell’s recent audits.
The move follows an announcement by Britain’s Financial Reporting Council in December that it had opened an investigation into EY’s audit of Shell’s 2024 financial statements. The probe focuses on potential breaches of rules governing the rotation of lead audit partners, which are designed to safeguard auditor independence and maintain confidence in financial reporting.
Shell had previously disclosed in a regulatory filing in July that EY had breached requirements mandating an accounting firm to rotate its lead audit partner every five to seven years. According to the company, EY also failed to comply with U.S. Securities and Exchange Commission rules on partner rotation, prompting Shell to say it would amend its 2023 and 2024 annual reports. The company stressed at the time that while these reports would be updated to reflect compliance issues, the underlying financial statements themselves would remain unchanged.
In explaining its decision to change auditors, Shell said its Audit and Risk Committee opted to carry out a full tender process, applying the same selection criteria used during the 2024 audit tender. These criteria included auditor independence, the composition and expertise of the proposed audit team, the scope and robustness of the audit approach, and strict adherence to regulatory requirements across jurisdictions.
The appointment of PwC is expected to provide continuity and assurance as Shell navigates a complex regulatory environment and ongoing scrutiny of corporate governance standards in the energy sector. EY did not immediately respond to a request for comment on the matter.
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