At its annual general meeting (AGM) in July, there was significant opposition by shareholders to Deloitte’s reappointment and a competitive tender process was launched.

The AGM came after the company reported annual results in June covering the 12 months to the end of March 2017, which showed a pretax loss of £42.9m compared to a £107.6m profit the year before.

In its 2017 annual report, Mitie said it had held an accounting review during the year and ‘had found that improvements were required in the approach to risk management and internal audit and has made changes in both those areas’.

As part of this review, KPMG was asked to carry out a detailed review of the policies in relation to long-term complex contracts, mobilisation costs, accrued income and work in progress.

The accounting review identified a number of prior year errors that, due to their materiality, required the restatement of results for periods before 31 March 2017. This led an error of £60.5m, of which £26m is a restatement of goodwill impairment in FY16, £20.9m relates to other adjustments in FY16 and £13.6m relates to earlier years.

As a consequence, the net impact of prior year adjustments in FY16 is £20.9m before other items. 

BDO will immediately review the financials for the half-year, 30 September 2017, and audit the full year ended 31 March 2018.

In 2016, Deloitte earned £766,000 in audit fees from Mitie, with a further £59,000 in audit-related fees and £149,000 in non-audit fees.

In Mitie’s 2017 annual report, the audit committee confirmed that it would commence an audit tender process such that a new external auditor could be appointed during the financial year ended 31 March 2018.

Commenting on the appointment, BDO head of audit Scott Knight said: ‘We look forward to working with Mitie's board and new executive team who are focused on restoring market confidence.’ 

Deloitte and Mitie have both been contacted for comment.

Report by Calum Fuller