Studio Retail financial statements under investigation by UK watchdog

Studio Retail, a British home shopping company, is set to have its financial statements investigated by a UK watchdog.

The Financial Reporting Council (FRC) said it has commenced an investigation in relation to the audit conducted by Mazars LLP of the group’s financial statements for the 12-month period ended 26 March 2021.

The accounting firm had overseen the auditing for the struggling company, which fell into administration in February before being bought out by businessman Mike Ashley.

According to the retailer, its collapse was due to the increase in shipping costs, cash flow struggles and supply chain delays.

Ashley’s Frasers Group stepped in with a 26.8 million pound rescue deal.

Following the acquisition, however, the fashion conglomerate slammed Studio Retail for the handling of its downfall, stating that, as a significant shareholder, it had long attempted to push a strategic review of the retailer.

In a statement through the London Stock Exchange, the group, which also owns the likes of House of Fraser and Sports Direct, cited issues with management as a fundamental part of its demise.

In a release, the FRC said its decision to launch the investigation was made during a meeting of the firm’s Conduct Committee on September 13.

It added the process will be conducted by its Enforcement Division under the Audit Enforcement Procedure, which will include detailing allegations and taking action if necessary.