Restated accounts for 2010/11

[Matthew Turner]

It look like somebody has given a donation for the 'English Championship', so presumably the top placed English player at the British get £2,000. This appears as a creditor because the money is not part of general ECF funds but is set aside for a specific purpose.

[Mick Norris]

I think we all have questions, but the MCF and Bury Rapidplay have voted in favour, having had a Chartered Accountant look at the Accounts

Given the short deadline, I would like to think we would all want to ensure that every Council voter casts their vote, although it is up to them which way they do so

[David Shepherd]

It look like somebody has given a donation for the 'English Championship', so presumably the top placed English player at the British get £2,000. This appears as a creditor because the money is not part of general ECF funds but is set aside for a specific purpose.

I gues that is one theory but the figure seems to have been 2009 £18K 2009 25K 2010 £22K (in draft accounts was £24,947), 2011 £20K. If Mathew's guess at what it is correct then I am not sure that showing it as creditor due within the next 12 months is correct (although without knowing all the facts it is hard to draw a conclusion). However one has to rely to some extent on the external auditors as they are professionals. They may know there are errors or things that could be improved but their task is to say whether overall the accounts present a true and fair picture and comply with the Companies Act etc (which they would be in a much better positin to do than a casual observer).

[John McKenna]

According to the entry form for the 2012 British Championships there is a £1500 prize for the 'English Champion' and a £500 one for the 'Woman Champion'.
Perhaps that means the £20,000 in the accounts will be given out over 10 years if the prize levels remain unchanged.

[Alex Holowczak]

Perhaps that means the £20,000 in the accounts will be given out over 10 years if the prize levels remain unchanged.

Or perhaps it's the total budget of the British Championship (£25,000) net of VAT.

[Richard Bates]

Perhaps that means the £20,000 in the accounts will be given out over 10 years if the prize levels remain unchanged.

Or perhaps it's the total budget of the British Championship (£25,000) net of VAT.

Better leave the accountancy to the accountants, I think...

[John McKenna]

Normally I'd agree with Richard but last week the BoE director for financial stability said of banks that accounting & reporting rules for assets & liabilities can lead to confusion. He argued it may be better to value assets at 'fire sale' than 'fair value' prices.
ECF isn't a bank but £48,000 of assets are debts owed it. (Prepayments are about half but other half's historical.)
This raises a liquidity question - ECF's ratio (assets/liabilities) is 1.23, usual is 2, which suggests looking at cashflow now.

[Richard Bates]

Normally I'd agree with Richard but last week the BoE director for financial stability said of banks that accounting & reporting rules for assets & liabilities can lead to confusion. He argued it may be better to value assets at 'fire sale' than 'fair value' prices.
ECF isn't a bank but £48,000 of assets are debts owed it. (Prepayments are about half but other half's historical.)
This raises a liquidity question - ECF's ratio (assets/liabilities) is 1.23, usual is 2, which suggests looking at cashflow now.

Well i don't think the classification of certain items as short term creditors makes much sense. The English championship prize doesn't look like a short-term creditor, and i'm surprised that the 40,000 loan from the PIF is as well. Maybe it's going to be paid back and replaced with another one...

However my comment was directed specifically at the suggestion that one of the ECF's creditors is their budgeted expenditure for the forthcoming year.

[Roger de Coverly]

The English championship prize doesn't look like a short-term creditor

I think the story on the English Championship was that the ECF was donated or bequeathed a lump sum to enable the award to be established. Rather than set up an investment fund to ring fence it, the money was aggregated with the rest of the ECF's assets. I believe one of the ideas was that the ECF would, if it could afford, build up the amounts set aside so the prize could become self-sustaining.

There's something similar, a creditor, in the accounts of the otherwise dormant "Chess Centre Limited". This contains funds originally left to it by Golombek with the intention of financing a national chess library.

Accountants have rules about such things which presumably the ECF is following. As it's a permanent feature, an explanatory note might be helpful for those on Council who spot the creditor and are unclear as to what it represents.

The budgeted expenditure for a future British Championship Congress would only be present in the event that sponsors or entrants had paid amounts for the 2011 Congress before the 30th April 2011. Otherwise both the expenditure and income for the 2011 Congress would be regarded as being in the future and not reported as part of April 2011 year end.

[Alex Holowczak]

This raises a liquidity question - ECF's ratio (assets/liabilities) is 1.23, usual is 2, which suggests looking at cashflow now.

The Finance Director has done a cashflow analysis for the Board already. All seemed OK.

[John McKenna]

Thank you Alex H for the reassurance about cashflow. From the a/cs one can see that in general most figures are going in the right direction regarding that.
D Shephard asked (20th Jan. 15:28) about the Corp. Tax figure (£1,179), while it is a fairly small amount in overall terms it is about 48% of (£2,428?) profits.
From the Sunday papers it would seem that Tony Blair's company Windrush Ventures (cryptic for after-dinner-speaking-burp) paid 28% (£315k on a bit over £1m profit)!?

[David Shepherd]

The explanation for the cororation tax % being high will be in the adjusments to the accounting profit to reach the taxable profit, its just its inclusion as a management expense I found a bit strange, with no mention of corporation tax (unless I missed it) in the statutory accounts (the pages at the end not counting in this respect).

[John McKenna]

Ah, David, the mysteries of accounting - behind the arithmetic lies an arcane world of magic. Tony Blair's accountants managed to spirit away £8m (out of £12m income) as non-taxable expenses.
Thanks Roger for explaining about prizes & legacies - perhaps the a/cs need a few more notes.
Richard, your mentioning budgets, again, raised the question of the £6k (approx.) shortfall in budgeted Congress Game Fee income.
It's a question of budgetary control - periodic checks for variance should be made during year.

[Matthew Turner]

Sorry to be dumb, but why would the ECF pay any corporation tax? Surely this year's profit could be offset against last year's losses?

[John McKenna]

All amateurs are dummies when it comes to professional accounting. I suspect the answer to Matthews sensible question is that ECF's previous year losses were less than half the next profits and that 'adjustaments' also had to be made.