The U.K. Financial Reporting Council (FRC) on Wednesday announced it has begun an investigation into Mazars concerning its audit of financially ailing retail company French Connection Group, which has just been sold.
The probe focuses on Mazars’ audit of French Connection’s consolidated financial statements for the fiscal year ended January 2020. The FRC did not provide any further details about its investigation, which is being conducted by its Enforcement Division.
Commencement of the investigation comes two days after French Connection announced it will be acquired by MIP Holdings, a newly incorporated entity directly owned and controlled by Apinder Singh Ghura, Amarjit Singh Grewal, and KJR Brothers Limited. Ghura, who holds shares of approximately 25 percent in French Connection, is the company’s second largest shareholder.
The final sale price was $39.5 million.
“Over the last five years, French Connection has made significant progress in its plans to rationalize the size of its store portfolio and to return the French Connection Group to profitability,” said French Connection Chairman Stephen Marks. “It was always our intention to look at the most appropriate ownership structure for the business once it was back on track, and, having conducted a formal sale process, the French Connection board has concluded that the offer being made by MIP is fair and reasonable.”
Marks, who founded the business in 1972, added he will be retiring from French Connection following the transaction’s closing.
“We are pleased to have reached an agreement with the French Connection directors on this recommended acquisition,” Ghura said. “We are looking forward to working with French Connection’s management to execute and implement MIP’s strategic plans to facilitate the future growth and profitability for the business.”