Lookers delays accounts as £19m probe widens

Listed car dealership admits no longer possible to release 2019 financial statements by end of August as scope of audit widens following Grant Thornton investigation into accounts blackhole

Embattled car dealership Lookers has admitted it cannot publish its financial; statement before the end of August, as previously expected, following its board decision to extend the scope of its audit after receiving the results of an investigation by Grant Thornton revealed the need for £19m of ‘non-cash adjustments’.

In a stock exchange announcement, the company said: ‘Following review of the final report from Grant Thornton LLP on 3 August 2020, the Board and its auditors, Deloitte LLP, extended the scope of the 2019 audit at consolidated Group and individual entity level.’

The company added that the extended scope of the audit had identified further work on the group’s corporate leasing division and vehicle financing arrangements and the 2018 and earlier balance sheets to ensure correct identification and allocation of adjustments. Further work is ongoing to finalise the 2019 accounts.

The news comes after the company suspended its shares on 1 July, a day after the last date permitted for publication of the 2019 Results under the Financial Conduct Authority’s Disclosure Guidance and Transparency Rules.

Around £4m of the draft adjustments relate to the initial phase of the investigation which focused on one of the group’s operating divisions. These adjustments include certain misrepresented and overstated debtor balances in respect of supplier bonuses receivable together with a number of fraudulent expense claims.

The remaining £15m of the draft adjustments relate to the incorrect or inconsistent application of policies, processes and accounting standards. Grant Thornton’s draft report also highlighted several areas where certain financial controls and some behavioural and cultural aspects require strengthening.

In June, Lookers said Deloitte would resign following completion of the audit of the company’s 2019 financial statements. The Big Four firm was paid £680,000 in audit and non-audit fees in 2018.

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