Deloitte Fined £6.05 Million Over Go-Ahead Group Audits
Accounting firm Deloitte has been fined £6.05 million ($7.98 million) by Britain’s Financial Reporting Council (FRC) over its audits of transport operator Go-Ahead Group for the financial years from 2016 to 2020.
The FRC said the penalty was reduced from £11 million following Deloitte’s “exceptional cooperation” and admissions during the investigation. The accounting firm acknowledged shortcomings in its audit work and said it had learned from the matter.
Deloitte’s fine relates to more than £30 million in overpayments made by Britain’s Department for Transport to Go-Ahead subsidiary London & South Eastern Railway (LSER) under a rail franchise agreement. The overpayments were made before Deloitte became Go-Ahead’s auditor.
According to the FRC, LSER retained the funds without informing the Department for Transport. The government department eventually became aware of the overpayments in 2021 and subsequently took steps to recover the money.
The regulator said Deloitte failed to challenge Go-Ahead’s decision to retain the public funds for an extended period. It also raised concerns about the level of scrutiny applied by Deloitte to decisions and actions taken by the transport group.
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Penrose Foss, the FRC’s executive director of investigations and enforcement, described the audit failures as a “highly concerning pattern” in which Deloitte did not apply sufficient scrutiny to decisions that were clearly questionable.
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The case highlights the responsibilities of external auditors in scrutinising companies’ financial reporting and challenging potentially improper accounting or financial decisions, particularly when public funds are involved.
A Deloitte spokesperson said the firm regretted that aspects of its audit work had not met the expected standards. The company added that it was committed to continuous improvement and maintaining high-quality audit practices.
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The FRC’s action underscores growing regulatory scrutiny of major accounting firms and the importance of professional skepticism and effective challenge during audits.