It was Deloitte’s turn on the Financial Reporting Council’s dunk tank today, as the U.K. regulator fined the firm and one of its partners over the audits of the 2011 and 2012 financial statements of Serco Geografix Ltd., a subsidiary of outsourcing firm Serco Group PLC, which were found to be complete rubbish.
The FRC said Deloitte and audit engagement partner Helen George “failed to act in accordance with the fundamental principle of professional competence and due care.”
The Wall Street Journal reported:
Deloitte was fined £6.5 million ($8.2 million) and handed what the regulator described was a “severe” reprimand. The fine was reduced to £4.225 million as part of the firm’s settlement. Deloitte also agreed to pay £300,000 toward the costs of the investigation and have all audit staff undergo training aimed at improving the conduct of the team.
PwC was given a similar fine by the FRC last month for its shoddy auditing of Redcentric.
In addition, George was fined £150,000, which was reduced to £97,500 as part of the settlement, and given a severe reprimand. Her fine only pertains to the audit of Serco Geografix’s 2011 financial statements.
In a statement, Deloitte agreed that its work on Serco Geografix’s 2011 and 2012 audits was pretty crappy and the firm has “specifically agreed with the FRC certain actions focused on learning lessons from the shortcomings in this audit work,” according to the Wall Street Journal.
And it just so happens that Serco Geografix has been in all sorts of trouble recently, as the company agreed on July 3 to pay £19.2 million ($24 million) to settle fraud and false accounting charges brought by the U.K.’s Serious Fraud Office.
Serco Geografix misled the U.K.’s Ministry of Justice about profits made from a contract between 2010 and 2013, according to the SFO.
