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£10m Accounting Error Leads to Board Resignations

Tuesday 7th January, 2020

A mid-tier accountancy firm selected to audit Mike Ashley’s retail empire misstated its accounts by almost £10 million over two years in an error according to reports.

RSM who has around 3500 partners and staff in the UK, said that there had been an error in the calculation of the provision for professional liability claims, which represents the estimated cost of legal action or regulatory penalties against the firm.

The company allocated £3.8 million too much for these claims in 2017 and £6 million too little in 2018, resulting in a £2.2 million impact on net profit, reported by The Times Newspaper.

The fallout due to the error has led to a number of board members resigning last month, including the firm’s Chief Executive, CFO and Chief Operating Officer.

The roles have been filled in the interim by, Jez Filley as acting chief executive, Andrew Westbrook as acting chief finance officer and Jill Jones as acting chief operating officer.

It is understood RSM reported the errors to audit regulator the Financial Reporting Council.