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Totally agree with all of that Rammy and I can see where you are coming from an accountant's perspective. As consulting business strategist I had worked on the assumption that Anderson has not been able to borrow without there being charges on assets in return for at least the last two years, and that the balance sheet, whilst not being a perfect measure of a business's value,as you point out can and should be a pretty damned accurate summary, though I agree that technically there can be exceptions to that objective, especially if there's some "creativity" going on.rammywhite wrote:wanderlust wrote:The balance sheet doesn't really lie if it's been signed off by the auditors does it? After all it is a snapshot of the club's value on a particular day, a specific moment in time but with caveats.rammywhite wrote:wanderlust wrote:"with one source claiming more than £10m of unexpected creditors have been unearthed"
Sadly my "completely unfounded suggestions that "Mr Anderson" may be pawning the club's assets" may have some truth about them, but we'll see.
One thing is for sure: the day that we finally get to the truth about Anderson's tenure is fast approaching and that will be the day that the accounts are finally published.
Lusty,
Don't put too much faith in the Accounts, not because they will be manipulated but because they are a statutory reporting statement which must obey the disclosure requirements laid down in law.
Whether a liability is certain, probable or remote is a matter of judgement. For example Dale's claim for damages might not pass the test for disclosure if the auditors feel that it is remote. Additionally any liabilities created since the year end won't be there simply because they happened after the year end. Thus the latest creditors such as police, ambulance, caterers ,etc., if the liability did not exist at the balance sheet date, then no mention of them will appear in the Accounts.
So don't expect that all will become clear- because it won't.
As I mentioned earlier- look for an audit qualification and that will be a more serious litmus test of the ability of the club to survive.
Sure the business could go out and borrow a load of money the next day, but that creates both income in the form of the money borrowed and expenditure in the form of a debt to the same value.
I think what you are talking about is the (well used) scenario of having received a service but the bill for it has not yet come in and therefore doesn't appear in the accounts, but should be mentioned as an unrecorded liability for audit purposes (accruals and deferrals)
What I'll be looking for is the impact of the whole of Anderson's tenure - a period long enough for the birds to come home to roost and the bottom line for me is that he took over a business with a balance of over £42 million and according to his own figures this had shrunk to £38 million in his first year, since when nothing has been filed.
What we also know is that any potential buyer will want to know about any unrecorded liabilities - which is probably where this alleged £10 million figure came from - and the reason why the buyer walked. We also know that if in the event of a miracle happening and somebody buys us, there's a strong chance they'll file asap to publicly baseline the acquisition and that will include all liabilities, so one way or another we'll get a pretty good idea of how much value Anderson has squandered.
We can then compare that to the estimated cost of administration in 2016 and will finally be able to answer the question "did Anderson "save" the club or did he just f*** us over" with some degree of clarity.
I don't want to go into a technical discussion about all of this but essentially it's about in-year events and after balance sheet date events and that is quite technical, going well beyond any discussion of accruals. Even if a pre- balance sheet service has been rendered without an invoice being received that would be part of a purchases provision and included in the Accounts
The balance sheet doesn't lie because what's in it is what corporate law says what should be in it although many of the values are challengeable particularly for non current assets. Its what's NOT in it that is important and that's why its an incomplete residual statement.
If a business went out and borrowed a load of money it would certainly form an income but not necessarily an expenditure as it might simply not spend the money.
All of this stuff reflects the fact that I've been an FCA for over 40 years and prepared and signed off hundreds of audit reports and so technically I have a vey deep knowledge of all of this.
It probably bores the backside off most people on here so lets draw a line under the discussion and then see what the Accounts actually say.
As you say we'll see what the accounts say and I think we are in agreement that a new owner's filing is likely to be more comprehensive and telling which is the point I was making.
