Accounting watchdog investigates Deloitte over Go-Ahead audits

theguardian.com:

One of the UK’s biggest accounting firms, Deloitte, is under investigation by regulators for its audits of Go-Ahead, after the bus and rail operator was embroiled in a scandal for wrongly withholding £50m of taxpayers’ money.

The Financial Reporting Council (FRC) said it had opened an investigation in relation to Deloitte’s audit of Go-Ahead’s annual financial accounts between 2016 and 2021.

The government stripped the transport group of the right to run Southeastern, one of Britain’s biggest rail networks, in September for a “serious breach of trust” after discovering that £25m of taxpayers’ money had been retained by the franchise over five years from 2014.

After further investigation, the full amount owed to the Department for Transport was established to be £51.3m, with discrepancies dating back to 2006. The case has been referred to the Serious Fraud Office.

A spokesperson for Deloitte UK said the auditor would cooperate fully with the FRC investigation. “Deloitte is committed to the highest standards of audit quality,” the company said.

Go-Ahead declined to comment on the FRC investigation.

Last month the Department for Transport (DfT) fined Go-Ahead £23.5m over the scandal.

The group’s chief financial officer, Elodie Brian, who was the chief financial officer at Southeastern during the period where most breaches occurred, from 2014 to 2019, quit last September as the scandal emerged. The Go-Ahead chief executive, David Brown, also stepped down.

Last month Govia, a joint venture led by Go-Ahead with the French firm Keolis, was awarded a new contract to run Britain’s biggest commuter rail network, a week after the DfT handed down the fine.

The rail union RMT said it was a “sick joke” that Govia had been given a three-year