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FRC probes Deloitte’s audit of Go-Ahead

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Deloitte’s audit of Go-Ahead Group is under investigation by the UK accounting watchdog, after the troubled public transport company suspended its shares at the London Stock Exchange in January following audit delays. 

12th Apr 2022
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The Financial Reporting Council (FRC) has launched a probe into the Big Four firm’s audit of the financial statements of Go-Ahead Group plc. The investigation covers six financial year ends starting from 2 July 2016 until 3 July 2021. 

The FRC did not disclose any more details of the investigation, other than the decision to commence the audit was made on 22 March 2022. 

A Deloitte UK spokesperson said the firm is “committed to the highest standards of audit quality” and it will “co-operate fully with the FRC’s investigation”.

Troubles at Go-Ahead

In January this year the beleaguered rail and bus operator had to temporarily suspend trading of its shares due to audit delays. AccountingWEB reported that managers had been locked in negotiations with its auditor Deloitte on how to treat £25m in unreported taxpayer funding

The Go-Ahead Group has been coming off the rails since the Department for Transport stripped the company of the Southeastern rail franchise in October after serious accounting errors were uncovered. These included a failure to declare £27m funding to the Department for Transport. 

When the delayed annual accounts were released, the rail franchise operator reported £104.1m in exceptional charges as a result of the loss of Southeastern UK rail franchise. 

After the scandal emerged, the group’s former CFO Elodie Brian stepped down in September, while CEO David Brown followed her out the door on 5 November.

A glut of investigations

Deloitte has faced its own share of regulatory scrutiny, with its audit of Lookers the subject of another FRC investigation following a £19m hole in the car dealer’s balance sheet. The Big Four firm walked away from Lookers after saying it faced non-cooperation when trying to address accounting irregularities. 

The ICAEW launched another probe last year into Deloitte’s audit of multinational conglomerate Essar Oil UK.

Deloitte was also fined £15m in 2020 for falling seriously short of the standards expected of an auditor over its audit of software firm Autonomy

The FRC announced that the investigation into Deloitte’s audit of Go-Ahead will be conducted by the watchdog’s enforcement division under the audit enforcement procedure.

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