Following the Sports Direct AGM, there is no progress on the appointment of a new auditor after Grant Thornton resigned as the incumbent last month
It had been expected that the FTSE 250 listed retailer, headed by Mike Ashley, would make an announcement on the appointment of a replacement for mid-tier firm Grant Thornton, who resigned following a turbulent relationship with the company. The resignation came into effect from 11 September, following the AGM.
Big Four firms have tried to recuse themselves from tendering for the audit, citing issues of conflict preventing them from handling the business.
The audit was worth £1.1m to Grant Thornton for the audit of the accounts for year end April 2019 and had been in place since 2004 when the company first listed.
If Sports Direct are unable to find an auditor, the Secretary of State for Business with the decision on what action to take. The audit regulator, the Financial Reporting Council (FRC), would have no role in any decision.
The Secretary of State has a power in section 490 of the Companies Act 2006 (CA 2006) to appoint an auditor to a public company. However, that power only arises if the company fails to appoint an auditor at its accounts meeting (usually the AGM). The company must notify BEIS (via a notice to Companies House) within a week if the Secretary of State is forced to use these powers.
Last month, a BEIS spokesperson told Accountancy Daily: ‘We have not received a formal notification to provide assistance to the company to find an auditor. Lawyers for Sports Direct have requested clarity on our role, and we have responded.’
In addition, BEIS confirmed that ‘only if the accounts meeting [AGM] failed to conclude with the successful appointment of an auditor would we expect to be formally notified that had happened’.
The AGM was held behind closed doors with Ashley refusing to allow the press to cover the event.