Sports Direct hires auditor after two month search

Oscar Williams-Grut
Senior City Correspondent, Yahoo Finance UK
Shoppers walk past Sports Direct store on Oxford Street in London, Britain December 17, 2018. Photo: REUTERS/Simon Dawson

Sports Direct (SPD.L) has appointed an auditor after a two-month search, ending speculation that the retailer would be forced to ask the government for help.

The discount sports retailer said in a brief statement on Wednesday afternoon that RSM UK had been appointed auditor “with immediate effect.”

The appointment comes after the resignation of Grant Thornton in mid-August and ends speculation that business secretary Andrea Leadsom would be forced to step in and order an auditor to work with Sports Direct.

Sports Direct failed to appoint an auditor in time for its annual general meeting (AGM) last month, forcing it to notify the government that it may be in need of assistance.

All of the “Big Four” auditors — PwC, EY, KPMG, and Deloitte — had ruled out working with Sports Direct before the search for a new auditor began.

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Major audit firms are reluctant to work with the company because of potential reputational damage. In July, Sports Direct’s results were delayed for hours with no explanation and the final publication revealed a surprise tax bill of £605m ($748m) from Belgian authorities.

Founder and majority owner Mike Ashley has also been criticised for making high-risk bets on the high street despite falling sales and footfall. Ashley has used Sports Direct to buy stakes in Game, Debenhams, and Evans Cycles. The company has also taken over bust department store House of Fraser and struggling preppy retailer Jack Wills.

RSM is one of the biggest accountancy groups in the world but Sports Direct represents its most high-profile audit client in the UK.

Jonathan Ericson, Head Of Audit at RSM UK, said: "RSM is delighted to have won this opportunity. We have a strong, high quality audit practice. Our experience, investment and commitment, together with the scope and scale of our international services, mean we are ideally placed for this important public interest appointment."