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Deloitte faces new probe into audits

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The FCA dropped its investigation into Lookers last month, saying it had “concerns” over the “historic culture, systems and control” but did not censure the business.

Deloitte was replaced by BDO in 2020 as Lookers’ auditor after 14 years working on the car dealer’s accounts.

In Deloitte’s resignation letter, which was filed with Companies House in January, the consultancy said it was giving up the contract after measures taken by the car dealer to address shortcomings in its financial controls were found to be “falling short of what was committed, and what we expected”.

It added: “As part of our 2017 and 2018 audits, we reported to the board of the company a number of recommendations for actions related to the financial controls of the company, which the company committed to undertake. 

“We made these recommendations because we considered there was a considerable gap between the financial controls seen within the company and those we saw in other public companies of equivalent scale and complexity.”

This is not the first time Deloitte has run into problems over its auditing. Earlier this month the accountancy giant struck an $80m (£57m) settlement with Malaysia over its role as an auditor to 1MDB, the state investment fund embroiled in a multi-billion-dollar embezzlement scandal.

Last November, Deloitte was fined over failures in its audit work for Johnston Press and was ordered to pay a record £15m after failing to act with “integrity and objectivity” over its audits of former FTSE 100 technology group Autonomy.

In a statement, Deloitte said: “We take this investigation seriously and are fully co-operating with the FRC. Audit quality is our priority and we are committed to maintaining the highest professional standards.” 

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