Accounting StandardsBig Four

Deloitte fined £4.2m for Serco audit failings

The Financial Reporting Council (FRC) has fined Deloitte £4.2m in relation to the audit of the financial statements of Serco Geografix Limited for the years ending 31 December 2011 and 2012.

The terms of settlement were agreed by the FRC’s executive counsel on 7 January 2019 and approved by a legal member of the independent tribunal panel.

The FRC also imposed sanctions against its audit engagement partner, Helen George, in relation to the year ended 31 December 2011, following admissions of misconduct.

FRC said Deloitte and George “failed to act in accordance with the Fundamental Principle of Professional Competence and Due Care”.

Deloitte was fined £6,500,000, discounted for settlement to £4,225,000, and been “severely reprimanded” by the regulator. The firm will also pay £300,000 towards the costs of the investigation.

George has also been fined £150,000 (discounted for settlement to £97,500).

In addition, the FRC said Deloitte has arranged for all its audit staff to undergo a training programme “designed to the satisfaction of the FRC” aimed at improving the behaviour that is the subject of the misconduct.

The news comes after Serco, the outsourcing specialist, revealed a settlement with the Serious Fraud Office, including the payment of a £22.9m fine for three offences of fraud and two of false accountings.

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