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February 28, 2010

Vantis receives going concern warning

UK accountancy firm Vantis received an emphasis of matter paragraph in an audit opinion after the firm’s auditor, Ernst & Young (E&Y), flagged payment problems stemming from insolvency work on Stanford International Bank.

Vantis was appointed joint-liquidator of Stanford’s bank in February 2009. Despite pouring “significant assets” into the insolvency work, the firm is struggling to recover fees after a US court issued a freezing order and the US-appointed receivers launched a UK court appeal over the control of the bank’s US assets.

In interim results to the six months to 31 October 2009, the AIM-listed Vantis posted a £10.7 million loss compared to a £4.6 million profit a year ago.

Emphasis of matter statements highlight when an auditor has picked up material uncertainties over a company’s ability to trade but should not be interpreted as a death knell.

E&Y’s emphasis of matter statement noted:

“In forming our conclusion we have considered the adequacy of the disclosures made in note 1 of the interim financial information in respect of the material uncertainties associated with receipts from the Stanford insolvency and the various cash flow and cost reduction initiatives being undertaken, which may cast significant doubt on the company’s ability to continue as a going concern.

“The validity of the going concern basis depends on the Group being able to operate within its current banking facilities and covenants which requires the successful outcome of the above. The financial information does not include any adjustments that would result from failure to achieve this.”


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