Yahoo Finance Sports Direct appoints new auditor after split with Grant Thornton
Sports Direct has appointed advisory group RSM as its auditor, more than a month after an acrimonious split with the accounting firm Grant Thornton.
RSM is the UK’s seventh biggest audit firm and Sports Direct will be its biggest client. The advisory group has no other audit clients among the top 350 companies on the London Stock Exchange.
According to ARL, a service that monitors corporate advisers and their clients, RSM signs off the accounts of Aim-listed firms including Quiz, Fulham Shore and Cake Box. Sports Direct is a FTSE250 firm with a valuation of almost £1.7bn.
Shares in Sports Direct tumbled to their lowest level since 2011 in August after its then auditor, Grant Thornton, quit. Grant Thornton had monitored Sport Direct’s accounts since the retailers floatation in 2007.
The difficulties came after Sports Direct repeatedly delayed its annual results and eventually published them after the market had closed on a Friday evening. The late publication included news of a €674m (£605m) tax bill from the Belgian authorities, which is understood to have come as a surprise to the Grant Thornton auditors
Sports Direct’s chief executive, Mike Ashley, said he was keen to appoint one of the “big four” accounting firms – Deloitte, PwC, KPMG and EY – to replace Grant Thornton. But all four refused to take on the business, citing problems such as conflict of interest.
No replacement had been secured by the time of Sports Direct’s annual shareholder meeting on 11 September when Grant Thornton formally stepped down.
As a listed company Sports Direct must have an auditor in place by the time of its full-year results, which are usually announced in July. Most companies also audit their half-year results and Sports Direct’s are due to be published on 12 December.
Sports Direct was forced to send a letter to the business secretary, Andrea Leadsom, explaining its difficulties in finding a suitable advisor to check its annual accounts. Leadsom has the power to appoint an auditor if a company is unable to do so.
Jonathan Ericson, the head of audit at RSM UK, said: “We have a strong, high quality audit practice. Our experience, investment and commitment, together with the scope and scale of our international services, mean we are ideally placed for this important public interest appointment.”
Nearly a third of independent investors voted against Ashley continuing as chief executive at Sports Direct’s annual meeting. There has been mounting criticism about the company’s poor corporate governance, with concerns including the appointment of his future son-in-law to a senior role and paying him more than £10m over the past two years. A rash of ill-judged investments, including in Debenhams, House of Fraser and Goals Soccer Centres have also upset investors.
