Sports Direct auditor Grant Thornton quits after huge tax bill
The announcement comes as the UK’s largest audit firms prepare to release risky and unprofitable clients following a string of scandals.
Sports Direct has announced that auditor Grant Thornton is set to quit its role working for the retail giant.
Mike Ashley’s retail business told investors the accountancy firm provided Sports Direct with a notice on Tuesday and will not seek reappointment as the company’s auditor.
The announcement comes as the UK’s largest audit firms prepare to release risky and unprofitable clients following a string of scandals and major corporate collapses.
Grant Thornton will cease to be auditor for Sports Direct from September 11, when the retailer’s annual general meeting will take place.
In a joint statement, Sports Direct and Grant Thornton said the end of their working relationship came about as a result of the retailer’s “longer term aim of looking to engage a big four auditor in the future”.
Grant Thornton has audited the company’s accounts since 2007, but the break-up comes weeks after the release of Sports Direct’s annual results was delayed due to a 674 million euro (£624 million) tax claim.
The day before Sports Direct was due to release its results, which had already been delayed once, it discovered the hefty demand from Belgian tax authorities.
With its annual results, Sports Direct said it had held “early discussions” with the big four accountancy firms about a tender process to replace Grant Thornton.
It said PWC had a “reluctance to engage due to its ownership structure”, while KPMG, EY and Deloitte said they would have conflicts due to other clients.
It is understood that Grant Thornton’s resignation leaves the retailer struggling to find a firm to audit its books.
Sports Direct has asked the UK Government to clarify how it might act if it becomes the first major UK-listed business to fail to appoint an auditor, according to reports in the Financial Times.
It is understood that the accounting watchdog, the Financial Reporting Council, is also in conversations with Sports Direct.
Grant Thornton has come under significant scrutiny over the past year, being named the worst performer in the FRC’s annual review in July.
The FRC scrutinised Grant Thornton’s audit work for Patisserie Valerie, which entered administration following a major accounting scandal, as well as outsourcing firm Interserve, which was sold in March following the appointment of administrators.