BusinessCompany NewsSanctuary investor rebellion threatens to reopen audit row

Sanctuary investor rebellion threatens to reopen audit row

Investors could prevent appointment of new auditor

Investors in Sanctuary Group are on course for a major clash with the board,
after it emerged that they could block the appointment of a new auditor.

The rare sight of investors clashing publicly with executives will reignite
the debate on how open auditors should be about their clients’ financial
affairs.

The music group has said that it will put its audit contract out to tender,
after a high profile row with auditor Baker Tilly, which qualified its accounts
last month.

Sources close to Sanctuary said the appointment of a new auditor remained up
in the air, but Patrick Yau, an analyst at Bridgewell Securities, said it could
be voted down. ‘Generally, these things aren’t opposed, but in this case that
could happen.’

He added that the mooted change in auditor was ‘another one of those things
that cast doubt over the direction of the business’.

The company, which has clients including stars like Beyonce and Joss Stone,
has struggled for the past six months with accounting difficulties. Last month,
Baker Tilly said that the accounting treatment used by the group had understated
losses by £15.9m.

Baker Tilly and a Big Four firm have already crossed swords over the
accounts, with the larger firm said to be prepared to give the accounts a clean
bill of health.

Any new auditor chosen by the executive would have to be approved at an AGM,
the date for which has yet to be finalised. It would also require Baker Tilly to
formally resign.

David Somerlinck of corporate governance specialists PIRC said: ‘When
auditors resign, then we would like to see them making more use of the Companies
Act to give information to shareholders.’

A Sanctuary spokesman said: ‘As part of our £110m fundraising, and following
consultation with major shareholders, the company has undertaken to change the
board structure and review the appointment of auditors.’

Investors, including Fidelity and Talpa, the investment vehicle of Endemol
founder John de Mol’s, declined to comment.

Related Articles

BDO replaces Deloitte as Mitie auditor

Audit BDO replaces Deloitte as Mitie auditor

3m Emma Smith, Managing Editor
CVR Global appoints partner in London office

Company News CVR Global appoints partner in London office

7m Alia Shoaib, Reporter
FTSE100 failing to provide adequate ethics information

Company News FTSE100 failing to provide adequate ethics information

7m Alia Shoaib, Reporter
Moore Stephens recruits new private client partner

Accounting Firms Moore Stephens recruits new private client partner

10m Emma Smith, Managing Editor
Magma Group announces merger, partner promotions

Accounting Firms Magma Group announces merger, partner promotions

10m Emma Smith, Managing Editor
BDO on ‘recruitment spree’ with multiple partner appointments

Accounting Firms BDO on ‘recruitment spree’ with multiple partner appointments

10m Emma Smith, Managing Editor
Brand strength leads to fee income growth for RSM

Accounting Firms Brand strength leads to fee income growth for RSM

10m Emma Smith, Managing Editor
Mazars strengthens audit team with partner appointment

Accounting Firms Mazars strengthens audit team with partner appointment

10m Emma Smith, Managing Editor