Sports Direct has reportedly pleaded with Deloitte, PwC, EY and KPMG to pitch for its audit contract after warning that a smaller firm would not be able to perform the role.
The sporting goods retailer has reached out to each of the major accountancy firms in the past fortnight to ask them to reconsider their stance on auditing the business, according to Sky News.
The move, which is being led by Sports Direct’s senior independent director and chair of its board audit committee Richard Bottomley, comes ahead of the controversial retailer’s annual general meeting today.
If the retail group, which also owns chains including House of Fraser and Evans Cycles, fails to appoint a replacement auditor for its current firm Grant Thornton, it will have to resort to the untested process of having an auditor appointed on its behalf by business secretary Andrea Leadsom.
In Sports Direct’s delayed full-year results in July, boss and founder Mike Ashley flagged the reasons that each of the big four accountancy firms had declined to work with the retailer.
EY cited its role as auditor for House of Fraser as a conflict of interest, KPMG said it could not take on the role due to an “existing portfolio of clients”, PwC said it did not wish to be considered due to a string of audit fines for work on companies such as BHS, while Deloitte referred to its current tax and advisory work for the retailer meaning it could not also take on the role of auditor.
Despite these justifications, Ashley said in July that because Sports Direct had “grown exponentially in size, geography, and complexity over recent years…we do not believe a firm outside of the big four will potentially be able to cope with such an audit in the future”.
This claim has raised questions about how substantially the retailer has engaged with smaller accountancy firms on the possibility of succeeding Grant Thornton as auditor despite reported discussions with firms such as Mazars and MHA MacIntyre Hudson.
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