Sports Direct International plc (Audit and Assurance services)

Sports Direct is the largest sporting goods retailer and operates a diversified policy of sports, fitness, fashion and lifestyle fascias and brands.

The Group provides a full multi-channel retail approach across its fascias in the UK, and increasingly across its fascias in continental Europe. The Group also licenses its brands to partners in the UK, continental Europe, the Americas and the Far East.

The Group operates through three strategic business segments : Sports Retail, Brands and Premium Lifestyle.

Extracts from Annual Report and Accounts 2016/ 17

– Group consolidated income statement for the 52 weeks ended
30 April 2017

– Consolidated statement of financial position as at 30 April

– Consolidated statement of cash flows for the 52 weeks ended
30 April 2017

– Independent auditor’s report to the members of Sports Direct International plc 19 July 2017

– Viability Statement July 2016 – FRC Guidance on Risk Management, Internal Control and Related Financial and Business Reporting, going concern

Access from Sports Direct website Corporate Governance Report incl. Audit Committee Report 2017
pp. 80 – 83

– Half-Year results 14 December 2017 , 26 weeks to 29 Oct. 2017

– Dec. 2017 Sports Direct shares take a hit as debt swells

– Dec. 2017 Sports Direct highlights ‘ spectacular ‘ performance despite 67% profits drop

– Jan. 2017 Mike Ashley defies shareholders again over Sports Direct Chairman

– Economia Nov. 2016 FRC launches investigation into Grant Thornton over Sports Direct



Critically evaluate the risk-based approach to external audit with particular reference to the audit of Sports Direct
International plc.

You should give examples of how you might collect evidence and assess the degree of business risk (obtaining an understanding of the entity and its environment and assessing the risks of a material misstatement) in the 2017 audit of the company and factors affecting the company’s ‘control environment‘.


Identify those features of Sports Direct International plc’s results for 2015 – 2017, incl. the interim results to October 2016, which might indicate to you as the external auditor that the company was facing going concern problems.



Identify any qualitative factors or information in the annual reports and accounts for Sports Direct International plc for 2016/ 17, including the work of the audit committee, that you as the external auditor would consider that might suggest that the company would be able to continue in business for the foreseeable future.


With reference to the Independent auditors’ report of Sports Direct International plc and specifically the areas of particular audit focus identified by Grant Thornton discuss the factors which would influence you as the external auditor in forming an opinion on the financial statements of the Group for 2017.

Indicate briefly the form that your opinion might take including any emphasis of matters paragraph that you may consider making in relation to the appropriateness of the going concern basis.

Overall structure and presentation, referencing and bibliography


Sample Solution

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