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French Connection audit being investigated by accounting watchdog

TheIndustry.fashion
06 October 2021

The accounting watchdog has launched an investigation into the audit of French Connection, which was carried out by Mazars.

The Financial Reporting Council (FRC) said it was looking at the fashion chain’s accounts for the year ending 31 January 2020.

It said the decision to investigate the audit was made at a meeting of its conduct committee on July 20, with the case being handled by the FRC’s enforcement division.

The move comes after French Connection on Monday agreed a £29 million takeover by one of its biggest shareholders.

The group said it had negotiated a deal with Apinder Singh Ghura, who already owns about 25.4% of the business and is its second-largest shareholder. He purchased his stake in the chain at the start of the year, snapping up shares divested by Frasers chief Mike Ashley.

The clothing brand, which was founded by chairman and chief executive Stephen Marks in 1972, saw underlying losses widen to £11.7 million for the year to 31 January 2021, compared with a £2.9 million loss the previous year. Annual group revenues plunged by 40.4% to £71.5 million after coronavirus restrictions caused it to shut stores for large parts of the year.

Mazars took over auditing for French Connection for the year to January 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 European and UK rules for auditor rotation.

Mazars said it was “co-operating fully” with the FRC. It added: “Respecting client confidentiality and due process, will provide no further comment during the course of the investigation.”

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