// Former Sports Direct auditor Grant Thornton has been fined £1.3 million by the Financial Reporting Council
// The auditor failed to disclose the relationship between Sports Direct and a company controlled by Mike Ashley’s brother
Sports Direct’s former auditor Grant Thornton has been handed a £1.3 million fine by the Financial Reporting Council (FRC) over ‘serious failings’ in its auditing of the sports giant’s accounts.
The fine relates to Grant Thornton’s auditing of Sports Direct, now called Frasers Group, for the financial statements for the years ended 2016 and 2018.
Philip Westerman, the former Grant Thornton partner who was in charge of the audits, was handed a penalty of nearly £80,000.
During the period, Westerman and Grant Thornton as a firm failure to disclose the relationship between Sports Direct and a company controlled by Mike Ashley’s brother.
The FRC said: “Whilst the respondents identified related parties as an area of significant risk, they failed to treat with professional scepticism management’s assertion that Delivery Company A was not a related party of Sports Direct.
“There were a number of relevant factors which should have prompted the respondents to consider and follow up matters further, but they did not.”
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The findings against the firm and Westerman concerned “basic and important requirements” that were “fundamental to the work of an auditor”, the FRC said.
Grant Thornton quit as Sports Direct’s auditor in 2019.
Frasers Group highlighted that the FRC findings included “no criticisms of Frasers Group, no issues in relation to Frasers Group’s historical financial statements and no findings that there were any undisclosed related party transactions within the group”.
It added: “Frasers Group always makes clear that its accounting principles are being conservative, consistent and simple. Frasers Group tries as far as possible to be fully transparent with the market on its financial disclosures.
“Even though Frasers Group believes it was technically correct in its disclosure of related party transactions, with hindsight further disclosure within the accounts might have avoided this particular aspect of The FRC’s investigation of Grant Thornton and Philip Westerman.”
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