Sports Direct Auditor Quits After Huge Tax Bill

sherbrook_loyal

Administrator
Staff member
#1
Another blow for Jabba the Hutt? :))

https://www.belfasttelegraph.co.uk/...rnton-quits-after-huge-tax-bill-38402547.html

This bit in particular could prove to be interesting:

"With its annual results, Sports Direct said it had held “early discussions” with the big four accountancy firms about a tender process to replace Grant Thornton.
It said PWC had a “reluctance to engage due to its ownership structure”, while KPMG, EY and Deloitte said they would have conflicts due to other clients.
It is understood that Grant Thornton’s resignation leaves the retailer struggling to find a firm to audit its books.
Sports Direct has asked the UK Government to clarify how it might act if it becomes the first major UK-listed business to fail to appoint an auditor, according to reports in the Financial Times.
It is understood that the accounting watchdog, the Financial Reporting Council, is also in conversations with Sports Direct."
 

RFC_Falkirk

Well-Known Member
#11
The cynic in me thinks the falling share price is good for him. He buys back shares at a low price and sells when the market recovers

But I'd rather the walking heart attack got what's coming to him
 

Shongo

Well-Known Member
#12
Would be interesting if we see another scenario like Goals (ironically enough with Ashley being a share holder there) where they get a new auditor and a forensic examination of the accounts which then unearth a lot of discrepancies.
 

Earl of Leven

Well-Known Member
Official Ticketer
#13
Surely some shareholders will be desperate for them to get rid of loss making, yet deliberate, mistakes like contract with us? It makes no sense for them to be losing money AND pursuing a vendetta.
 

Sandbear

Well-Known Member
#17
The cynic in me thinks the falling share price is good for him. He buys back shares at a low price and sells when the market recovers

But I'd rather the walking heart attack got what's coming to him
The market doesn’t matter it’s the sentiment to SD if the market doesn’t like what they do they advise to sell makes no difference if the market rises they will still drop.
The falling stock price could be good in another way for him if he can borrow enough to buy up all the shares taking the company private.
 

imvaison

Well-Known Member
#19
Would be interesting if we see another scenario like Goals (ironically enough with Ashley being a share holder there) where they get a new auditor and a forensic examination of the accounts which then unearth a lot of discrepancies.
This could be a possibility. For years the Financial Reporting Council have been hampered by lack of muscle but this is being addressed.
 

Starting Anew

Well-Known Member
#25
The big 4 know there is something very fishy about his accounts. Senior executives have voluntarily walked in the past few weeks.

I smell jail time for him and his cohorts for fraud etc.
I’ve said this before but I do think that the senior directors walking away is suspicious from the way that we know Ashley does business. I wonder if they are establishing ‘independence’ to form a Phoenix group for a prepack administration and let Ashley discharge various debts that way. Not an expert in such things but it sounds very familiar to what he did to us and others with placeholders on the board. With his crown jewel, he would want his most loyal henchmen running it.

Nonetheless, it still hopefully gives us a lot more options in our disputes if his business is circling the swanny.
 

Marty101

Well-Known Member
#31
In passing, SDI Retail Services Ltd, the company suing RFC, does finally seem to have done something to sort out their Companies House filing - the strike off application which was pending has been discontinued.

Their accounts still haven't been lodged though (they were due at the end of April.)
 
#33
In passing, SDI Retail Services Ltd, the company suing RFC, does finally seem to have done something to sort out their Companies House filing - the strike off application which was pending has been discontinued.

Their accounts still haven't been lodged though (they were due at the end of April.)
They were on the strike list, for over a month, and nobody in the press picked up on it?
 

Discodale

Well-Known Member
#34
If, as people have mentioned in the past, he buys more stock himself and makes the company private, does that make a lot his problems with the likes of filing accounts and having no auditors go away?
 
#35
In passing, SDI Retail Services Ltd, the company suing RFC, does finally seem to have done something to sort out their Companies House filing - the strike off application which was pending has been discontinued.

Their accounts still haven't been lodged though (they were due at the end of April.)
I noticed that change the other day, rather suspect don’t you think?
 

Hillheadbear

Goooooooooaaaaaaaaaaallllllllll
#43
We require @Hillheadbear expert opinion on this and the possible implications, as unlike our ‘friends’ in the east of the city the vast majority of us are not taxation experts
I'm not a tax expert but I did work in audit for 25 years and I was a partner with PwC. So I do know a wee bit.

That the auditors have resigned over this tax issue suggests that it was known to Sports Direct but not disclosed to the auditors. As it is clearly material, that is a very serious omission, one which calls into question the probity of Sports Direct management and one which sends the auditor's risk sky high.

That view is supported by PwC's “reluctance to engage due to its ownership structure”. Normally, PwC would jump at the chance to win the audit of a large quoted company. That they are reluctant suggests that they also consider the risk to be too high.

For the others, "conflicts due to other clients" is clearly bullshit. All the Big 4 have clients who are in competition with each other. When there are only four international auditing firms it is inevitable. To me it sounds like an excuse because they also consider the risk to be too high.

Ultimately, SD will find an auditor but it is going to be expensive for them and the auditor is going to be very sceptical. SD will not want to risk a second auditor walking away either. That would look very bad for them.
 

Hillheadbear

Goooooooooaaaaaaaaaaallllllllll
#44
Surely some shareholders will be desperate for them to get rid of loss making, yet deliberate, mistakes like contract with us? It makes no sense for them to be losing money AND pursuing a vendetta.
That may be, but with over 60% of the shareholding, Ashley can safely ignore them.
 

Hillheadbear

Goooooooooaaaaaaaaaaallllllllll
#45
If, as people have mentioned in the past, he buys more stock himself and makes the company private, does that make a lot his problems with the likes of filing accounts and having no auditors go away?
Even if he took it private, it is still big enough to require an auditor.
 

ibroxonian

Well-Known Member
#46
Big 5 auditors under increasing scrutiny over failures to identify poor practices at retail businesses. Tesco, Patisserie Valerie etc

Sports Direct and Ashley already have a toxic image in the city, so auditors will be very cautious over such an appointment

Will end up with a lower grade accountancy firm which won't play well with investment community
 
Top