(Adds Grant Thornton statement)
LONDON, Nov 28 (Reuters) - Britain's accounting watchdog hasbegun an investigation into Grant Thornton's auditing offinancial statements published by Sports Direct, it saidon Monday, dealing another blow to the troubled sportswearretailer.
The Financial Reporting Council (FRC) said it was lookinginto the preparation, approval and audit of Sports Direct'sfinancial statements for the year to April 24, 2016.
"These decisions follow reports of an arrangement betweenSports Direct and Barlin Delivery Limited which was notdisclosed as a related party in the company's financialstatements," the FRC said.
According to media reports, Barlin Delivery is owned by JohnAshley, the brother of Sports Direct's billionaire founder andChief Executive Mike Ashley. The reports said Barlin acted as adelivery broker to Sports Direct's overseas website customers.
Sports Direct's financial statements during the period underinvestigation were audited by Grant Thornton.
"The FRC and Grant Thornton have a common interest inpromoting good corporate governance and reporting standards. Weshall of course be co-operating fully with their investigation,"said Sue Almond, head of assurance at Grant Thornton.
Sports Direct was not immediately available for comment.
The firm has had a disastrous 2016. Lawmakers have condemnedit for "Victorian" working conditions, investors and media havecriticised its corporate governance and trading has been poorwith a series of profit warnings issued, the latest in October.
Its shares, some 55 percent of which are owned by Ashley,were down 2.4 percent at 1030 GMT, taking losses for the year to48 percent. (Reporting by Huw Jones, additional reporting by James Davey;Editing by Rachel Armstrong)
