Lookers has confirmed that it must make an adjustment of £19m in order to “correct overstatements in profitability” over the past several years.
The firm’s accounts have been under review after its auditors identified “potentially fraudulent transitions” in its books earlier this year.
Earlier this month, Lookers confirmed that a Grant Thornton investigation into its accounts was “nearing its completion”, and that a draft of the Grant Thornton report had been shared with Deloitte for review in the context of their audit opinion.
In addition, an insider told Sky News that Deloitte was reportedly set to resign as the group’s auditor following the company’s 2019 audit opinion and approval of its full-year results.
The latest auditor report found that £4m of the identified adjustments relate to the initial phase of the investigation, which largely focused on one of the group’s operating divisions.
This included “misrepresented and overstated” debtor balances in supplier bonuses, as well as a “number” of fraudulent expense claims.
The remaining £15m reportedly relates to “incorrect or inconsistent” applications of policies, processes and accounting standards.
In addition, the findings from its auditors also highlighted several areas where “certain financial controls and some behavioural and cultural aspects” required strengthening.
In light of the report, Lookers said it is now implementing remedial measures to address the findings, and is “continuing to invest” in its systems and controls to “further improve their robustness”.
In an effort to address this, it has also established an independent board committee that will “ensure proper implementation” of the recommendations found in the report.
In its latest statement, Lookers said: “Whilst the Company is making good progress in resolving the investigation there remain a number of outstanding issues and until such time as these issues are resolved and Deloitte have completed their audit, it is not possible for the company to confirm the full impact.
“However, the board believes that 2019 will remain profitable at the underlying profit before tax level.”