Deloitte is under investigation by regulators over its role in auditing car showroom business Lookers between 2017 and 2018.
The Financial Reporting Council (FRC) said it would be looking at the audits carried out by the accountancy giant, which subsequently became part of an investigation by the Financial Conduct Authority (FCA) due to allegations of fraud and black holes in accounts.
Deloitte was replaced by BDO as Lookers’ auditors last year, having held the role since 2006.
The nationwide chain of car dealerships has five in Scotland.
A Deloitte spokesperson said: “We take this investigation seriously and are fully co-operating with the Financial Reporting Council.
“Audit quality is our priority and we are committed to maintaining the highest professional standards.”
Earlier this month, the FCA dropped its investigation into Lookers, which was launched in 2019 and which had seen the firm set aside £10.4m to cover potential fines.
In dropping the case, the FCA said there were “concerns” over the “historic culture, systems and control”, but did not censure the business.
Last November, Lookers revealed a much-delayed annual loss of £45.5m for 2019 after uncovering £300,000 of fraud by a former employee and tens of millions of pounds of inflated profits at a time Deloitte was signing off its accounts.
Profits were overstated by £25.5m over a number of years and a black hole of £21.8m was found.
A £41.9m profit in 2018 was also lowered by £7.2m following an internal investigation into possible fraud.
The delayed accounts had seen the company suspended from the London Stock Exchange, but it has subsequently re-listed and undergone a major overhaul and boardroom clear-out.
A number of senior executives, including boss Andy Bruce, left the firm as a result of the FCA probe.
Chief executive Mark Raban said recently: “It is an important time for Lookers as we emerge from a difficult period dealing with both the challenges of our legacy issues and Covid.
“We are pleased that the FCA has decided to close its investigation and we can now look forward and continue to build our business for the benefit of our customers and other stakeholders.”
The investigation into Deloitte comes in the same month the accountancy giant struck a £57m settlement with Malaysia over its role as an auditor to 1MDB, the state investment fund embroiled in a multibillion-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.
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