The Scotsman: Auditors 'Forced Shell Report Delay'
By David Winning, City Staff, PA News
21st March 2004
Oil giant Shell delayed publication of its annual report after one of its joint auditors refused to sign off the accounts, it was reported today.
KPMG declined to approve the accounts of the Anglo-Dutch group because of the quality of information it had received, according to the Sunday Times.
The report follows Shell’s shock announcement on Thursday that it was downgrading its oil reserves for the second time in as many months.
The group said it was delaying publication of its annual report until June while an examination of all its global energy fields takes place.
Senior executives said a worldwide review was necessary to get confidence back in the company, which suffered a major blow to its reputation in January with the announcement that its reserves were 20% lower than previously thought.
The company is being investigated by the US Securities and Exchange Commission (SEC), while the Financial Services Authority in the UK has requested information regarding the circumstances around the reserves downgrade.
KPMG, which jointly audits the oil giant with PricewaterhouseCoopers, was worried about potential liability to the SEC investigation of the group if it approved the accounts, the Sunday Times reported.
KPMG and PwC are not legally bound to audit the oil reserves, but these figures are part of the company’s accounts and therefore still important, the newspaper added.
A Shell spokesman said the decision to postpone the report was taken on Wednesday evening once it became clear that a review of its global energy fields was needed.
He said: “Once the board decided to pursue a further in-depth review of the reserves position it became necessary to delay publication of the report.”
Shell is facing a number of class action lawsuits in the US over the reserves downgrade. It also being investigated by Dutch regulators over potential insider trading.
An internal investigation launched by Shell in the wake of the reserves downgrade is due to finish in the next few weeks.
This review has already claimed the scalps of chairman Sir Philip Watts and Walter van de Vijver, the chief executive of Shell’s exploration and production business.
The pair were forced to resign earlier this month after the board lost confidence in their leadership.