Kate McMahon was today asked to comment by both The Telegraph and City AM on the news that auditors Grant Thornton have been called in to investigate potential fraud after car dealership Lookers announced a £19m adjustment to its accounts in order “to correct overstatements in profitability over several years”.
As a result of the probe, Lookers has been unable to publish its financial results, which were originally due in March and unless it can publish them today the firm has warned that the trading of its shares will be suspended after consultation with the Financial Conduct Authority.
Lookers have said that around £4m may relate to misrepresented and over stated debtor balances in respect of supplier bonuses together with a number of fraudulent expenses claims. The remaining £15m relates to incorrect or inconsistent application of polices, processes and accounting standards.
Kate was asked to comment on the civil and criminal issues that the firm is facing. She highlighted fraud on its shareholders, potential significant internal fraud and false accounting together with inadequate internal procedures and consumer harm leading to regulator investigation.
Kate commented that this sort of investigation and such significant legal problems are likely to lead to a further loss in share value. It is likely that the FCA and shareholders alike will be looking to the entire management board for explanation, as well as the now ex-auditors.