Deloitte drops Lookers audit
8 Jun 2020
Troubled car dealership Lookers has announced a further delay in publication of its 2019 results, already deferred to the end of this month, and is seeking a new auditor after Deloitte revealed its intention to resign after 14 years in the role
8 Jun 2020
In early March the company said it would postpone the publication of its results for the financial year ending 31 December 2019, after identifying potentially fraudulent transactions in one of its operating divisions.
Lookers also announced an investigation into the fraud allegations, to be handled by Grant Thornton.
Having originally indicated it would release its results in the second half of April, on 4 June the company announced that the 2019 results were expected to be published by the 30 June, subject to the conclusion of banking discussions and the completion of the audit process.
It also said the Grant Thornton investigation was nearing its completion and that a draft of the report had been shared with Deloitte, for review in the context of their audit opinion.
Now in an update released four days later, Lookers stated: ‘Having discussed the draft report with Deloitte and with that report to be finalised, the company has concluded that the additional procedures that the company and Deloitte will now need to perform in order to finalise the 2019 results means that it will not be possible to publish the 2019 results by 30 June 2020.’
The end of the month is the last date permitted under Financial Conduct Authority (FCA) disclosure rules, which have been modified in light of the Covid-19 pandemic. As a result, if Lookers does not publish its 2019 results by the 30 June deadline, its shares will be temporarily suspended with effect from 1 July.
Lookers said: ‘The company's priority and focus is the production of the 2019 results at the earliest possible date and by no later than the end of August 2020.’
The company said its finance team is working closely with Deloitte and is developing an action plan to ensure that the additional work required to allow publication of 2019 results is completed as soon as possible.
In addition, Lookers said: ‘Deloitte has indicated to the company that it intends to resign as auditor following the publication of the 2019 results. The company is currently engaged in a competitive tender process to appoint a new auditor.’
According to its 2018 annual report, Deloitte has been Lookers’ external auditor since the firm’s appointment for the year ending 31 December 2006 A formal re-tendering process was last undertaken in the financial year ending 31 December 2016.
Deloitte was paid £680,000 in audit fees for the company and its subsidiaries in 2018, plus £20,000 in fees for non-audit services. This compared with £357,000 in audit fees for the previous year.
Earlier this month Lookers announced a redundancy process likely to see the nationwide dealership lose some 1,500 staff as part of a restructuring plan expected to deliver annual payroll savings of approximately £50m.
A Deloitte spokesperson said: 'We continue working with the company on finalising its 2019 accounts.'