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South County GC Closed
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Just as an FYI guys. The audit report was signed on the 12th of April 2012 and I have the following issues with it;
Although it contained an emphasis of matter paragraph regarding going concern being contingent on continued support of the members the accounts were prepared on the going concern basis. This means that the auditors expressed reasonable assurance that the company would be trading 12 months from the audit report date (12th April). However less than 1 month later it ceases trading
. The auditors would have had to have been presented with detailed forecasts and future cash flow statements as well as future funding requirements to sign off the audit report for this basis of preparation and would have had to stress test these so it could have possibly been professional negligence on their part or extremely misleading from SC management or most likely a mixture of both.
In my professional opinion all the factors point to accounts that should have been prepared on a break up basis (i.e. that the company would cease trading in the next 12 months) which would given anybody who could not interpret the financial statements the red flags necessary to know the financial position.0 -
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Just as an FYI guys. The audit report was signed on the 12th of April 2012 and I have the following issues with it;
Although it contained an emphasis of matter paragraph regarding going concern being contingent on continued support of the members the accounts were prepared on the going concern basis. This means that the auditors expressed reasonable assurance that the company would be trading 12 months from the audit report date (12th April). However less than 1 month later it ceases trading. The auditors would have had to have been presented with detailed forecasts and future cash flow statements as well as future funding requirements to sign off the audit report for this basis of preparation and would have had to stress test these so it could have possibly been professional negligence on their part or extremely misleading from SC management or most likely a mixture of both.
In my professional opinion all the factors point to accounts that should have been prepared on a break up basis (i.e. that the company would cease trading in the next 12 months) which would given anybody who could not interpret the financial statements the red flags necessary to know the financial position.
Who are the auditors?0 -
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A number of members found themselves unable to afford the subs and offered genuine alternatives to the board. All were rejected and a number of then walked. Their friends at the club then refused to renew because of how the board treated individuals who have supported the club from the outset. The board carried on and told us that all was good but as soon as the april subs were paid they appear to have shut up shop without any egm. It not going to be easy to recover from this
A number of those who were unable to pay received a letter, in recent weeks, from the Board threatening them with debt collectors if they did not pay up.0 -
carman2011 wrote: »this makes no sense at all !
what loans were removed from the balance sheet approaching year end, and how would you know this ?
There were directors loans that were not disclosed in the annual accounts as the directors fudged their directors certs and in 2009 there were further controversial transactions which had the effect of misrepresenting the end-of-year accounts of Anglo. Anglo-Irish Bank lent €4bn to Irish Life & Permanent (IL&P) for 1 day by way of inter-bank loan, and a subsidiary of Irish Life placed a deposit of a similar amount with Anglo, which was recorded as a customer deposit thus increasing their cash balances in the year end accounts. Its more complex than this but seeing as my original post made no sense at all to you then you may not have the aptitude to understand the more complex version
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I know this for 2 reasons 1. Its freely available public knowledge 2. My profession.
We should prob get back to South County as the banks, their audit and their collapse are worlds away from the simple cash of south county running out've cash to fund day to day activities.0 -
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My point is that to sign the audit report the auditors would have had to look at the most up to date financial position of the entity which would most likely be the March 2012 management accounts. Furthermore, the future projections to at least April 2013 (12 months) would have had to be stress tested and determined to be reasonable. The auditors could then form an opinion that the club could continue to trade for 12 months from the date of the audit report (12th April) which they did by preparing the accounts on a going concern basis but less than a month later it goes bust. Even though they included an emphasis of matter on continued support of members and banks, the accounts suggest that this was not enough as they club was f'ed.
IMO it was probably a mixture of misleading info from board coupled by professional negligence from the auditors.
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I know the point you're making alright, and you're correct.
However in real life its relatively unusual do much more than cursory testing on projections, usually a caveat is included that gets them off the hook. Given the troubled financial history of SC you could argue they should have been a bit more thorough, but at the same time, what do you do if someone says "we reckon we'll get in 100 new members next year and not lose any current ones, sure look at all the advertising we're doing" ?
Obviously the ultimate indicator is the bank balance and how anyone could suggest they had enough money to keep the lights on is beyond me, given what they had in the bank.
Anyway, I'm not getting into an accounting discussion here, I passed my finals too long ago for that craic
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carman2011 wrote: »this makes no sense at all !
what loans were removed from the balance sheet approaching year end, and how would you know this ?
There were directors loans that were not disclosed in the annual accounts as the directors fudged their directors certs and in 2009 there were further controversial transactions which had the effect of misrepresenting the end-of-year accounts of Anglo. Anglo-Irish Bank lent €4bn to Irish Life & Permanent (IL&P) for 1 day by way of inter-bank loan, and a subsidiary of Irish Life placed a deposit of a similar amount with Anglo, which was recorded as a customer deposit thus increasing their cash balances in the year end accounts. Its more complex than this but seeing as my original post made no sense at all to you then you may not have the aptitude to understand the more complex version.
I know this for 2 reasons 1. Its freely available public knowledge 2. My profession.
We should prob get back to South County as the banks, their audit and their collapse are worlds away from the simple cash of south county running out've cash to fund day to day activities.
Sorry misread 1st post , thought u were talking about the club hiding loans !0 -
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carman2011 wrote: »Sorry misread 1st post , thought u were talking about the club hiding loans !
No worries, there is no indication of any of this going on in south county. Furthermore, it'd be close to impossible to hide as I am doubtful that they would have a high volume of transactions to hide this from the auditors. Apologies for my sarcastic response, i'm easily wound up at times, its my biggest character flaw, at least i'm aware of it though
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I know the point you're making alright, and you're correct.
However in real life its relatively unusual do much more than cursory testing on projections, usually a caveat is included that gets them off the hook. Given the troubled financial history of SC you could argue they should have been a bit more thorough, but at the same time, what do you do if someone says "we reckon we'll get in 100 new members next year and not lose any current ones, sure look at all the advertising we're doing" ?
Obviously the ultimate indicator is the bank balance and how anyone could suggest they had enough money to keep the lights on is beyond me, given what they had in the bank.
Anyway, I'm not getting into an accounting discussion here, I passed my finals too long ago for that craic
Ya fair enough, whatever about projections being misleading which is ture, but the current financial situation would have had to be analysed on 12 April which means the March 2012 management accounts as part of a sub events review, to last only a month longer after this review suggests either these accounts were fudged or there was professional negligence on behalf of the auditors as the place only lasted a month after this sign off. There's no way any auditor should accept a company director saying that we'll get 100 new members in the next month to get us through May as part of the projections.
I agree that the company had absolutely no cash or liquid assets to cover any costs. The fact that the subs (although as suggested not all were paid) in january only kept the place afloat till May speaks volumes about how poor a financial situation they were in.0 -
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