Shares of Mike Ashley’s Sports Direct International fell 10% on Wednesday after it said in a stock exchange statement that Grant Thornton is to quit as Sports Direct’s auditor.
Grant Thornton has been Sports Direct International ’s auditor since 2007.
Sports Direct International then issued a later 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 — Deloitte, PwC, KPMG and EY.
Sports Direct has now asked the UK Government what its options are as it faces the prospect of breaking stock market rules if it cannot appoint an official auditor at its annual meeting on September 11, according to the Financial Times.
UK business secretary Andrea Leadsom has the power to appoint an auditor to a quoted company.
The first statement read: “Sports Direct announces that, subsequent to the publication of Sports Direct’s annual report and accounts on 13 August 2019, on 13 August 2019 Sports Direct received notice from Grant Thornton UK LLP (GT) that, following a review of its client portfolio, GT intends not to seek reappointment as the company’s auditors and will cease to hold office as auditors of the company with effect from 11 September 2019, being the date of the company’s annual general meeting.”
The joint statement read: “As referred to in the chief executive’s report and business review in SD’s annual report and accounts for the period ended 28 April 2019, SD has a longer term aim of looking to engage a Big 4 auditor in the future.
“In line with the audit profession as a whole reviewing their client portfolios for, amongst other reasons, audit profitability, during a period of increased regulatory scrutiny, GT’s review of its client portfolio alongside SD’s future intentions on engagement of a Big 4 auditor has led to a decision by GT to not seek reappointment as SD’s auditor.
“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.”