Accounting watchdog launches probe into French Connection audit just days after fashion chain agreed a £29m takeover
The accounting watchdog has launched an investigation into the audit of French Connection by Mazars.
The Financial Reporting Council (FRC) said it was looking at the fashion chain’s accounts for the year ending Jan 31, 2020.
It said the decision was made at a meeting of its conduct committee on July 20, with the case being handled by the FRC’s enforcement division.
Audit probe: The Financial Reporting Council said it was looking at the fashion chain French Connection’s accounts for the year ending Jan 31, 2020
It comes after French Connection on Monday agreed a £29million takeover by one of its biggest shareholders.
The group said it had negotiated a deal with Apinder Singh Ghura, who owns about 25.4 per cent of the business and is its second largest shareholder.
The sale comes after years of losses, with trading woes compounded by the pandemic.
The clothing brand, which was founded by chairman and chief executive Stephen Marks in 1972, saw underlying losses widen to £11.7million for the year to January 31 2021, compared with a £2.9million loss the year before.
Annual group revenues plunged by 40.4 per cent to £71.5million after coronavirus restrictions caused it to shut stores.
Mazars took over auditing for the year to Jan 2020, which is the subject of the FRC investigation, after replacing KPMG.
KPMG had handled the firm’s audit since 1994, but the account was put out to tender under rules for auditor rotation.
Mazars said it was ‘co-operating fully’ with the FRC. It added: ‘Respecting client confidentiality and due process, we will provide no further comment during the investigation.’