Mail on Sunday (UK): Auditors clean up at Shell: “AUDITORS who failed to spot the massive overstatement of reserves at Shell raked in record fees from the oil giant last year. KPMG and Pricewaterhouse-Coopers earned £22m for preparing Shell's accounts… the highest amount ever paid by a British company for a basic audit.”: “In a series of downgrades, Shell was forced to slash its estimate of proven reserves by a staggering six billion barrels, almost 30%, after admitting it had misled investors for years.”: “Shell still faces a criminal investigation from the US Justice Department and class action lawsuits from disgruntled shareholders over the scandal”: “The reserves scandal shattered Shell's reputation…”: “its ratio of reserve replacement, a key indicator, had collapsed to a paltry 19% - the lowest of any oil major. That means Shell is finding less than a fifth of what it produces. 'It is clearly a concern,' Shell acknowledged” (ShellNews.net) Sunday 3 April 05
Patrick Tooher, ,
3 April 2005
AUDITORS who failed to spot the massive overstatement of reserves at Shell raked in record fees from the oil giant last year.
KPMG and Pricewaterhouse-Coopers earned £22m for preparing Shell's accounts, according to documents just filed in America. It is believed to be the highest amount ever paid by a British company for a basic audit.
In a series of downgrades, Shell was forced to slash its estimate of proven reserves by a staggering six billion barrels, almost 30%, after admitting it had misled investors for years.
A damning report into the fiasco blamed lax controls within Shell's finance department that were not picked up by Shell's external auditors.
Shell still faces a criminal investigation from the US Justice Department and class action lawsuits from disgruntled shareholders over the scandal.
The Anglo-Dutch group's audit fee was £5.3m higher than in 2003 and reflects the extra work KPMG and PwC undertook in restating previous years' accounts, which they had already signed off.
By contrast, BP, Shell's larger rival, was charged £14.4m for the statutory audit while banking giant HSBC paid £20m. All told, KPMG and PwC picked up £37m in audit and consultancy fees from Shell last year.
The reserves scandal shattered Shell's reputation and led to the sacking of three directors, including chief executive Sir Philip Watts and finance director Judy Boynton. All the firm's directors missed out on bonuses in 2003 because of the accounting crisis.
However, last year, Jeroen van der Veer, Watts's successor, was paid £1.8m, the bulk of which was a bonus, after Shell posted record profits of almost £10bn.
Shell, which is overhauling its antiquated corporate structure, also revealed last week that its ratio of reserve replacement, a key indicator, had collapsed to a paltry 19% - the lowest of any oil major.
That means Shell is finding less than a fifth of what it produces. 'It is clearly a concern,' Shell acknowledged.
http://www.thisislondon.com/news/business/articles/timid399392
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