SWFC Accounts 31 July 2018

[Guest mkowl]

Just now, Miffed said:

Meaning in a couple of seasons Chansiri might have the option of all or bust again but this time using the stadium money. 

 

I think the money to pay for the stadium will just be another method of paying money in to fund the day to day losses as opposed to increasing his shareholder loan with this company

[Wizzard1867]

1 minute ago, mkowl said:

When it comes to football clubs they are much more interested in the payments out to people that's for sure 

As Madaric and Redknap will tell you, that's going to mainly be a problem for the recipient of the money though. Lets hope their aren't any bank account holding pets

 

[gurujuan]

Maybe we appeal, get the deduction reduced to 8pts, thus rendering any court battle between the EFL, and Charlton, meaningless A win win for both, us and the EFL

[Miffed]

8 minutes ago, mkowl said:

 

I think the money to pay for the stadium will just be another method of paying money in to fund the day to day losses as opposed to increasing his shareholder loan with this company

Even so, he could be using the stadium money to do a reset on the accounts and then go for it again.

 

Only next time we don’t have a stadium to sell  

[Triple O]

3 hours ago, mkowl said:

Certainly my issue with this. 

 

I am used to dealing with HMRC and the first rule is that the accounts as prepared under UK GAAP is the starting point. Enshrined in tax law

 

There are then adjustments which we all understand to do but HMRC will struggle to override the start line.

 

The panel seems to have done this and for now does not sit comfortably

Could you expand on this a little MK to help a thickie like me understand it more?

[Guest mkowl]

20 minutes ago, Triple O said:

Could you expand on this a little MK to help a thickie like me understand it more?

 

Its really boring but the basic position is that when a company prepares its accounts it should do in accordance with the Companies Act and part of that is it should follow the set accounting standards. This is referred to as UK Generally Accepted Accounting Policies or UK GAAP.

 

There are slightly different versions of this depending on the size of the company but for SWFC the relevant standard is FRS102. 

 

Its a laugh a minute I promise. However it sets out some fundamental principles and then how to deal with each section of the accounts. 

 

So as an accountant I need to follow this as does a company's directors. 

 

Where a statutory audit is undertaken then the auditor is basically confirming that the accounts show a true and fair view, in other words the accounts have been prepared in accordance with accounting standards. 

 

The question of the right date for a transaction is more within the basic principles part. 

 

However if you have recorded a sale because it fits within those principles, one of which is if there is an unconditional sales contract, then it is a sale. 

 

So the EFL rules state that the accounts should be prepared using UK GAAP. That is the starting point for the FFP calculations. 

 

We know there are adjustments for certain things but for the EFL to adjust for a number that is there because accounting standards say it could or should be there is a pretty major step 

 

 

 

 

[Triple O]

7 minutes ago, mkowl said:

 

Its really boring but the basic position is that when a company prepares its accounts it should do in accordance with the Companies Act and part of that is it should follow the set accounting standards. This is referred to as UK Generally Accepted Accounting Policies or UK GAAP.

 

There are slightly different versions of this depending on the size of the company but for SWFC the relevant standard is FRS102. 

 

Its a laugh a minute I promise. However it sets out some fundamental principles and then how to deal with each section of the accounts. 

 

So as an accountant I need to follow this as does a company's directors. 

 

Where a statutory audit is undertaken then the auditor is basically confirming that the accounts show a true and fair view, in other words the accounts have been prepared in accordance with accounting standards. 

 

The question of the right date for a transaction is more within the basic principles part. 

 

However if you have recorded a sale because it fits within those principles, one of which is if there is an unconditional sales contract, then it is a sale. 

 

So the EFL rules state that the accounts should be prepared using UK GAAP. That is the starting point for the FFP calculations. 

 

We know there are adjustments for certain things but for the EFL to adjust for a number that is there because accounting standards say it could or should be there is a pretty major step 

 

 

 

 

Wow very comprehensive. Really appreciated your knowledge and time MK. Thanks

[frastheowl]

1 hour ago, gurujuan said:

Maybe we appeal, get the deduction reduced to 8pts, thus rendering any court battle between the EFL, and Charlton, meaningless A win win for both, us and the EFL

 

My understanding was, that there was a defined matrix in terms of Points Deduction and Exceeded Allowable Losses.

 

And our loss, minus the sale of Hillsborough in the 2017-18 Accounts, meant our P&S allowable losses for the previous three seasons exceeded the upper limit of £15m, and therefore have been deducted that number. 

 

Unless the club can someone convince them that the exceeded losses for that period is lower (it'd have to be between £10m-£12m, to be deducted 8 points), then I'm not sure what other option the panel has got. 

 

It seems simple enough...either the stadium sale was allowed in that accounting period and we avoid any points deduction, OR it isn't, and we get 12 points deducted (plus possible additional deductions for aggravation).

 

Not sure how appealing will reduce the penalty...it seems like it's an all-or-nothing scenario to me.

[Wizzard1867]

17 hours ago, mkowl said:

 

Its really boring but the basic position is that when a company prepares its accounts it should do in accordance with the Companies Act and part of that is it should follow the set accounting standards. This is referred to as UK Generally Accepted Accounting Policies or UK GAAP.

 

There are slightly different versions of this depending on the size of the company but for SWFC the relevant standard is FRS102. 

 

Its a laugh a minute I promise. However it sets out some fundamental principles and then how to deal with each section of the accounts. 

 

So as an accountant I need to follow this as does a company's directors. 

 

Where a statutory audit is undertaken then the auditor is basically confirming that the accounts show a true and fair view, in other words the accounts have been prepared in accordance with accounting standards. 

 

The question of the right date for a transaction is more within the basic principles part. 

 

However if you have recorded a sale because it fits within those principles, one of which is if there is an unconditional sales contract, then it is a sale. 

 

So the EFL rules state that the accounts should be prepared using UK GAAP. That is the starting point for the FFP calculations. 

 

We know there are adjustments for certain things but for the EFL to adjust for a number that is there because accounting standards say it could or should be there is a pretty major step 

 

 

 

 

This is why we were always going to lose the EFL FFP case. Yes the sale price of Hillsborough at £60m could still be questioned as an arms length transaction, but recording gains and losses in the period in which they are incurred is accounting basics.

 

Interesting what Senior Auditor, John Warner of BHP, thinks of it!! I think he was happy to sign it off, as he knew the only person Mr Chansiri was kidding was himself, and he clearly states his audit is for Mr Chansiris benefit only. 

[Brommers]

21 hours ago, Brad_owl said:

As above, the stadium sale now being moved into the following years accounts now might move us forward faster financially. If we can stay up next year then we could have a good financial platform for a good push. 

 

So by a complete turn of fate this could work to our advantage IF we can stay up. 

 

The disadvantage is it does nothing to help player recruitment.

 

Although we could afford to pay them poo loads of money. What could possibly go wrong. 

[OhForAnotherShez]

I wonder if MK would be interested in providing an easy method of cost calculation for multiple half time refreshments thus reducing queue lengths.

 

Seriously, thanks MK for your A/c explanations!

[Guest mkowl]

14 minutes ago, Ozymandias Owl said:

This is why we were always going to lose the EFL FFP case. Yes the sale price of Hillsborough at £60m could still be questioned as an arms length transaction, but recording gains and losses in the period in which they are incurred is accounting basics.

 

Interesting what Senior Auditor, John Warner of BHP, thinks of it!! I think he was happy to sign it off, as he knew the only person Mr Chansiri was kidding was himself, and he clearly states his audit is for Mr Chansiris benefit only. 

 

Well tbf they used the standard wording advised by the regulator for the audit report. That is the situation an audit is for the members and the caveat about it only being for shareholders is simply to stop being sued by everyone and all. However as an auditor you don't hide behind that 

 

Having been an auditor - I got out that game thankfully 18 months ago - then you would not blindly sign off an incredibly material transaction without evidence just to please the client.

 

I was only reading on Friday that BDO and the individual RI were fined about 200k plus costs and reprimanded for failure to critically appraise the independence of an actuary report. 

 

 

 

 

[Guest mkowl]

Just now, OhForAnotherShez said:

I wonder if MK would be interested in providing an easy method of cost calculation for multiple half time refreshments thus reducing queue lengths.

 

Seriously, thanks MK for your A/c explanations!

 

I am good but not that good 

[Guest Grandad]

19 hours ago, mkowl said:

 

I think the money to pay for the stadium will just be another method of paying money in to fund the day to day losses as opposed to increasing his shareholder loan with this company

Isn't that what I suggested a couple of weeks ago that you disagreed with?

[Sheff74]

22 hours ago, McRightSide said:

What I’m mainly interested in is how the ground sale shows up now.

 

I assume that what’s essentially happened is that the transaction date has been rejected, therefore it’s been removed from consideration for that year and the relevant penalty applied.

 

If so, then surely it will appear again in the latest version and therefore plays a bigger role in future years - incl the year of the Bruce compo, Joao sale and high earner clear out.

 

That must surely be in the clubs mind when it comes to the appeal. Given that we avoided relegation with the punishment I can only now imagine that the appeal would be to reduce the -12 rather than to actually overhaul to total verdict. 
 

As painful as a -12 start would be it actually could put us in a more favourable financial position (in P&S terms) than the original attempted sale date of the stadium.

 

So...I can imagine an appeal isn’t a given. Either way I would run it right up to the 14th day to bring it as close as possible to the new season to reduce chance of a re-do of the timing of the punishment 

 

If the possibility of a -12 this season could come from appeal then I would accept the verdict and the favourable financial position this affords us and crack on with signing some decent players

 

I have posted in a separate thread about this mate, as I am not sure it is quite as simple as that. I have no expertise in this area however, so will happily be put in my place if wrong.....

 

But essentially, the Independent Commission's role was to assess whether the sale could be considered for P&S purposes in 17/18, and obviously they said no. So logic would assume that the sale is now considered as part of our 18/19 accounts, when the sale actually took place, however..... who then goes back and amends the 17/18 accounts to remove the sale? Remember that these accounts have already been signed off by auditors and were submitted to HMRC last year.

 

Is it even possible to retrospectively amend accounts like this? For accounting purposes the sale is gone, can it now be taken out of those earlier accounts and resubmitted without HMRC and others questioning this? The Commission have authority over P&S rules only, and have nothing to do with HMRC & Companies House and correcting earlier issues.

 

The worst possible scenario is that the stadium has been sold, and we don't benefit from it in any way. It can't be re-sold either, so effectively the whole enterprise would have been a very costly waste of time.

 

As I say, I could be very wrong, and indeed hope I am......?

 

 

[Wizzard1867]

49 minutes ago, mkowl said:

 

Well tbf they used the standard wording advised by the regulator for the audit report. That is the situation an audit is for the members and the caveat about it only being for shareholders is simply to stop being sued by everyone and all. However as an auditor you don't hide behind that 

 

Having been an auditor - I got out that game thankfully 18 months ago - then you would not blindly sign off an incredibly material transaction without evidence just to please the client.

 

I was only reading on Friday that BDO and the individual RI were fined about 200k plus costs and reprimanded for failure to critically appraise the independence of an actuary report. 

 

 

 

 

I got out of Accountancy many year ago, not before it had bored me to tears.... 

 

Yet more cost for DC, as I assume DC agreed to pay his fine when it arrives....

 

I'm sure the Auditor must have "written" to DC about the recording of the Stadium sale in the July 2018 accounts to cover his back? 

 

Would this stand up as a defence for the Auditor? 

[Wizzard1867]

26 minutes ago, Sheff74 said:

 

I have posted in a separate thread about this mate, as I am not sure it is quite as simple as that. I have no expertise in this area however, so will happily be put in my place if wrong.....

 

But essentially, the Independent Commission's role was to assess whether the sale could be considered for P&S purposes in 17/18, and obviously they said no. So logic would assume that the sale is now considered as part of our 18/19 accounts, when the sale actually took place, however..... who then goes back and amends the 17/18 accounts to remove the sale? Remember that these accounts have already been signed off by auditors and were submitted to HMRC last year.

 

Is it even possible to retrospectively amend accounts like this? For accounting purposes the sale is gone, can it now be taken out of those earlier accounts and resubmitted without HMRC and others questioning this? The Commission have authority over P&S rules only, and have nothing to do with HMRC & Companies House and correcting earlier issues.

 

The worst possible scenario is that the stadium has been sold, and we don't benefit from it in any way. It can't be re-sold either, so effectively the whole enterprise would have been a very costly waste of time.

 

As I say, I could be very wrong, and indeed hope I am......?

 

 

The simple assumption I make is it will be carried forward by the EFL in their figures, once SWFC Ltd have submitted  the imminent July 2019 accounts to Companies house. 

 

It would not surprise me if there is then a further legal wrangle with the EFL next season about the valuation of Hillsborough at £60m, as it's not a true and fair arms length value. 

 

As you can imagine, it's important to keep Nick de Marcos in sea food pasta.

 

[Guest mkowl]

3 hours ago, Grandad said:

Isn't that what I suggested a couple of weeks ago that you disagreed with?

Nope I have always said that

[Guest Grandad]

1 minute ago, mkowl said:

Nope I have always said that

 

So you now agree that the money/some of the money hes put into the club could be shown to be payment for the stadium - hence he could demonstrate he doesnt owe anything on the stadium if potential administrators went after him?

[Big Jack]

21 hours ago, frastheowl said:

 

My understanding was, that there was a defined matrix in terms of Points Deduction and Exceeded Allowable Losses.

 

And our loss, minus the sale of Hillsborough in the 2017-18 Accounts, meant our P&S allowable losses for the previous three seasons exceeded the upper limit of £15m, and therefore have been deducted that number. 

 

Unless the club can someone convince them that the exceeded losses for that period is lower (it'd have to be between £10m-£12m, to be deducted 8 points), then I'm not sure what other option the panel has got. 

 

It seems simple enough...either the stadium sale was allowed in that accounting period and we avoid any points deduction, OR it isn't, and we get 12 points deducted (plus possible additional deductions for aggravation).

 

Not sure how appealing will reduce the penalty...it seems like it's an all-or-nothing scenario to me.

Need to see the transcript first, I have a feeling it is not as clear cut as what you say.

Edited August 2, 2020 by Big Jack