ECF Accounts to 30 April 2012

[Roger de Coverly]

I have the idea, perhaps incorrectly, that there's a filing deadline of 31st January 2013. Deadline might be the wrong word, but I believe there are financial penalties for non-submission. Little has been heard on the accounts since the October AGM, one report suggesting an issue or dispute involving the reporting of Congress Game Fee by financial year.

It's the voting membership of the ECF, aka Council, who will have to approve the Accounts. Seeing them would be an advantage.

[John Philpott]

Roger de Coverly wrote

I have the idea, perhaps incorrectly, that there's a filing deadline of 31st January 2013. Deadline might be the wrong word, but I believe there are financial penalties for non-submission. Little has been heard on the accounts since the October AGM, one report suggesting an issue or dispute involving the reporting of Congress Game Fee by financial year.

It's the voting membership of the ECF, aka Council, who will have to approve the Accounts. Seeing them would be an advantage.

There is indeed a 31 January Companies House filing deadline as a result of section 442 of the Companies Act 2006. Failure to meet the deadline triggers an initial automatic civil penalty of £150 which increases if the delay continues. Failure to file is also a criminal offence which could lead to individual directors being prosecuted and fined.

I have devoted a considerable amount of time as financial controller to reviewing the underlying accounting records of the ECF to ensure that the contents of the various ledger accounts are properly understood and that the balance sheet as at 30 April 2012 reflects as realistic as possible a position. This includes full accrual for Game Fee received after the year end, which derives as much from leagues and clubs as from congresses. The accounts were approved by the Board at its meeting on 12 January and have now been signed off by the auditors, who are submitting the abridged version (minus the management accounting information) to Companies House on the ECF's behalf. The full version of the accounts will be circulated to members of Council this week and published on the website. If time permits I will provide an accompanying commentary.

The accounts will be an agenda item for the April 2013 Finance Council meeting where there will be an opportunity for a full discussion. In the meantime, questions on the accounts and commentary will be welcomed.

[Roger de Coverly]

The accounts were approved by the Board at its meeting on 12 January and have now been signed off by the auditors, who are submitting the abridged version (minus the management accounting information) to Companies House on the ECF's behalf. The full version of the accounts will be circulated to members of Council this week and published on the website. If time permits I will provide an accompanying commentary.

The accounts will be an agenda item for the April 2013 Finance Council meeting where there will be an opportunity for a full discussion. In the meantime, questions on the accounts and commentary will be welcomed.

That would seem to be a change of interpretation. In previous years, the impression had been given that the formal approval of the voting membership was a pre-condition of filing.

[John Philpott]

Roger de Coverly wrote

That would seem to be a change of interpretation. In previous years, the impression had been given that the formal approval of the voting membership was a pre-condition of filing.

My current interpretation is that there is definitely no such pre-condition. Article 75 makes no reference to Companies House filing but simply states:

Subject to the provisions of any elective resolution of the Company for the time being in force, the Board shall from time to time in accordance with the provisions of the Act, cause to be prepared and to be laid before the Company in General Meeting such profit and loss accounts, balance sheets, group accounts (if any) and reports as are referred to in those provisions.

As it happens, the legislation has changed since the ECF Articles were made, and the Companies Act 2006 does not require private companies to lay accounts before a general meeting at all (such an obligation is placed on public companies by section 437): instead, section 424(2) requires the accounts to be circulated to voting members by the Companies House filing deadline. This requirement will be satisfied by the circulation that I referred to in my previous post: notwithstanding the absence of a Companies Act requirement, the accounts will be laid before general meeting in April as I indicated.

There was, indeed, a written resolution to approve the 2010/11 accounts. This made some sense as there were at least draft accounts available at the 2011 AGM that could be discussed, so that the written resolution could be seen as a technical device to take a vote on unfinished AGM business. With no accounts or Finance Director's report available at the 2012 AGM, it would be totally inappropriate to ask Council members for a simple yes/no vote.

Matters should be very different in future. With the change in year end to 31 August, the intention is for audited accounts to be available for the April 2014 Finance Council meeting and filed at Companies House immediately thereafter, over a month ahead of the deadline. Notwithstanding the relatively short period between 31 August and the 2013 AGM on 12 October, I will be working to try to ensure that management accounts are available at the AGM to give Council a good indication of the likely financial outcome for 2012/13.

[Angus French]

Some background: The accounts were due to be presented for the AGM on 13 October 2012. The AGM was told that in the lead up to the meeting, some figures were found not be right. The Finance Director “dropped off the face of the earth” and stopped responding to emails. No accounts were presented at the AGM. John Philpott stepped in and I believe made multiple visits to the ECF Office in Hastings – both before and after the AGM. The AGM was told that it would take an estimated two to three weeks to produce new accounts. I have an idea – though I’m not certain – that it was agreed that the accounts would be presented at the EGM to be held in January or February. The report of the Board meetings of November 13 and November 20 states “The 2011/2012 accounts are close to completion. A system of management accounts is being introduced so that all Directors will be better informed about ECF finances in the future”. The same report also states “It was agreed that ECF EGM scheduled for January or February 2013 will now not take place”. The ECF’s Articles of Association require profit and loss accounts, balance sheets etc. to be “laid before” a General Meeting of the company. I believe it has been the practice for Council to approve audited accounts before they are filed with Companies House.

I would have expected to see the accounts sooner and before they were filed. What happens if the accounts are filed and then not approved? If the accounts were close to completion on November 20, what happened in the two months since?

[Roger de Coverly]

What happens if the accounts are filed and then not approved?

I think what John is now saying, is that the Accounts can be filed after approval from the Directors only. So whilst in previous years, the AGM or last year an electronic extension of it, would approve the accounts, this isn't strictly necessary both by Company law and the ECF's own Articles. He is also saying that the Accounts will be circulated in the near future. The April Finance Council can presumably reject them but it would be too late to change them.

[Angus French]

What happens if the accounts are filed and then not approved?

I think what John is now saying, is that the Accounts can be filed after approval from the Directors only. So whilst in previous years, the AGM or last year an electronic extension of it, would approve the accounts, this isn't strictly necessary both by Company law and the ECF's own Articles. He is also saying that the Accounts will be circulated in the near future. The April Finance Council can presumably reject them but it would be too late to change them.

Yeah, I meant approved by Council (rather than approved by the Board): What happens if the accounts are filed and then not approved by Council?
Regardless of Company Law requirements, I'd like the Board to be accountable to Council.

[John Philpott]

This is the final post that I am intending to make on this subject.

Angus French wrote

John Philpott stepped in and I believe made multiple visits to the ECF Office in Hastings – both before and after the AGM.

I have indeed made multiple visits to the ECF Office (actually in Battle) and taken files away to work on between visits. The visits relating to the accounts were all subsequent to the AGM: I was appointed financial controller by the Board on 17 October and only then acquired the official authority to deal with the accounts.

Angus French wrote

The AGM was told that it would take an estimated two to three weeks to produce new accounts.

Any such statement was over optimistic and was made prior to my examination of the underlying accounting records.

Angus French wrote

I have an idea – though I’m not certain – that it was agreed that the accounts would be presented at the EGM to be held in January or February.

Had there been such an EGM, it was indeed the intention to deal with the accounts at the meeting rather than in April.

Angus French wrote

The report of the Board meetings of November 13 and November 20 states “The 2011/2012 accounts are close to completion".

A reasonable statement. I visited the auditors on 26 November to discuss the approach that I was taking to the accounts, and sent them the accounts and supporting papers the following week. I received a number of queries that needed to be responded to. and audit clearance was not obtained until shortly before the January Board meeting.

Angus French wrote

I believe it has been the practice for Council to approve audited accounts before they are filed with Companies House.

The Board has not had a good track record in presenting audited accounts to the AGM in recent years, as the minutes indicate:

2011: Gareth Caller told Council that in view of the work still required before the auditors could be asked to sign off the accounts, he was not seeking Council’s approval at this time. Approval was subsequently sought by written resolution

2010: Gareth Caller explained that the accounts had not been audited. This was entirely his fault due to personal circumstances, which had prevented him from responding to all of the auditor's questions.

2009: The accounts were available, ironically at a time when there was no Finance Director.

2008: The accounts that had been circulated in the AGM mailing were amended by the Board on the morning of the meeting due to the omission of an accrual for Game Fee income.

Angus French wrote:

I would have expected to see the accounts sooner and before they were filed

That may well be your expectation, but you are going to have to settle for a dead heat with the Companies House filing.

Angus French wrote:

What happens if the accounts are filed and then not approved?

We will cross that bridge when we come to it.

[Roger de Coverly]

Regardless of Company Law requirements, I'd like the Board to be accountable to Council.

Last year, the electronic voting membership was to some extent coerced into approving the Accounts. This was notwithstanding unresolved questions as to why the reported Game Fee income had reduced. (It's now known, or believed, that reported Game Fee income was reduced because the then Director chose not to report all of it)

[benedgell]

For anyone interested and not already aware, the accounts were sent out on Jan 31st.

[John Townsend]

Thanks for letting us know. Can we see the accounts online anywhere?

[benedgell]

Couldn't see them on the ECF site, so I've attached them here.

[John Townsend]

Ta!

[Roger de Coverly]

A couple of useful points in the commentary:-

Last year's supposed Game Fee shortfall was really just an accounting adjustment. I don't know why that couldn't be disclosed last year when the accounts were awaiting approval.

If you increase the sale of memberships offering Game Fee exemptions as a benefit, the amount of Game Fee collected reduces.

I don't think there's much new material on the accounts of the 2011 British Championships. As the notes say, the figures exclude payments made directly to players, so how much was contributed by various donation sources is never likely to be completely established. The accounts are stated net of VAT, so Darwin actually paid over £ 15,600 whilst some of the expenses will have been reduced by VAT offsets.

[JustinHorton]

As the notes say, the figures exclude payments made directly to players

Just out of interest, why is that, and whose accounts (if any) do they appear in?