duncanjwitham

And of course it's not really straight pass/fail, it's how much you fail by. Given the stadium sale, it's unlikely we're failing by untold millions of overspending, so any points deductions that might arise *should* be relatively minor.

We still don't know *for sure* the exact reasons we are under an embargo. We know it's at least in part due to the 2019 and 2020 accounts not being submitted yet. We have no idea if it's also related to the EFL charges, and the 3 sets we need to re-submit.  We know for sure that the embargo relating to the charges was dropped when we were cleared originally and I haven't seen any mention of it starting again since the EFL appeal victory or the punishment decision.  It may well be that we can now submit the 2019/2020 sets with the 'correct' amortisation model and have the embargo lifted. We can then sit on the 2016/17/18 sets until the last minute.

Why not? I can't be any worse then anybody else that played up front last year. (Narrator: He was worse in every possible way.)

It honestly feels like the DC, the LAP, the EFL and the Club are all talking across each other, using the same terms to mean different things and quoting different bits of FRS102 at each other out of context.  And I'm really not an expert on any of this, so I'm basically going by a surface reading of the written reasons and regs, so I may well be wrong on everything here too.  So...
It does seems to be taken as fact by everyone that there is no "active market" and hence we have to use the cost model. Even the club agrees with that with their statements to the DC and say they are using the cost model.  And going by my reading of the regs, I agree.
The EFL/LAP/ProfPope etc claimed we were using the cost model but were revaluing players, which is a feature of (and only of) the revaluation model. That's the root of their appeal win.
We claim we were doing no such thing. We claim we were using the cost model, but we were factoring potential sales into the future economic benefits of the asset. So for someone like Jozwiak, his future economic benefits might only be 20% in actually playing for the club, and 80% in what we think we can sell him for in a year or 2.  Obviously if his form dropped or he got injured, that balance would shift and we'd readjust.
The LAP reasons are really weird, they go on for pages and pages quoting FRS102 about things we weren't claiming we were doing, and saying we can't do them (well, so what?). And then there's just a few statements that basically boil down ProfPope's opinion about future economic benefits without any real legal analysis about whether they're correct or not.  What analysis there is doesn't seem to tally with the regs either. The regs say future economic benefits can include that from the disposal of an asset, but the LAP decision is clear that they believe they can only come from the clubs use of an asset.  The regs say you can amend your amortisation model, useful life (or residual value) if your use of an asset or market conditions changes, the LAP decision makes it clear they they believe you can only do that for the revaluation model.  The LAP's understanding of the regs really doesn't seem right to me.
From what I can tell, the entire issue is that they think we were doing something that we weren't (cost model + revaluing players).  They claim in the LAP reasons that ProfPope's lack of experience in practical accountancy and football finances was irrelevant because the issue came down to a matter of fact (the regs so you can't do X and we did X). But to my reading, ProfPrope's lack of experience is exactly what's lead him to this erroneous conclusion about what were doing. He didn't have the experience or knowledge to see if what we were doing is appropriate or not.
Sorry for the long post...

I don't think it would have made any difference at all.  The first step was proving that we were even allowed to do what we were doing - having failed to do that, whether we were doing it well or not is irrelevant.  If we'd found a random accountant to stand up in the DC and say that what we were doing is perfectly normal, then that would have probably been enough.  The "error in law" was ignoring the expert in the room - if we'd had competing experts and the DC had found ours more credible, then there would have been no error. The DC were already convinced what we were doing was okay, so getting an expert witness to agree to it should have been a rubber-stamping exercise.
Beyond that, the DC were satisfied our methods for calculating ERVs were OK (despite the shoddy record-keeping etc), and the LAP found no grounds to overrule that.  So keeping better records would have made no difference.  The screwup the club is responsible for is not getting our own expert witness.  That's what ultimately cost us.
Obviously that doesn't excuse the poor record-keeping, it's quite frankly pathetic and embarrassing for the club to be admitting that in a legal proceeding

I'm the wrong side of 40, but I'm up for it if you want? What's the weekly wage?

Why not? I can't be any worse then anybody else that played up front last year. (Narrator: He was worse in every possible way.)

Why not? I can't be any worse then anybody else that played up front last year. (Narrator: He was worse in every possible way.)

Keg of Watneys and a 6 pack of Mars bars.

We could appeal to reduce the punishment, the EFL could appeal to raise it. Presumably both appeals would be handled in a single hearing.

It honestly feels like the DC, the LAP, the EFL and the Club are all talking across each other, using the same terms to mean different things and quoting different bits of FRS102 at each other out of context.  And I'm really not an expert on any of this, so I'm basically going by a surface reading of the written reasons and regs, so I may well be wrong on everything here too.  So...
It does seems to be taken as fact by everyone that there is no "active market" and hence we have to use the cost model. Even the club agrees with that with their statements to the DC and say they are using the cost model.  And going by my reading of the regs, I agree.
The EFL/LAP/ProfPope etc claimed we were using the cost model but were revaluing players, which is a feature of (and only of) the revaluation model. That's the root of their appeal win.
We claim we were doing no such thing. We claim we were using the cost model, but we were factoring potential sales into the future economic benefits of the asset. So for someone like Jozwiak, his future economic benefits might only be 20% in actually playing for the club, and 80% in what we think we can sell him for in a year or 2.  Obviously if his form dropped or he got injured, that balance would shift and we'd readjust.
The LAP reasons are really weird, they go on for pages and pages quoting FRS102 about things we weren't claiming we were doing, and saying we can't do them (well, so what?). And then there's just a few statements that basically boil down ProfPope's opinion about future economic benefits without any real legal analysis about whether they're correct or not.  What analysis there is doesn't seem to tally with the regs either. The regs say future economic benefits can include that from the disposal of an asset, but the LAP decision is clear that they believe they can only come from the clubs use of an asset.  The regs say you can amend your amortisation model, useful life (or residual value) if your use of an asset or market conditions changes, the LAP decision makes it clear they they believe you can only do that for the revaluation model.  The LAP's understanding of the regs really doesn't seem right to me.
From what I can tell, the entire issue is that they think we were doing something that we weren't (cost model + revaluing players).  They claim in the LAP reasons that ProfPope's lack of experience in practical accountancy and football finances was irrelevant because the issue came down to a matter of fact (the regs so you can't do X and we did X). But to my reading, ProfPrope's lack of experience is exactly what's lead him to this erroneous conclusion about what were doing. He didn't have the experience or knowledge to see if what we were doing is appropriate or not.
Sorry for the long post...

The only real incentive for us to appeal is to reduce the fine. In theory we could ask them to strike off the requirement to resubmit the accounts, but given that it's clearly the most logical response to the hearing, and not even a punishment in and of itself, I think there's zero chance of that getting changed.  Us appealing won't delay anything.
Personally, I'd just take the fine on the chin and walk away from this one.

It honestly feels like the DC, the LAP, the EFL and the Club are all talking across each other, using the same terms to mean different things and quoting different bits of FRS102 at each other out of context.  And I'm really not an expert on any of this, so I'm basically going by a surface reading of the written reasons and regs, so I may well be wrong on everything here too.  So...
It does seems to be taken as fact by everyone that there is no "active market" and hence we have to use the cost model. Even the club agrees with that with their statements to the DC and say they are using the cost model.  And going by my reading of the regs, I agree.
The EFL/LAP/ProfPope etc claimed we were using the cost model but were revaluing players, which is a feature of (and only of) the revaluation model. That's the root of their appeal win.
We claim we were doing no such thing. We claim we were using the cost model, but we were factoring potential sales into the future economic benefits of the asset. So for someone like Jozwiak, his future economic benefits might only be 20% in actually playing for the club, and 80% in what we think we can sell him for in a year or 2.  Obviously if his form dropped or he got injured, that balance would shift and we'd readjust.
The LAP reasons are really weird, they go on for pages and pages quoting FRS102 about things we weren't claiming we were doing, and saying we can't do them (well, so what?). And then there's just a few statements that basically boil down ProfPope's opinion about future economic benefits without any real legal analysis about whether they're correct or not.  What analysis there is doesn't seem to tally with the regs either. The regs say future economic benefits can include that from the disposal of an asset, but the LAP decision is clear that they believe they can only come from the clubs use of an asset.  The regs say you can amend your amortisation model, useful life (or residual value) if your use of an asset or market conditions changes, the LAP decision makes it clear they they believe you can only do that for the revaluation model.  The LAP's understanding of the regs really doesn't seem right to me.
From what I can tell, the entire issue is that they think we were doing something that we weren't (cost model + revaluing players).  They claim in the LAP reasons that ProfPope's lack of experience in practical accountancy and football finances was irrelevant because the issue came down to a matter of fact (the regs so you can't do X and we did X). But to my reading, ProfPrope's lack of experience is exactly what's lead him to this erroneous conclusion about what were doing. He didn't have the experience or knowledge to see if what we were doing is appropriate or not.
Sorry for the long post...

It honestly feels like the DC, the LAP, the EFL and the Club are all talking across each other, using the same terms to mean different things and quoting different bits of FRS102 at each other out of context.  And I'm really not an expert on any of this, so I'm basically going by a surface reading of the written reasons and regs, so I may well be wrong on everything here too.  So...
It does seems to be taken as fact by everyone that there is no "active market" and hence we have to use the cost model. Even the club agrees with that with their statements to the DC and say they are using the cost model.  And going by my reading of the regs, I agree.
The EFL/LAP/ProfPope etc claimed we were using the cost model but were revaluing players, which is a feature of (and only of) the revaluation model. That's the root of their appeal win.
We claim we were doing no such thing. We claim we were using the cost model, but we were factoring potential sales into the future economic benefits of the asset. So for someone like Jozwiak, his future economic benefits might only be 20% in actually playing for the club, and 80% in what we think we can sell him for in a year or 2.  Obviously if his form dropped or he got injured, that balance would shift and we'd readjust.
The LAP reasons are really weird, they go on for pages and pages quoting FRS102 about things we weren't claiming we were doing, and saying we can't do them (well, so what?). And then there's just a few statements that basically boil down ProfPope's opinion about future economic benefits without any real legal analysis about whether they're correct or not.  What analysis there is doesn't seem to tally with the regs either. The regs say future economic benefits can include that from the disposal of an asset, but the LAP decision is clear that they believe they can only come from the clubs use of an asset.  The regs say you can amend your amortisation model, useful life (or residual value) if your use of an asset or market conditions changes, the LAP decision makes it clear they they believe you can only do that for the revaluation model.  The LAP's understanding of the regs really doesn't seem right to me.
From what I can tell, the entire issue is that they think we were doing something that we weren't (cost model + revaluing players).  They claim in the LAP reasons that ProfPope's lack of experience in practical accountancy and football finances was irrelevant because the issue came down to a matter of fact (the regs so you can't do X and we did X). But to my reading, ProfPrope's lack of experience is exactly what's lead him to this erroneous conclusion about what were doing. He didn't have the experience or knowledge to see if what we were doing is appropriate or not.
Sorry for the long post...

It honestly feels like the DC, the LAP, the EFL and the Club are all talking across each other, using the same terms to mean different things and quoting different bits of FRS102 at each other out of context.  And I'm really not an expert on any of this, so I'm basically going by a surface reading of the written reasons and regs, so I may well be wrong on everything here too.  So...
It does seems to be taken as fact by everyone that there is no "active market" and hence we have to use the cost model. Even the club agrees with that with their statements to the DC and say they are using the cost model.  And going by my reading of the regs, I agree.
The EFL/LAP/ProfPope etc claimed we were using the cost model but were revaluing players, which is a feature of (and only of) the revaluation model. That's the root of their appeal win.
We claim we were doing no such thing. We claim we were using the cost model, but we were factoring potential sales into the future economic benefits of the asset. So for someone like Jozwiak, his future economic benefits might only be 20% in actually playing for the club, and 80% in what we think we can sell him for in a year or 2.  Obviously if his form dropped or he got injured, that balance would shift and we'd readjust.
The LAP reasons are really weird, they go on for pages and pages quoting FRS102 about things we weren't claiming we were doing, and saying we can't do them (well, so what?). And then there's just a few statements that basically boil down ProfPope's opinion about future economic benefits without any real legal analysis about whether they're correct or not.  What analysis there is doesn't seem to tally with the regs either. The regs say future economic benefits can include that from the disposal of an asset, but the LAP decision is clear that they believe they can only come from the clubs use of an asset.  The regs say you can amend your amortisation model, useful life (or residual value) if your use of an asset or market conditions changes, the LAP decision makes it clear they they believe you can only do that for the revaluation model.  The LAP's understanding of the regs really doesn't seem right to me.
From what I can tell, the entire issue is that they think we were doing something that we weren't (cost model + revaluing players).  They claim in the LAP reasons that ProfPope's lack of experience in practical accountancy and football finances was irrelevant because the issue came down to a matter of fact (the regs so you can't do X and we did X). But to my reading, ProfPrope's lack of experience is exactly what's lead him to this erroneous conclusion about what were doing. He didn't have the experience or knowledge to see if what we were doing is appropriate or not.
Sorry for the long post...

The only real incentive for us to appeal is to reduce the fine. In theory we could ask them to strike off the requirement to resubmit the accounts, but given that it's clearly the most logical response to the hearing, and not even a punishment in and of itself, I think there's zero chance of that getting changed.  Us appealing won't delay anything.
Personally, I'd just take the fine on the chin and walk away from this one.

To summarise: Lawyers think they understand accounting regs better than accountants.

It honestly feels like the DC, the LAP, the EFL and the Club are all talking across each other, using the same terms to mean different things and quoting different bits of FRS102 at each other out of context.  And I'm really not an expert on any of this, so I'm basically going by a surface reading of the written reasons and regs, so I may well be wrong on everything here too.  So...
It does seems to be taken as fact by everyone that there is no "active market" and hence we have to use the cost model. Even the club agrees with that with their statements to the DC and say they are using the cost model.  And going by my reading of the regs, I agree.
The EFL/LAP/ProfPope etc claimed we were using the cost model but were revaluing players, which is a feature of (and only of) the revaluation model. That's the root of their appeal win.
We claim we were doing no such thing. We claim we were using the cost model, but we were factoring potential sales into the future economic benefits of the asset. So for someone like Jozwiak, his future economic benefits might only be 20% in actually playing for the club, and 80% in what we think we can sell him for in a year or 2.  Obviously if his form dropped or he got injured, that balance would shift and we'd readjust.
The LAP reasons are really weird, they go on for pages and pages quoting FRS102 about things we weren't claiming we were doing, and saying we can't do them (well, so what?). And then there's just a few statements that basically boil down ProfPope's opinion about future economic benefits without any real legal analysis about whether they're correct or not.  What analysis there is doesn't seem to tally with the regs either. The regs say future economic benefits can include that from the disposal of an asset, but the LAP decision is clear that they believe they can only come from the clubs use of an asset.  The regs say you can amend your amortisation model, useful life (or residual value) if your use of an asset or market conditions changes, the LAP decision makes it clear they they believe you can only do that for the revaluation model.  The LAP's understanding of the regs really doesn't seem right to me.
From what I can tell, the entire issue is that they think we were doing something that we weren't (cost model + revaluing players).  They claim in the LAP reasons that ProfPope's lack of experience in practical accountancy and football finances was irrelevant because the issue came down to a matter of fact (the regs so you can't do X and we did X). But to my reading, ProfPrope's lack of experience is exactly what's lead him to this erroneous conclusion about what were doing. He didn't have the experience or knowledge to see if what we were doing is appropriate or not.
Sorry for the long post...

It’s defined quite precisely in the written reasons:
“Active market” is defined in the Glossary as follows;
“A market in which all the following conditions exist:
(a) the items traded in the market are homogeneous;
(b) willing buyers and sellers can normally be found at any time;
and (c) prices are available to the public.”
certainly, to my eyes anyway, players don’t meet any of those conditions. Although I have no idea exactly how those definitions are normally used in accountancy, or how they would be applied in our case.

The bit from the conclusion I posted after this post seems pretty clear to me. They claim it’s straight up impermissible to use resale values for player amortisation.
 
Having skimmed through the actual FRS102 regs it’s much less clear IMO. There are definitely areas where the LAP conclusions just don’t match the regs, by my surface reading. You can absolutely factor in a residual value for assets using the cost model, and reassess it regularly when it’s use or market conditions change (which is basically what we were doing). But that again comes down to “active markets” and like you say, it’s unlikely that a method exists for estimating them for footballers. And even then, it doesn’t matter what the regs actually say now, it matters what the LAP think they say.

That’s the entire crux of their argument though. It’s why they granted the appeal in the EFLs favour.  Their expert said that you cannot use the revaluation model because there isn’t an “active market” for players, so you have to use the cost model. And that means you have to use straight line amortisation (less impairment etc). You cannot use expected recoverable values with the cost model. The LAP took that expert evidence as fact, and have ruled that accounts must comply with it to meet FRS102. I know we haven’t seen their written reasons yet, but it would be astonishing if the DC had subsequently ordered us to do something that went against the LAP decision, and no doubt the EFL would be appealing it straight back to them.  

That’s the entire crux of their argument though. It’s why they granted the appeal in the EFLs favour.  Their expert said that you cannot use the revaluation model because there isn’t an “active market” for players, so you have to use the cost model. And that means you have to use straight line amortisation (less impairment etc). You cannot use expected recoverable values with the cost model. The LAP took that expert evidence as fact, and have ruled that accounts must comply with it to meet FRS102. I know we haven’t seen their written reasons yet, but it would be astonishing if the DC had subsequently ordered us to do something that went against the LAP decision, and no doubt the EFL would be appealing it straight back to them.  

The way the rules are written, with just a blanket "you must comply with FRS 102", it basically feels like the EFL have decided to outsource that particular competence to the people that actually have expertise on it.  They know they don't have the manpower or knowledge to properly audit every clubs accounts, so they decided to just leave a requirement to comply and trust HMRC/auditors etc to do it properly.  Which honestly seems a fairly sensible way of doing things to me.
That's why it feels so weird and wrong that they're suddenly making very specific requests about how accounts are to be submitted, and they're passing judgments on things that they have no legal authority to pass judgements on.  To my knowledge, no legal body has ever bestowed on the EFL the power to determine whether accounts are compliant with FRS102 or not.

The only real incentive for us to appeal is to reduce the fine. In theory we could ask them to strike off the requirement to resubmit the accounts, but given that it's clearly the most logical response to the hearing, and not even a punishment in and of itself, I think there's zero chance of that getting changed.  Us appealing won't delay anything.
Personally, I'd just take the fine on the chin and walk away from this one.

The only real incentive for us to appeal is to reduce the fine. In theory we could ask them to strike off the requirement to resubmit the accounts, but given that it's clearly the most logical response to the hearing, and not even a punishment in and of itself, I think there's zero chance of that getting changed.  Us appealing won't delay anything.
Personally, I'd just take the fine on the chin and walk away from this one.