The FTSE 250 company is seeking to replace Grant Thornton (GT) after it completes the 2019 audit. GT has audited Sports Direct since before it floated in February 2007.
As is traditional, the Big Four do not comment on pitches or tenders. However, it is understood that KPMG ruled itself out of the running back in February because it currently audits one of the FTSE 250 company’s major competitors, JD Sports.
EY is also thought to have decided not to tender for the role because of conflicts of interest arising from its role as administrator to House of Fraser.
The firm sold the failing department store chain to Sports Direct in a pre-pack arrangement in August just hours after being appointed administrator. It was then forced to defend the sale.
According to Sky News, both PwC and Deloitte decided against tendering over fears about reputational risk.
Sports Direct has faced repeated criticism and poor corporate governance in recent years over its working practices and corporate governance.
Earlier this week, a High Court judge ordered it to hand over 40 documents and emails to accounting watchdog the Financial Reporting Council (FRC).
The FRC is currently investigating Grant Thornton’s audit of the 2016 accounts and in particular its conduct in relation to an arrangement between Sports Direct and Barlin Delivery Ltd which is owned by John Ashley, brother of Sport Direct founder and chair Mike Ashley. The arrangement has now ended.
The FRC had previously described Sports Direct’s approach in the case as “one of obfuscation and delay verging on obstruction”. Judge Richard Arnold agreed. “In my view, this criticism is entirely justified,” he said.