UK accounting watchdog probes Sports Direct audit
Britain's accounting watchdog has begun investigating Grant Thornton's auditing of financial statements published by Sports Direct, it said on Monday, dealing another blow to the troubled sportswear retailer.
The UK's Financial Reporting Council (FRC) said it was looking into the preparation, approval and audit of Sports Direct's financial statements for the year to April 24, 2016.
"These decisions follow reports of an arrangement between Sports Direct and Barlin Delivery Limited which was not disclosed as a related party in the company's financial statements," the FRC said.
According to media reports, Barlin Delivery is owned by John Ashley, the brother of Sports Direct's billionaire founder and chief executive Mike Ashley. The reports said Barlin acted as a delivery broker to Sports Direct's overseas website customers.
Sports Direct's financial statements during the period under investigation were audited by Grant Thornton.
Sue Almond, head of assurance at Grant Thornton said: "The FRC and Grant Thornton have a common interest in promoting good corporate governance and reporting standards. We shall of course be co-operating fully with their investigation."
Sports Direct was not immediately available for comment.
The firm has had a disastrous 2016. Lawmakers have condemned it for "Victorian" working conditions, investors and media have criticised its corporate governance and trading has been poor with a series of profit warnings issued, the latest in October.
Its shares, 55pc of which are owned by Ashley, were down 2.4pc at 10.30 in London, taking the decline this year to 48pc. (Reuters)