Deloitte investigated over Mitie auditing

Deloitte is to be investigated by the accountancy regulator over its auditing of troubled outsourcing giant Mitie's accounts.

The Financial Reporting Council will review statutory audits of Mitie's financial statements in the years ending March 2015 and 2016. It could issue an "unlimited fine" if it finds breaches of "relevant requirements", says the Financial Times.

Deloitte, one of the so-called "big four" accountants, said: "Audit quality is of critical importance to our firm and we are committed to maintaining the highest professional standards.

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"We take this investigation very seriously and will co-operate fully with the Financial Reporting Council."

Last week, 30 per cent of Mitie's shareholders voted against renewing its contract with Deloitte. The company said it was undertaking a tender process over the next three months and would "announce a new external auditor in due course".

Mitie has suffered a challenging year. As well as issuing a string of profit warnings, it lost its chief executive after a decade at the helm and reported a £43m full-year loss, caused by £88m of one-off costs following a review of its accounts that found past financial reports had been "less conservative" than its rivals, says the BBC.

Outsourcing firms in general have been under scrutiny over how they book profits from long-term contracts, says the FT, and Mitie has been under pressure over falling profits in its healthcare arm, which it eventually sold in March for £2.