Core Viewpoint - Four partners have departed from EY due to potential breaches in the audit of Shell, leading to Shell's decision to switch auditors from EY to PricewaterhouseCoopers (PwC) starting in 2027 [1][1]. Group 1: Departure of Partners - Four partners left EY in December as the firm sought to manage the repercussions of compliance failures related to its audit of Shell [1][1]. - Among those who left was Gary Donald, who was the lead auditor for Shell, and another partner who had recently been promoted to EY's top ranks [1][1]. Group 2: Shell's Auditor Transition - Shell has selected PwC as its new auditor after a tender process, which will take effect in 2027, following the breaches identified in EY's audit practices [1][1]. - In a regulatory filing from July, Shell indicated that EY had violated rules mandating a change of the lead audit partner every five to seven years [1][1]. Group 3: Regulatory Investigation - The Financial Reporting Council in the UK has initiated an investigation into EY's audit of Shell's 2024 financial statements due to potential violations of audit partner rotation rules [1][1].

Core Points - The Financial Reporting Council (FRC) has initiated a formal inquiry into Ernst & Young (EY) regarding compliance with UK audit partner rotation requirements during the audit of Shell's financial statements for the year ending December 31, 2024 [1][3] - The investigation will evaluate adherence to regulations concerning the duration of service for lead audit partners, as Shell reported issues with compliance to the London Stock Exchange in July 2025 [1][2] - EY has acknowledged that the time limits for partner rotation, as per the FRC's Revised Ethical Standard, were exceeded, leading Shell to amend its annual reports for 2023 and 2024, although the underlying financial statements will remain unchanged [2][4] Group 1 - The FRC's inquiry was confirmed during a Conduct Committee meeting on October 21, 2025, and will be conducted in accordance with the Audit Enforcement Procedure [3] - EY communicated to Shell that the US audit opinions for 2023 and 2024 should not be relied upon, prompting a reassignment of responsibilities and the reissuance of these audit opinions [3] - EY reported the exceeded time limitations to the FRC, indicating a proactive approach to compliance issues [4]