Deloitte has been fined £4.2m by the accounting watchdog and severely reprimanded for its audit of Serco’s Geografix division during the outsourcing firm’s electronic tagging scandal.

The penalty comes a day after the company was fined £22.9m by the Serious Fraud Office over the tagging contracts.

The Financial Reporting Council’s (FRC) fine outlined on Thursday relates to the audit of Serco Geografix in 2011 and 2012. The accounting firm will pay £300,000 towards the costs of the three-year investigation. The regulator also severely reprimanded a Deloitte partner, Helen George, and fined her £97,500.

The fines were reduced as part of a settlement and would otherwise have been £6.5m for the accounting firm and £150,000 for George. Both admitted misconduct.

Deloitte has arranged for all its audit staff to undergo training aimed at preventing similar audit failures in future.

The FRC said: “Deloitte and Ms George failed to act in accordance with the fundamental principle of professional competence and due care.”

Serco’s settlement with the SFO means the company will not face criminal charges following a lengthy investigation. The issue was first reported by Serco to the SFO in 2013.

Rupert Soames, Serco’s chief executive, said on Wednesday that he and others running the business were “mortified, embarrassed and angry” that Serco understated the level of profitability of its electronic monitoring contract in its reports to the Ministry of Justice. He apologised “unreservedly” again. The company was stripped of its contracts for tagging criminals in the UK in late 2013.

Serco agreed a £70m settlement with the MoJ in 2013 after the firm and fellow outsourcing group G4S faced allegations of charging for tagging people who were either dead, in jail, or had left the country.