Sports Direct faces race against time as auditor Grant Thornton quits

Guardian Web |

Sports Direct has less than a month to find a new auditor after Grant Thornton told the embattled retailer that it intends to quit at its annual meeting in September.

Grant Thornton, which has audited Sports Direct since it floated on the Stock Exchange in 2007, will stop working with Mike Ashley’s business following its annual general meeting on 11 September.

The announcement comes a day after Sports Direct published its annual report stating that it proposed Grant Thornton be reappointed by shareholders at next month’s meeting.

The resignation puts Sports Direct in a difficult position as the company admitted at its annual results last month that it has not been able to attract rival accounting firms to tender for its contract. The company, which is struggling to make its £90m acquisition of House of Fraser work, is facing a €674m (£605m) tax bill from the Belgian authorities.

Sports Direct has now asked the UK government what its options are as it faces breaking stock market rules if it cannot appoint an official auditor at its annual general meeting, according to the Financial Times.

The business secretary, Andrea Leadsom, has the power to appoint an auditor to a quoted company if it cannot do so itself. If Sports Direct fails to find an auditor it will be the first major publicly-listed company to do so.

In July, Sports Direct said that the other “big four” accounting firms - Deloitte, PwC, KPMG and EY – had said they could not take on the business because of client conflicts.

It emerged at the end of last month that Grant Thornton had told the Financial Reporting Council, the audit watchdog, of its plans to resign as Sports Direct’s auditor. However, an official announcement from Sports Direct was only released to the stock market on Wednesday.

The company’s annual report, which proposed the reappointment of Grant Thornton, appears to have been finalised at the end of July – before reports that the auditor intended to step down.

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