Deloitte has been fined more than £6 million by the accounting watchdog over its audits of transport firm Go-Ahead.
The Financial Reporting Council (FRC) said it found a “highly concerning pattern of failure” in the audits over a five-year period.
Investigation and breaches
The regulator launched an investigation four years ago, a year after Go-Ahead’s Govia joint venture with French firm Keolis was stripped of the Southeastern rail franchise by the Government for a “serious breach of trust”.
On Thursday, the FRC said that there were “numerous breaches” of audit requirements between 2016 and 2020.
It found that Deloitte failed to challenge two of Go-Ahead subsidiaries wrongfully retaining more than £30 million of public money for an extended period.
Fine and response
The FRC found that Go-Ahead had kept the money and released it as profit rather than returning it to the Government.
Go-Ahead stopped the practice after this was discovered by the Government, leading to a £23.5 million fine at the time.
The regulator would have fined Deloitte £11 million but reduced this to £6.05 million because of co-operation and admissions by the firm.
Penrose Foss, executive counsel and executive director of investigations and enforcement at the FRC, said: “These breaches show a highly concerning pattern of failure by Deloitte to apply sufficient scrutiny to decisions and actions by GAG (Go-Ahead Group) which were clearly questionable.
“The fact that some of those decisions and actions put very large amounts of UK taxpayers’ money at risk is particularly troubling, and this is reflected in the high level of financial sanction imposed.”
Separate investigation closed
A Deloitte UK spokeswoman said: “We regret that aspects of our audit work did not meet the standards expected and have learned from this matter.
“We are committed to continuous improvement and the delivery of high-quality audits.”
On Thursday, the FRC also closed a separate investigation into Deloitte related to financial statements for retailer Joules.
The watchdog confirmed that it had decided not to bring any enforcement action after reviewing evidence.
