Deloitte fined £6.05m over Go-Ahead public money audits

Deloitte has been fined £6.05 million by the Financial Reporting Council (FRC) for its audits of transport firm Go-Ahead. The accounting watchdog identified a "highly concerning pattern of failure" in the audits spanning a five-year period between 2016 and 2020.

Failure to challenge retained funds

The FRC's investigation, launched four years ago, found that Deloitte failed to sufficiently challenge two Go-Ahead subsidiaries. These subsidiaries had wrongfully retained over £30 million of public money for an extended period. Instead of returning the funds to the Government, Go-Ahead had treated this money as profit. The practice ceased after it was discovered by the Government, which subsequently fined Go-Ahead £23.5 million.

Penrose Foss, executive counsel and executive director of investigations and enforcement at the FRC, stated that the breaches demonstrated 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." He added, "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."

The FRC initially considered a fine of £11 million for Deloitte. However, this amount was reduced to £6.05 million in recognition of the firm's cooperation and admissions made during the investigation.

Deloitte's response

A spokeswoman for Deloitte UK commented on the ruling, stating: "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."

Separately, the FRC confirmed on Thursday that it had closed an investigation into Deloitte concerning financial statements for the retailer Joules, deciding not to pursue any enforcement action after reviewing the available evidence.