The UK’s accounting watchdog today hit Grant Thornton with a £2.05m over “serious failings” in its audits of high-street retailer Sports Direct.
The fines come after the UK’s Financial Reporting Council (FRC) said Grant Thornton had failed to properly scrutinize Sports Direct’s relationship with an unnamed delivery company and the impact the relationship would have on Sports Direct’s financial results during its 2016 audit of the firm.
The accounting watchdog said Grant Thornton also failed to obtain sufficient evidence regarding Sports Direct’s online sales, after revenues from its website increased 20 per cent to £162.2m in 2018.
The FRC said that while there is no evidence Grant Thornton’s failing resulted in any misstatements, the firm’s auditors failed to meet the standards auditors are required to meet.
Jamie Symington, Deputy Executive Counsel to the FRC, said: “The audit failings in this case were serious and relate to fundamental auditing standards.”
“It is particularly important that auditors follow up with due rigour where they have identified potential related party transactions as a significant audit risk.”
“Auditors must adopt a mindset of professional scepticism, and exercise good judgment based on sufficient and properly documented evidence.”
The watchdog also fined former Grant Thornton partner Philip Westman £120,000 for his failings in auditing Sports Direct.