Accountancy firm Grant Thornton is reportedly set to quit as the auditor to Mike Ashley’s Sports Direct following concerns over the revelations of a €674m (£605m) tax bill.
According to the Financial Times, the auditor has told UK regulator The Financial Reporting Council of its intention to step down, citing the fact it was only notified of the tax bill from the Belgian authorities just hours before it was to sign off on the results last Friday (26 July).
Grant Thornton has been the auditor of Sports Direct for the past 12 years and the news comes after the retailer dismissed rumours that is seeking to replace the accountancy firm. In its trading update it noted “inaccurate reports” of an audit tender process being run in 2019, and added that this was “not the case”.
In the delayed set of results Sports Direct revealed following its acquisition of House of Fraser it had found problems in the company that were “nothing short of terminal in nature”.
It reported that group underlying EBITDA decreased by 6% to £287.8m during the period, but excluding House of Fraser, underlying EBITDA would have increased 10.9% to £339.4m
It said “serious” underinvestment in stores and appropriate support services, “excessive and unsustainable” outsourcing and financing, and selling brands to the company’s Chinese parent shortly before administration are just some of the “many problems faced”.
Grant Thornton has declined to comment on the reports.