UK’s FRC to probe Deloitte’s auditing of outsourcer Mitie
31 Jul 2017
The UK accounting watchdog has launched an investigation into Deloitte over the auditing of the accounts of troubled outsourcer Mitie.
According to the Financial Reporting Council (FRC), it has launched a probe to see if there have been any ''breaches of relevant requirements'' in Mitie's full-year accounts for 2015 and 2016.
Mitie had said in May, that an external review of its accounting policies by KPMG would result in writedowns totalling between £40 million and £50 million, adding a "number of material errors" had been found in the accounts.
But in its full-year results last month, Mitie said it had taken a hit of £88.3 million as it reported a pre-tax loss of £58.2 million for the full year, as against a profit of £91.9 million in the previous year.
Mitie, which was not under investigation by the watchdog, has undertaken a £45 million cost-saving programme called Project Helix, which had led to a staff cut of around 3,000.
The FTSE 250 outsourcer, which offered a wide range of services from cleaning and catering to risk assessment and security, announced last month that it will cut its dividend to fund new technology, which will allow its clients to track their staff and have cleaners on demand.
Meanwhile, Deloitte said in a statement, "Audit quality is of critical importance to our firm and we are committed to maintaining the highest professional standards.
"We take this investigation very seriously and will co-operate fully with the Financial Reporting Council."
At Mitie's annual general meeting last week, nearly 30 per cent of the company's shareholders voted against Deloitte continuing as its auditor.
According to Mitie, it would "announce a new external auditor in due course" and was undertaking a tender process.
The FRC said last month, that is had launched an investigation into the auditing of BT's financial statements by PwC, covering the years 2015 to 2017.
