Deloitte's Lookers role under spotlight
Deloitte is under investigation by the industry watchdog over its role in auditing Lookers, the car dealership giant with a string of Scottish showrooms, between 2017 and 2018.
The Financial Reporting Council (FRC) said it would be looking at the audits carried out by the Big Four accountancy firm which subsequently became part of an investigation by the Financial Conduct Authority (FCA) with allegations of fraud and black holes in Lookers’ accounts.
Deloitte was replaced as the car dealership’s auditor last year, having held the role since 2006, by BDO.
The FCA recently dropped its investigation into Lookers, which was launched in 2019 and which had seen the firm set aside £10.4 million to cover potential fines.
In dropping the case the FCA said there were “concerns” over the “historic culture, systems and control” but did not censure the business – owner of the long-established Taggarts business and some Audi dealerships in Scotland.
Last November, Lookers revealed a much-delayed annual loss of £45.5m for 2019 after uncovering £300,000 of fraud by a former employee and tens of millions of pounds of inflated profits at a time Deloitte was signing off its accounts.
Profits were overstated by £25.5m over a number of years and a black hole of £21.8m was found. A £41.9m profit in 2018 was also lowered by £7.2m following an internal investigation into possible fraud.
The delayed accounts had seen the company suspended from the London Stock Exchange, but it has subsequently relisted and undergone a major overhaul and boardroom clearout.