The Financial Reporting Council (FRC) has launched an investigation under its accountancy scheme into Deloitte and some of its staff in relation to the auditing of outsourcing specialist Serco, following information received from the Serious Fraud Office (SFO) which is examining potential overcharging claims on government contracts
The investigation will look at the preparation, approval and audit of the financial statements of companies within the Serco group for the financial years ended 31 December 2011 and 31 December 2012.
The FRC said the decision is the result of information received from the SFO investigation into Serco’s electronic monitoring contracts in respect of England and Wales.
In 2013 Serco was found to have overcharged the Ministry of Justice on a contract to fit offenders with electronic monitoring tags emerged in 2013, amid allegations of billing the government for tagging prisoners who were either dead or in jail. The company subsequently repaid £70.5m.
A forensic audit conducted by PwC at the time suggested the overcharging could stretch back to at least 2005. The SFO has not yet finished its investigation into Serco and another operator G4S.
A Deloitte spokesperson said: ‘Deloitte is committed to upholding the highest professional standards. We take this investigation seriously and will cooperate fully with the Financial Reporting Council.’
Deloitte has handled the FTSE 100 listed Serco audit, which was valued at £1.5m for the financial year 2014-15, since 2000.
