Sanctuary set for victory in auditor battle

Sanctuary set for victory in auditor battle

Embattled music group hopes to get shareholders to approve KPMG as its new auditors at annual general meeting

Embattled music group Sanctuary looks set to win its battle to drop auditor
Baker Tilly.

The group will hold its annual general meeting in London on Friday, at which
it hopes to get shareholders to approve KPMG as its new auditors.

Baker Tilly qualified the music group’s accounts for last year, as its share
price collapsed amid a welter of accounting difficulties. The sacking has caused
some to question whether the new auditors can be independent of management.

Investors F&C, however, said they had no problem with the change of
auditor. Other investors, including Fidelity and various hedge funds, who took
stakes after the company’s placing, refused to comment. Analysts have suggested
that the decision to change auditor soon after the qualification could mean
investors would turn down KPMG.

There is still a possibility that auditors Baker Tilly could seek to explain
outstanding issues with the business in filings to Companies House. Sources
suggested though, that investors with any concerns would have contacted the firm
directly to decide on the issue.

Baker Tilly said Sanctuary understated losses in 2005 by £15.9m. ‘The
financial statements do not give a true and fair view of the state of affairs of
the group,’ the firm said.

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