LONDON (Reuters) - Sports Direct (SPD.L) has followed up a statement announcing the departure of its auditor Grant Thornton with another saying its board was comfortable with its latest accounts.
Shares of Sports Direct, led by Newcastle United owner Mike Ashley, were 9% lower at 214.8 pence by 1423 GMT on Wednesday.
Sports Direct, whose results were delayed last month after it received an 11th-hour tax bill from Belgian authorities that had to be assessed by Grant Thornton before it could sign off the numbers, said in an initial statement that the auditor had decided to quit following a review of its client portfolio.
It then issued a further statement, jointly with Grant Thornton (GT), saying it had a longer-term aim of looking to engage an auditor from the “Big Four” group of accountants who check the books of most of Britain’s top companies.
The statement said the audit profession as a whole was reviewing client portfolios for, among other reasons, audit profitability, at a time of increased regulatory scrutiny.
“GT’s review of its client portfolio alongside SD’s future intentions on engagement of a Big Four auditor has led to a decision by GT to not seek reappointment as SD’s auditor,” the statement said.
“The board of SD are comfortable with SD’s accounts for the period ended 28 April 2019 and believe a fully robust audit was carried out of SD’s financial statements.”
Grant Thornton, the group’s auditor since 2007, will not seek reappointment at next month’s annual shareholders’ meeting of Sports Direct, which has expanded beyond its sportswear foundations with a string of acquisitions including struggling department stores group House of Fraser.
Ashley has lately admitted that buying House of Fraser may have been a mistake.
In its results statement last month Sports Direct had said Grant Thornton had “vast experience” of the company and it intended to reappoint the firm for another year.
It said discussions with other members of the Big Four had thrown up barriers, including potential conflicts of interest and in the case of PwC a reluctance to engage with Sports Direct.
(This story has been refiled to correct spelling of company name in headline)
Reporting by Paul Sandle; Additional reporting by Yadarisa Shabong in Bengaluru; Editing by David Holmes