In an application to the Financial Services and Markets Tribunal, Watt’s lawyers Herbert Smith claimed that Sir Philip ‘relied on the reviews given by Shell’s experts in oil and gas reserves estimation, and Shell’s external auditors, to ensure the accuracy of reserves information’.
While reserves do not appear on the financial statements of oil companies, and therefore remain unaudited, Herbert Smith said that statement of auditing standard 52 means auditors must ‘determine that the methods for estimating proved oil and gas reserves comply with generally accepted accounting principles’.
Sir Philip’s lawyers also raised concerns over why KPMG had supported the group reserves auditor’s ‘competence and independence’, despite the FSA singling it out as ‘ineffective’. Sir Philip is understood to be looking for amendments to be made to the FSA’s Final Notice. KPMG declined to comment.
The FSA this week defended its procedures when looking at the Shell issue.
A spokesman said: ‘We are quite conscious of, and fully understand, our responsibilities to the rights of third parties. We are confident that any tribunal will find we respected Sir Philip Watt’s rights.’
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