• Register
Return to: Home > News > Deloitte fined £4.2m over audit of Serco Geografix, SFO fines Serco £19.2m

Deloitte fined £4.2m over audit of Serco Geografix, SFO fines Serco £19.2m

Deloitte has been fined £4.2m by the Financial Reporting Council (FRC) over  the audit of the financial statements of Serco subsidiary Serco Geografix Limited for the years ended 31 December 2011 and 2012 The FRC also sanctioned the firm’s audit engagement partner, Helen George, in relation to the year ended 31 December 2011, following their admissions of Misconduct.

  • Deloitte was fined £6,500,000 (discounted for settlement to £4,225,000) and been severely reprimanded. The firm will also pay £300,000 towards the costs of the investigation;
  • Ms George was fined £150,000 (discounted for settlement to £97,500) and been severely reprimanded;
  • In addition, Deloitte has arranged for all its audit staff to undergo a training programme (designed to the satisfaction of the FRC) aimed at improving the behaviour that is the subject of the Misconduct.

Deloitte and Ms George were found to have failed to act in accordance with the Fundamental Principle of Professional Competence and Due Care. The terms of settlement were agreed by the FRC’s Executive Counsel on 7 January 2019 and approved by a legal member of the independent Tribunal Panel. The FRC has not published the Settlement Agreement and the Particulars of Fact and Acts of Misconduct at this time.

SFO fines Serco, announces DPA

In a separate action, the Serious Fraud Office has reached a Deferred Prosecution Agreement (DPA) with Serco Geografix. The DPA was approved in principle by Mr Justice William Davis.

The DPA will see Serco pay a fine of £19.2m ($24.2m) and pay the SFO’s costs. Compensation to the victim of the conduct, the Ministry of Justice (MoJ), has already been paid by Serco as part of a £70m ($88.1m) civil settlement in 2013.

Alongside the DPA, Serco is issuing an undertaking in which obliges the company to continue to cooperate with the SFO, strengthen of its group-wide ethics and compliance functions, and provide annual reports on its group-wide assurance programme. Separately, Serco has agreed that this annual report will be provided to the Cabinet Office.

Signing the DPA means Serco Geografix takes responsibility for three offences of fraud and two of false accounting arising from a scheme to dishonestly mislead the MoJ as to the true extent of the profits being made between 2010 and 2013 by parent company Serco from its contract for the provision of electronic monitoring services. The scheme was designed to prevent the MoJ from obtaining information to which it was entitled and from using this to reduce Serco’s revenues under that contract.

The SFO agreed to the resolution based on a number of factors, including SGL’s prompt and voluntary self-disclosure of misconduct, ts substantial cooperation with the SFO’s investigation, and its significant remedial efforts (including prompt compensation paid to the MoJ and a complete change of senior management. Serco, the parent group, despite not being a party to the DPA, has undertaken to guarantee Serco Geografix’s performance of its obligations under the DPA and to commit to substantial cooperation, self-reporting, and compliance-related obligations of its own.

Top Content

    HONG KONG NATIONALS: UNDERSTANDING VISA AND TAX WHEN MOVING TO THE UK

    Over 2 million Hong Kongers learned recently that they may soon be offered a route to UK citizenship following China’s introduction at the end of June of its controversial Security Law in the territory.

    read more

    SASB IMPLEMENTATION SERIES: COMMUNICATING ESG TO MAINSTREAM INVESTORS

    As part of a series of webinars, the Sustainability Accounting Standards Board (SASB) took a closer look at how to communicate ESG initiatives and progress to mainstream investors

    read more

    REPORTING AND COMPLIANCE: WHY WE NEED A DATA REVOLUTION

    Commerce no longer adheres to national boundaries: the largest international organisations to the smallest businesses operate in a global market. However, rules for corporate reporting and compliance do adhere to borders, write IMA’s Jeff Thomson and Liv A Watson

    read more

    CORONAVIRUS TIMELINE: REACTIONS FROM THE ACCOUNTANCY PROFESSION

    As the Coronavirus (COVID-19) continues to spread across the world, the International Accounting Bulletin and The Accountant will be collating all the latest news and updates from the profession on the pandemic’s impact.

    read more
Privacy Policy

We have updated our privacy policy. In the latest update it explains what cookies are and how we use them on our site. To learn more about cookies and their benefits, please view our privacy policy. Please be aware that parts of this site will not function correctly if you disable cookies. By continuing to use this site, you consent to our use of cookies in accordance with our privacy policy unless you have disabled them.