ECF Accounting

[Roger de Coverly]

OK, so the spreadsheet shows £300 of income for a future accounting period that yet to start?

The key word is Budget. In the context of sales or income, a model or guess at what might be earned in the future. So you add up all the income you might receive in order to show that you can pay for all the expenditure you might make.

[Alex McFarlane]

Steve Giddins has spotted the ECF problem.

http://stevegiddinschessblog.blogspot.c ... ve-em.html

I'm not sure many will recognise Andrew Farthing from the picture.

[Carl Hibbard]

Steve Giddins has spotted the ECF problem.

http://stevegiddinschessblog.blogspot.c ... ve-em.html

For once a spot on post from little Stevie

[Ernie Lazenby]

There cannot be any other organisation in the Country that would allow such a large invoice, lacking in any detail, to be submitted and paid without authorisation. Beggars belief really.

Setting aside any personalities this issue has serious ramifications and must not be allowed to be swept under the carpet. Its no use Andrew farething simply saying we must have proceedures to prevent this happening again( welcome as they would be) there must be some accountability for what has happened. There must be a detailed explanation and no less than a full detailed account of the sum claimed. If council dont want to do anything about this then shame on those elected members who are supposed to represent the rank and file members.

The report makes grim and serious reading and in my view CJ De-Mooi must be asked to reconsider his position and failure to do so should result in his removal. It beggars belief that other board members were not aware of the situation and its likely that some had been for some time. The failure to do anything before now demonstrates what a shambolic, thoroughly inept, totally inadequate and out of time the ECF really is and no amount of spin can make it anything else.

Grassroots chess can continue without it, the grading issue which concerns us all could be placed in private hands. Yorkshire have their own system why not the rest than we can all say no thanks to the ECF.

I wonder what the CJ apologists have to say now.

BTW If the ECF is to incurr penalties re VAT etc then CJ De-Mooi ought to put his hand in his pocket and pay it.

[Ernie Lazenby]

BTW Seems to me those who set up the John Robinson trust actually did the right thing - at least its protected and one cannot envisage any circumstance where several K would get paid out without proper authorisation.

[John McKenna]

Sorry to say but the JR Trust did not escape unscathed - a sizeable sum was lost, it seems, when an investment was sold at a loss.
The ECF announcements today prepare the way for it to reinvent itself over the coming months.

[Angus French]

The ECF President submitted an invoice for £12,600 in respect of sponsorship expenses paid directly by him. No documentation was provided with this invoice to support this invoice, nor was the invoice reviewed and countersigned by another ECF director. Nonetheless the invoice was paid without question.

This begs a question which I don't think I've seen asked: who paid the invoice and why?

[Roger de Coverly]

This begs a question which I don't think I've seen asked: who paid the invoice and why?

According to Steve G at http://stevegiddinschessblog.wordpress.com/page/3/

I have obtained details of an invoice dated 7 April 2011, from CJ de Mooi, addressed to the ECF office at Battle. The rubric reads blandly “British Championship Sponsorship Fund” and the invoice is in the sum of £12,600. I would emphasise that this is an invoice from CJ, to the Egregious Federation. A covering note describes the amount concerned as being the whole of the Darwin sponsorship money £15,600 (being £13,000 plus VAT), less £3,000, which CJ says “the ECF is due… from me for the British Champs”. The covering note and invoice both ask for “immediate payment”, which, as far as I am aware, was made.

So payment was made by the office, but it's believed under direction from a Director, as the managers of the 2011 British weren't happy.

[Alex McFarlane]

One of the office staff transferred the money.

The invoice asked for "immediate" payment. The accompanying email asked for payment "as soon as possible".

I would not blame the office staff. Unless they had been told not to pay such invoices without confirmation from the CEO then it is not unreasonable to expect a command from the President to be met. I do not believe another Director approved the invoice simply because I don't believe any other Director was asked to.

The office staff are only pawns in this. I would hate to think that any of their jobs would be in danger because of the demands of the President.

The Finance Director and the CEO were made aware of this situation many months ago. They seem to have chosen to do nothing. If any 'jobs' are to be lost it should be at a higher level than the office staff.

I accept that the question as to why it was paid is legitimate but please don't let the blame be passed off on a poor unfortunate who hasn't been given proper training. A more appropriate question is "Why was nothing done about it subsequently?"

Why has the Board allowed De Mooi to do what he likes? The one official who asked him to be accountable for his actions was sacked (me in case there was any doubt).

When some Board info was passed on to Keene, I was informed by Mr Farthing that it wasn't De Mooi but could have been the lawyers of any member of the Board. I wonder if David Anderton shares Mr Farthings opinion of the legal profession.

[Richard Bates]

Speculation based on lack of knowledge is obviously unwise, but hey, what else is the forum for?

In the bits of the discussions that i have read i don't understand why there hasn't been more attempt to "break down" this 'invoice' that was issued? Rather than just focussing on the dubious process that led to its issue. Assuming this was the only financial dealings that the President had with the ECF over the British Championship it seems on the face of it that the ECF is owed money, morally, if not legally.

First of all the invoice as reported seems to be a nonsense, whether by cock-up or conspiracy. We are consistently told that the amount of sponsorship money provided by Darwin was £13,000 to go towards player conditions, so there seems to be no grounds for any invoice being issued quoting a figure of £15,600 (the cock-up version being that the President wasn't aware that VAT is payable on sponsorship and thought that he had the higher figure to distribute).

Secondly, if memory serves, the President made, at Canterbury, three pledges, which he promised to underwrite in the absence of sponsorship namely 1) a £10k first prize 2) conditions for the top four players 3) halving of junior entry fees.

Now subsequently the £10k first prize got revised down to £8k - which, speculating, may link to the £3,000 mentioned on the invoice (the "normal" level for the first prize based on Canterbury and North Shields being £5,000). What happened with Junior entry fees, i don't know.

So the question is - is the British Championship/ECF owed £2,600 for VAT on sponsorship which it has inadvertently paid over to the President and 2) is money owed for the underwriting of the other pledges? Why don't they raise an invoice?

[Alex McFarlane]

The £10,000 prize was revised down because the information given is that if a player receives that amount then Income Tax has to be deducted from source. Therefore a £10000 winner would be awarded £8000.

When the entry form was being produced (and remember there was no sponsor at the time) David and I decided that to avoid this tax threashold we would keep the first prize to £9500 (£8k + £1500 English Prize). If Mr De Mooi was privately going to offer conditions then that would not affect the tax situation for the ECF (obviously the players should declare this).

Complications arose when Keene/De Mooi 'found' Darwin Strategic or to be more exact when that money went through the ECF accounts. It is my belief that when that became the case then the ECF was responsible for the collection of tax on sums over £10000 (prizes + conditions). There are allowances which can be made but these are effectively equal to the hotel bill.

If De Mooi had paid out the £16000 that he originally claimed then it was possible that he had privately offered conditions to the top players and so the ECF escaped HMRC regulations. However if the only sponsorship was the Darwin money, then it is possible (I genuinely don't know what conditions were offered) that the players who finished first and second should also have had income tax deducted from their totals. If the only additional money was from the Short simul tour then it becomes likely that the ECF should have collected Income Tax.

This is one of the reasons I am trying to get access to the complete accounts for the 2011 British. There are the figures Roger produced yesterday, there are the figures John Philpott sent me last night and there are the figures that David Welch submitted. There are significant differences in all of these figures. Both David and I are asking for an explanation of this.

It is possible that the ECF are not liable to Income Tax if De Mooi paid conditions to Messrs Short and Adams directly. Hopefully De Mooi has expalained his financial involvement to the Finance Director. Has has already been said, the April meeting will be interesting.

[Roger de Coverly]

Secondly, if memory serves, the President made, at Canterbury, three pledges, which he promised to underwrite in the absence of sponsorship namely 1) a £10k first prize 2) conditions for the top four players 3) halving of junior entry fees.

I believe Junior entry fees were underwritten, in effect, by the surplus carried forward from Canterbury. This was documented at around this time last year.

I didn't recall the restriction of the conditions to the top four players, but it makes sense, given what "lesser" players have reported. In practice, conditions of some description went to more than than top four presumably.

There are the figures Roger produced yesterday, there are the figures John Philpott sent me last night and there are the figures that David Welch submitted. There are significant differences in all of these figures. Both David and I are asking for an explanation of this.

For clarity, I just took the figures from the material on the ECF website.
http://www.englishchess.org.uk/wp-conte ... budget.xls

According to the Properties tag, it was last saved by John Philpott presumably as part of loading to the website, but the original author appears to be, as one would expect, the Finance Director.

[John Philpott]

Roger De Coverly wrote

According to the Properties tag, it was last saved by John Philpott presumably as part of loading to the website, but the original author appears to be, as one would expect, the Finance Director.

Correct. It is showing up as last saved by me as I corrected the C16.11 reference on the front cover.

[Roger de Coverly]

We are consistently told that the amount of sponsorship money provided by Darwin was £13,000 to go towards player conditions, so there seems to be no grounds for any invoice being issued quoting a figure of £15,600 (the cock-up version being that the President wasn't aware that VAT is payable on sponsorship and thought that he had the higher figure to distribute).

VAT can go round in circles. Presumably from Darwin's viewpoint, if they bill a client for £ 13,000, they have to add £ 2,600 on top. So whether that goes to HMRC or the ECF doesn't matter to them as long as they have the audit trail to justify the £ 2,600 offset. From the ECF's viewpoint, they have £ 2,600 VAT to pay, but if they spend the entire sum of £ 15,600 on hotel bills, they can treat it as £ 13,000 hotel plus £ 2,600 VAT charged by the hotel.

The ECF is treated as one entity for VAT, so it's a matter of internal reporting as to how you pass VAT round the operation. It's usually been the practice to treat the Congress as a stand alone entity, so there's sense in ring fencing and separately reporting the VAT effect of the various payments.

You could set up an independent "British Championship conditions fund". It wouldn't be VAT registered, so whilst it wouldn't be liable for VAT on payments received, it wouldn't be able to reclaim the VAT on hotel bills. The most effective approach for VAT looks to be for private individuals to pay prize money directly, outside the ECF. For corporate expenses, paying expenses rather than prizes seems to work better.

[Sean Hewitt]

I have obtained details of an invoice dated 7 April 2011, from CJ de Mooi, addressed to the ECF office at Battle. The rubric reads blandly “British Championship Sponsorship Fund” and the invoice is in the sum of £12,600. I would emphasise that this is an invoice from CJ, to the Egregious Federation. A covering note describes the amount concerned as being the whole of the Darwin sponsorship money £15,600 (being £13,000 plus VAT), less £3,000, which CJ says “the ECF is due… from me for the British Champs”. The covering note and invoice both ask for “immediate payment”, which, as far as I am aware, was made.

There is potentially an issue here.
Darwin give the ECF £13,000 plus VAT for the British Champs. The VAT must be ignored because it is simply passed to HMRC.
CJ allegedly says that the ECF is due £3,000 from him for the British Champs. We don't know if this is true or how this debt cam to be.
CJ has arraneged to distribute the sponsorship money.
CJ wants to offset the amount due to the ECF against the sponsorship money and invoices the ECF for £12,600 WITH NO VAT.

Therefore, the ECF have received a net £400 (£13,000 - £12,600) of the £3,000 CJ allegedly owes them.

Doesn't that mean that CJ still owes the ECF £2,600 unless there are other transactions in place?