An investigation into a potential fraud at Lookers has found a “cumulative total of approximately £19 million of non-cash adjustments” due to overstatements in profitability spanning several years, including the initial £4m reported at the start of this year.
Lookers has revealed the figure from a draft report by Grant Thornton. This comes two days ahead of the shares being suspended following a delay to the firm’s accounts after a falling out with auditor Deloitte over the investigation.
Lookers is also still under investigation by the Financial Conduct Authority over car finance sales.
In a statement to the Stock Exchange, CEO Mark Raban said: “The Company has reviewed and agreed the Draft Adjustments and currently considers that approximately half of the Draft Adjustments impact the 2019 results with the remainder accumulated in prior years. Analysis is ongoing to determine the historical impact of the Draft Adjustments prior to 2019, but at present it is not possible to determine if the historical elements of the Draft Adjustments would be material in any year.
“As previously reported, circa £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. The Draft Report also highlighted several areas where certain financial controls and some behavioural and cultural aspects require strengthening.”