The Financial Reporting Council (FRC) will open an investigation into accountancy firm Grant Thornton for signing off an arrangement between Sports Direct and Barlin Delivery, a company owned by chief executive Mike Ashley’s brother.
The investigation will examine accounts for the year ended 24 April. It follows reports that an arrangement between Sports Direct and Barlin was not properly disclosed in the retailer’s financial statements.
Public companies are required to report transactions with family members. However, earlier this year, Sports Direct said Grant Thornton had advised it that John Ashley’s ownership of Barlin did not have to be disclosed.
Barlin, which handles some of Sports Direct’s international deliveries to online customers, said it made about £300,000 in annual profit earlier this year.
Sue Almond, head of assurance at Grant Thornton UK, said: “Grant Thornton is committed to delivering the best possible assurance services to clients and continually enhancing the quality of our audits. The FRC and Grant Thornton have a common interest in promoting good corporate governance and reporting standards. We shall of course be co-operating fully with their investigation.”