Ernst & Young

Sports Direct auditor search: excuses, excuses?

Sports Direct shop front
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No wonder Sports Direct wanted Grant Thornton to stay on for at least another year as it auditor - its search for a new firm isn't going too well.

In its annual report it said that its early discussions with the "big four" - KPMG, PwC, Deloitte and EY - "have thrown up some barriers"

  • Deloitte does tax compliance and advisory work so for Sports Direct so "cannot perform audit work at the same time".
  • KPMG has "indicated conflicts of interest based on an existing portfolio of clients". But Sports Direct says: "We do not believe based on our understanding of big four independence procedures that this is insurmountable."
  • EY, the retailer says, is reluctant to be Sports Direct's auditor because it acted as administrator to House of Fraser which the retailer rescued last year.
  • And PwC "has had some widely publicised fines in recent years and we understand there is a reluctance to engage based on our ownership structure".

Sports Direct is non-plussed.

It notes "that companies with supposed strong levels of corporate governance consisting of huge boards, many board meetings and management packs in the tens and hundreds, which the big four have been more than happy to audit, for instance Debenhams or Carillion, have been shown to be seriously lacking in what should be important to investors, and indeed auditors, transparency, true and fair accounts, and realistic communications and expectations to the market".

Auditors in the spotlight

Patisserie Valerie
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Representatives from the UK's biggest accountancy firms will be questioned by MPs this morning about "the future of audit".

Men from PWC, KPMG, EY, Deloitte, Grant Thornton, BDO and Mazars will face the Business, Energy and Industrial Strategy committee at a torrid time for the industry following a number of high profile company collapses and calls for accountancy firms to be broken up.

Most recently, Patisserie Valerie was forced into administration after a number of accounting "irregularities" were discovered.

Grant Thornton was the cafe chain's auditor.