According to the Financial Times the two Big Four firms looked likely to escape any involvement in the inquiry because oil reserve are neither balance-sheet items, nor form part of the independent annual audit.
But an internal report prepared for Shell by law firm Davis Polk & Wardwell said internal control problems were at the heart of the 20 billion barrels overstatement which shook the company to the core and which saw a report on BBC’s newsnight question whether this was becoming ‘Britain’s Enron’.
They are now likely to be questioned by the Securities & Exchange Commission over how they divided up responsibilities.
Independent auditors must verify that a company’s internal controls are adequate and provide numbers that can be used in an outside audit.
These requirements have become more stringent with the introduction of Sarbanes-Oxley.
Such controls ensure that financial reporting is reliable and also verify the effectiveness and efficiency of operations, and compliance with laws and regulations.
The report also questions the controls within the finance department, run by chief financial officer Judy Boynton until her resignation early this week
Simon Wright of CareersinAudit.com discusses how an effective cyber defence force is critical to businesses worldwide and how internal auditors can make the transition to a new career in cyber security
The FRC has said that the investigation will 'consider, but not be restricted to, issues regarding misstated accounting balances'
Craig Maxwell joins the audit and assurance team in Scotland
Stephen Grayson to join the audit department in Manchester