Go-Ahead hastens renewal of audit contract after Deloitte probe announced

Go-Ahead Group has brought forward the renewal of its audit contract just over two weeks after UK regulators announced an investigation of Deloitte for its checks on the bus and rail operator’s accounts over a six-year period.

The unusual decision to run the tender three years earlier than required could result in the replacement of Deloitte and is the latest blow to the Big Four accounting firm, which was ordered last week by the Financial Reporting Council to pay a fine and costs of more than £2mn for failings in its audit of UK outsourcer Mitie in 2016.

Go-Ahead said on Wednesday that its audit committee was seeking bids from auditors to sign off its accounts for its next financial year, which begins in July.

“The purpose of the audit tendering exercise will be to market test the quality and effectiveness of the services provided by the incumbent auditor against those offered by other firms, with the aim of obtaining the best quality and most effective audit,” said Go-Ahead.

Deloitte declined to comment on whether it would take part in the new tender.

The announcement of the tender came as Go-Ahead reported a £42.6mn profit for the six months to the end of December 2021, down 24.5 per cent on a year before, a time when the company had benefited from one-off factors such as bus support grants.

Christian Schreyer, chief executive, said the results showed “an encouraging performance as Go-Ahead emerges from a challenging period”.

Deloitte replaced EY as Go-Ahead’s auditor in 2016. Go-Ahead runs Govia Thameslink Railway, one of the UK’s busiest commuter lines, in south-east England.

Last year the UK government stripped it of the Southeastern rail franchise after finding it had failed to declare tens of millions of pounds of taxpayer funding that should have been returned.

Go-Ahead referred itself to the Serious Fraud Office and the Department for Transport fined the company £23.5mn last month over its failings.

Deloitte was paid £2.9mn by Go-Ahead in the 2021 financial year, including an additional £1.2mn fee for extra audit procedures in light of concerns about the Southeastern franchise.