Deloitte fined £6.5m over Serco misconduct
The Financial Reporting Council has fined Deloitte a headline figure of £6.5m and severly reprimanded the audit and consulting giant for misconduct in relation to the audit of the financial statements of facilities outsourcer, Serco.
The FRC also imposed sanctions against Deloitte in relation to the audit of the financial statements of Serco Geografix Limited for the years ended 31 December 2011 and 2012.
The fine relates to activities around the time of the so-called “tagging-scandal”, in which Serco was charging the UK Government for supervising the movements of people who were either dead, in jail, or had left the country between 2010 and 2013.
The FRC also fined the firm’s audit engagement partner, Helen George, in relation to the year ended 31 December 2011, following their admissions of Misconduct.
Fine reduced to £4.22m for settlement
Deloitte was fined £6.5 million, however, this was discounted for settlement to £4.225m and the global consulting group was “severely reprimanded”, the FRC said.
Deloitte will also pay £300,000 towards the costs of the investigation.
Ms George was fined £150,000, which was also discounted for settlement to £97,500. She was also severely reprimanded by the FRC.
The FRC said that, in addition to the fines, 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.
Deloitte and Ms George failed to act in accordance with the Fundamental Principle of Professional Competence and Due Care, the FRC said.
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 Settlement Agreement and the Particulars of Fact and Acts of Misconduct are not published at this time.
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