Sports Direct auditor RSM informs regulator and replaces management after internal accounting error
The new auditor for retail chain Sports Direct has cleared out its top management team and informed the audit regulator after discovering an error in its own accounts.
Challenger accountancy firm RSM scored a coup last year when it was appointed as auditor to FTSE 250 retailer Sports Direct (now Frasers Group).
However, accounts for the year to 31 March for RSM UK Holdings, which were published today on Companies House, showed that the firm made errors in its provisions for professional liability claims in 2018 and in earlier years.
The errors had a net impact on profit of nearly £3.8m, RSM’s accounts showed.
Read more: Sports Direct ends two-month wait for new auditor, appointing RSM
Last month, chief executive David Gwilliam, chief finance officer Nigel Tristem and chief operating officer Robert Ross resigned from their management roles as a result of the error, which was first reported by the Sunday Times.
The three remain listed as partners on RSM’s website.
Managing partner Jez Filley has been appointed as acting chief executive, Andrew Westbrook as acting chief finance officer and Jill Jones as acting chief operating officer.
Filley and Jones were appointed as directors of the firm in July, the accounts showed.
Read more: Brydon review finds UK audit industry in need of ‘urgent reform’
It is understood RSM reported the errors to audit regulator the Financial Reporting Council in advance of filing its accounts last month.
An RSM spokesperson said: “By way of response to these issues, the board made appropriate management changes.
“RSM remains in very strong financial health, well placed to capitalise on all the opportunities available to it in the market, and to grow on its success of recent years.”
Revenue for RSM UK Holdings in the year to 31 March 2019 grew 6.7 per cent to £335m, while profit before tax was £9m, compared to a loss of £113,000 the previous year.
The profit attributable to the highest paid member of RSM UK Group LLP last year was £2.1m, down from £2.5m the previous year.
Average profit per member for the LLP grew to £395,000 compared with £345,000 the previous year.
RSM’s auditor for the period in question was Moore Kingston Smith which did not respond to requests for comment.