Jan 7, 2020

Auditor RSM reveals error that led to bosses’ departures

Challenger audit firm RSM misstated its results by almost £10m over two years in an accounting blunder that has resulted in the removal of its chief executive, finance director and chief operating officer. The company set aside £3.8m too much for these claims in 2017 but £6m too little in 2018, resulting in a total net impact on profit of £2.2m. The error is a blow to the reputation of RSM, which was appointed to audit Sports Direct, the retail empire led by Mike Ashley, in October, its first audit client in the FTSE 350 index. RSM is one of a group of smaller firms alongside BDO, Grant Thornton and Mazars that is attempting to break the stranglehold of the Big Four - Deloitte, PwC, KPMG and EY. It was previously called Baker Tilly before it acquired the trading subsidiaries of RSM Tenon, which collapsed after an accounting scandal, in 2013. RSM said in a statement: "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." RSM audits 59 companies on London's junior market Aim but previously had no main market-listed audit clients.

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