A senior auditor at Deloitte has been fined £120,000 for failing to spot signs of fraud at Serco, more than six years after the electronic tagging fiasco.
A watchdog fined Deloitte £4.2m earlier this year and announced the results on Tuesday of its investigation into Ross Howard, Deloitte’s engagement partner leading the Serco audit in 2012.
Howard was severely reprimanded but admitted and “expressed contrition” for his misconduct, which alongside his good previous record led to his fine being discounted to £78,000.
Serco itself was fined £19.2m earlier this year, with its UK subsidiary Serco Geographix admitting three offences of fraud and two of false accounting for understating its profits from government contracts.
The Financial Reporting Council (FRC) said Howard’s misconducted included “failing to react to clear indicators of the risk of potential fraud on a UK government department,” despite such signs being “visibly set out” on a file.
The “failings in relation to identifying the risk of fraud” and exercising professional scepticism risked undermining confidence in the auditing profession, according to the FRC.
The settlement published by the FRC says audit engagement partner Howard was leading a team and had overall responsibility for the conduct of the audit, but “abrogated his responsibility” by failing to properly supervise.
But it said the misconduct had not been dishonest, deliberate or reckless, and Howard had not sought to benefit financially through his actions.