Ernst and Young, a prominent member of the Big 4 accountancy firms, has officially resigned from its role as the auditor for Asda. Despite the resignation taking place during the summer, the supermarket has not yet made an official disclosure regarding this departure in its Companies House filings or in response to recent inquiries from the Business and Trade select committee.
According to this statement, EY conveyed its inability to undertake the expanded audit in a letter last summer. This decision was influenced by factors such as the acquisition of the EG UK&I business and the considerable escalation in the scale and complexity of the group. The letter highlighted the challenge of adhering to the timetable to issue the audit opinion for the year ending December 31, 2023. Investors were reportedly informed about this development on August 8, 2023.
The revelation surfaced through The Telegraph over the weekend, disclosing that Asda had privately informed the lenders of its listed bonds about EY’s resignation in August. EY has corroborated this information, confirming to the newspaper that it indeed stepped down as Asda’s auditor.
The timing of EY’s resignation amplifies the ongoing scrutiny surrounding Asda’s operations, notably since the Issa brothers, in collaboration with TDR Capital, acquired the supermarket from Walmart for £6.8 billion. Parliament members have expressed concerns about Asda’s substantial £4 billion debt and the intricate structure of its ownership model.
Nadine Houghton, the national officer at the GMB Trade Union, criticised Asda for the delayed disclosure of the auditor’s resignation, highlighting what she perceives as a lack of transparency within the company. As the situation unfolds, industry observers are keenly monitoring for further developments and evaluating the potential impact on Asda’s financial and regulatory landscape.
ASDA STORES LIMITED
Asda Stores Limited, commonly known as Asda and frequently presented as ASDA, stands as a British supermarket chain with its headquarters situated in Leeds, England. Originally established in 1949, the company was formally incorporated under the name Associated Dairies and Farm Stores.
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