The Financial Reporting Council (FRC), the UK’s accounting watchdog, has fined Deloitte UK $7.9 million for flawed audits of Go-Ahead Group (GAG), a global transport company.
The fine, announced on Thursday, relates to Deloitte’s audits of GAG over a four-year period ending in June 2020. The FRC found that Deloitte failed to apply sufficient scrutiny to GAG’s decisions, putting UK taxpayers’ money at risk.
Two GAG subsidiaries, London & South Eastern Railway (LSER) and London & Birmingham Railway (LM), retained $39.6 million in overpayments from the UK Department of Transport. Instead of returning the funds, the subsidiaries marked them as profits, both before and after Deloitte’s appointment as auditor.
Penrose Foss, the FRC’s Executive Director of Investigations and Enforcement, stated, “These breaches show a highly concerning pattern of failure by Deloitte to apply sufficient scrutiny to decisions and actions by GAG which were clearly questionable.”
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Deloitte acknowledged that aspects of its audit work fell short of expected standards. A spokesperson said the firm is committed to ongoing improvement and delivering high-quality audits.
The FRC initially considered a $14.5 million penalty but reduced it due to Deloitte’s cooperation and early resolution of the matter.
The regulator found that Deloitte overlooked critical aspects of the contractual relationships between GAG’s railways and the government transport agency. They failed to inquire sufficiently into the subsidiaries’ actions, apply professional skepticism, and evaluate evidence of potential fraud risk factors.
In its annual report last month, the FRC noted that corporate reporting by FTSE 350 companies remains strong, with a narrowing quality gap between large and smaller companies. They reported a decline in the percentage of reviews leading to substantive enquiry letters, from 47% in 2023-2024 to 28% in 2025-2026.
