Deloitte audit manager fined six years after offender tagging fiasco

Tom Belger
Finance and policy reporter
Deloitte was fined over the prisoner tagging scandal. Photo: Jack Taylor/Getty Images

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.

Outsourcing firms Serco (SRP.L) and G4S (GFS.L) were found to have billed the taxpayer to monitor prisoners who were never tagged, back in prison or even dead in a major scandal in 2013.

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.

READ MORE: Serco fined £19.2m over electronic tagging scandal

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.

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