Fisker is in a state of disarray right now. The company continues to inch closer to bankruptcy, and the only car it sells right now, the Ocean EV, just had prices on its remaining inventory heavily slashed as the automaker attempts to move more metal in the face of falling stock prices. What’s been going on behind the scenes of the company, however, is much worse. A report from TechCrunch details how Fisker lost millions in customer payments, forcing an internal audit to find the money.
The troubles with Fisker started in late 2023. SEC filings show the company reported having internal accounting issues. Simply put: Fisker didn’t have enough accountants to go over its books, as the filing highlights. Speaking as someone with an accounting and finance background, a company the size of an automaker should have at least dozens or even hundreds of accountants, each working together to keep track of the company finances as well as acting as each other’s backup in case something like this goes wrong. Also mentioned in the filing was an even problem as TechCrunch pointed out.
In that same filing, Fisker revealed a second material weakness involving the “risks of material misstatement over the accounting for inventory and related income statement accounts.
By the end of February 2024, Fisker admitted its troubles around handling the balance sheets in a press release. The scope of this problem reared its ugly head upon an internal audit, as sources familiar with what’s going on described to TechCrunch.
Fisker struggled to keep tabs on these transactions, which included down payments and in some cases, the full price of the vehicles, because of lax internal procedures for keeping track of them, according to the people. In a few cases, it delivered vehicles without collecting any form of payment at all, they said.
“Checks were not cashed in a timely manner or just lost altogether,” one of the people told TechCrunch. “We were often scrambling to find checks, credit card receipts and any wired funds a few months after a vehicle was sold.”
The situation was so bad that one of the big four accounting firms, PwC (PricewaterhouseCoopers), was brought in to sort through things and find out where the money went. According to sources, PwC wanted more information about Ocean sales, but Fisker couldn’t even produce documentation for that, which apparently led to more information requests from PwC.
Making matters worse, this problem spilled over into other departments resulting in issues with things like state DMVs not being paid on time, tying up customer registrations, and pulling people away from the sales team to help with the internal audit at a time when sales itself needed all the help it could get. TechCrunch said the DMV problem was solved, but there was a massive backlog to work through.
As for the internal audit, sources say the company was ultimately able to track down the payments. Unfortunately, some of those payments had to be re-requested from the customers that gave them because the payments expired while they were lost. Neither Fisker nor PwC would make a comment to TechCrunch about the situation.