Deloitte being probed by accountancy watchdog

An investigation has been launched by the Financial Reporting Council (FRC) over Deloitte’s handling of accounts for Serco, following information produced by a Serious Fraud Office (SFO) investigation into criminal tagging contracts.

The ‘big four’ accountancy firm is being investigated over its preparation, approval and audit of the Serco group’s financial statements, from between 1 January 2011 and 31 December 2012.

The FRC said: “This decision follows information received from the Serious Fraud Office, which is conducting an investigation into Serco’s electronic monitoring contracts in respect of England and Wales.”

Serco became the subject of an investigation by the SFO three years ago when it was alleged to have billed the taxpayer for electronically tracking criminals, who were not actually being monitored – such as those who had died, or were in prison. Consequently, Serco agreed to reimburse the government for £68.5m.

Although Serco declined to comment, Deloitte said it “is committed to upholding the highest professional standards. We take this investigation seriously and will co-operate fully with the Financial Reporting Council.”

The responsibility for tagging criminals was stripped from Serco, who withdrew (along with G4S) from the bid to win prisoner supervision contracts.