LONDON — Millions of pounds flow through the company at the centre of an investigation into disclosure at Sports Direct, according to recently filed accounts.
The Financial Reporting Council (FRC) announced on Monday that it has opened an investigation into the “preparation, approval and audit” of Sports Direct’s most recent results for failing to disclose Barlin Delivery as “a related party” in the company’s financial statements.
The Financial Times revealed in August that Barlin, which handles international deliveries for the discount sports retailer, is run by Sports Direct founder Mike Ashley’s brother John. Accounting rules state that related parties such as these should be disclosed to investors and regulators to ensure there are no conflicts of interest.
Barlin Delivery’s most recent accounts, filed with Companies House earlier this month, show it was owed just over £2.6 million in April of this year and had bills of £2.57 million to pay within the next year.
The accounts, which cover the period from the company’s creation in February 2015 to the end of April 2016, are “abbreviated,” meaning only the barest balance sheet disclosure is given.
The FT estimated in August that Barlin makes around £300,000 a year from Sports Direct but the online shops of other brands and companies involved with Mike Ashley suggest Barlin works with them. The include USA Pro, football team Glasgow Ranger’s online shop, USC, and Karrimor. Barlin had £128,345 in the bank as of April 30 this year.
Interestingly, John Ashley, the sole owner of Barlin, earned nothing from the company, according to the accounts. The documents state that Ashley and the company’s only other director, Margaret Brown, “did not receive any remuneration from the company in either form of salary or dividends.”
Business Insider has been unable to contact Barlin Delivery. The contact page for Barlin on Sports Direct’s website redirects to Sports Direct’s own contact page. BI has yet to hear back from Sports Direct. BI also contacted Barlin’s auditors, who are not under investigation, to try and reach Barlin but have yet to hear back.
The FRC’s investigation centres around the role of Grant Thornton, Sports Direct’s accountants and auditors. The discount sports retailer told the earlier this year FT that it was Grant Thornton that decided no disclosure was needed.
The FRC’s investigation is expected to last 2 years and could result in a fine for Grant Thornton.
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