Serco auditor fined £78,000 for his role in tagging scandal

The chief auditor for Serco during the electronic tagging scandal has been fined £78,000 over his role, the accounting watchdog has revealed.

The Financial Reporting Council said Ross Howard failed to exercise “professional scepticism” when he was responsible for combing through Serco’s books in 2011 and 2012.

As a result, Serco claimed cash from the Government for services it was not providing.

A settlement was made with the Serious Fraud Office for £22.9 million.

Serco admitted some people it was supposed to be monitoring via its electronic tags on behalf of the Government were either in jail, dead or had left the country.

Mr Howard, who worked for Deloitte at the time, was severely reprimanded for his role in the scandal, although the Financial Reporting Council said he was not “dishonest, deliberate or reckless” in his behaviour.

The FRC, which regulates the accounting sector, added that he had failed “to react to clear indicators of the risk of potential fraud on a UK government department despite such indicators being visibly set out on the Serco Geografix Limited audit file for the 2012 audit.”

A fine of £120,000 was initially handed down, however, this was reduced to £78,000 following Mr Howard’s decision to settle.

Earlier this year Deloitte was fined £4.2 million for its role as Serco’s auditor at the time of the scandal.

The payment would have been £6.5 million but was reduced after Deloitte settled the claim.

Another auditor, Helen George, was also fined £97,500 and “severely reprimanded”.

Auditors have faced a barrage of criticism in recent years, with Government ministers vowing to crack down on poor behaviour by the sector.

Earlier this month, auditors for Thomas Cook were criticised by MPs on the Business Select Committee over their willingness to sign off accounts as a “going concern” despite the myriad of problems with the business.