Business

Deloitte's auditing of Mitie faces probe by watchdog

Pen and calculator Image copyright Eyewire

Deloitte's auditing of outsourcing firm Mitie Group's accounts is to be probed by the UK's accountancy watchdog.

The Financial Reporting Council (FRC) said its investigation related to Mitie's financial statements for the years ending 31 March 2015 and 2016.

Deloitte said it took the investigation "very seriously" and would co-operate fully.

Last month, Mitie reported a full-year loss after being hit by charges stemming from an accounting review.

One-off costs of £88.3m meant the company - which provides pest control, cleaning, security and healthcare services - posted an operating loss of £42.9m for the year to March.

The accounting review, which was carried out by KPMG, found the company's accounting was "less conservative" than its peers.

Shareholder vote

In a statement, Deloitte said: "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% of the company's shareholders voted against Deloitte remaining as its auditor.

Mitie said it was undertaking a tender process over the next three months and would "announce a new external auditor in due course".

Last month, the FRC said it had begun an investigation into the auditing of BT's financial statements by PwC, covering the years 2015 to 2017.

In January, BT wrote down the value of its Italian unit by £530m after what it called years of "inappropriate behaviour".

PwC was replaced in June as BT's auditor by KPMG.

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