Leisure and compression software developer Eidos has been dropped by auditor Coopers & Lybrand because of its failure to follow government guidelines.
Coopers & Lybrand said it was not standing for reappointment as Eidos? auditor because of ?certain inadequacies in the company?s corporate governance practices as set out in its most recent annual report?.
The announcement led to a massive slump in Eidos? share price on 8 August. Its shares have since fallen 60.5p to 572p.
Coopers & Lybrand has been Eidos? auditor since 1994. It received payment of #113,000 for services in the period 1996 to 1997.
In Eidos? annual report, Coopers & Lybrand referred to the company?s failure to implement in full the code of best practice published by committee on the financial aspects of corporate governance.
It also highlighted the company?s failure to fully review its system of internal control, as required.
The report also said the internal system ?can provide only reasonable and not absolute assurance against material misstatement or loss?.
In a statement, Eidos CEO Charles Cornwall said: ?We have taken and are taking steps to rectify the situation. We take this very seriously.?
KPMG has agreed to put itself forward for appointment as auditor at the AGM on 17 September, after consulting Eidos? directors, its financial and legal advisers and Coopers & Lybrand.
Eidos blamed the problem on the fact that it had grown too quickly. It posted a profit of #6.2 million on turnover of #75.5 million for the year ended 31 March, up from last year?s loss of #1.9 million and turnover of #3.7 million.
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