The full extent of Baker Tilly's dispute with Sanctuary Group, the troubled music company which manages artists such as Sir Elton John and Joss Stone, was laid bare after the auditors claimed that its client's accounts were in contravention of the 1985 Companies Act.
In comments printed in Sanctuary's annual report, published yesterday, Baker Tilly said it disagreed with several ways in which the group had accounted for income in its 2005 accounts, claiming the group had understated its losses for 2005 and overstated losses from previous years. Baker Tilly also accused the company of creating "a creditor ... [where] no liability exists".
Sanctuary said it was now starting a beauty parade with a view to appointing new auditors and would seek shareholder approval for its appointment at its forthcoming AGM. However, it said Baker Tilly would be invited to reapply for the position.
The dispute comes just days ahead of Sanctuary's proposed £110m share placing, which it is undertaking in the hope of paying down some of its mounting debts. However, the group stressed it had made no secret of the dispute with its auditors, and that its placing will be fully underwritten by Evolution Securities.
Sanctuary shares have fallen more than 90 per cent since last June. They closed up 0.2p yesterday at 1.49p, valuing it at £5.42m.Reuse content