Indy

That’s how I read it. The strange thing is that the commission (with accountancy experience), and a succession of auditors, interpreted our method as reasonable. But the EFL and a panel with no accountants didn’t. 
 
IIRC the original report admonished the EFL accountancy expert for not understanding the role of an expert witness because he argued that the EFL position was preferable, rather than giving testimony as to whether what we had done was reasonable (even if different to what the EFL might prefer). This seems to be the same. The fact that other methods are possible is irrelevant. All that is relevant is whether our approach was legally compliant and reasonable - and all accountants involved have agreed that it was. 

That’s how I read it. The strange thing is that the commission (with accountancy experience), and a succession of auditors, interpreted our method as reasonable. But the EFL and a panel with no accountants didn’t. 
 
IIRC the original report admonished the EFL accountancy expert for not understanding the role of an expert witness because he argued that the EFL position was preferable, rather than giving testimony as to whether what we had done was reasonable (even if different to what the EFL might prefer). This seems to be the same. The fact that other methods are possible is irrelevant. All that is relevant is whether our approach was legally compliant and reasonable - and all accountants involved have agreed that it was. 

That’s how I read it. The strange thing is that the commission (with accountancy experience), and a succession of auditors, interpreted our method as reasonable. But the EFL and a panel with no accountants didn’t. 
 
IIRC the original report admonished the EFL accountancy expert for not understanding the role of an expert witness because he argued that the EFL position was preferable, rather than giving testimony as to whether what we had done was reasonable (even if different to what the EFL might prefer). This seems to be the same. The fact that other methods are possible is irrelevant. All that is relevant is whether our approach was legally compliant and reasonable - and all accountants involved have agreed that it was. 

Seems bizarre that a set of lawyers can essentially say we can't use our amortisation method, whereas a set of accountants say we can. Even more bizarre that our accounts now have to do what the lawyers say!

I also think there has been a lot of signals over the way in which the club has been praised for its honesty etc and that will also mitigate the penalty

It's confused me greatly. It's why I'm wondering if the club's method can still be used but only based upon usage and not on resale. I'm not sure what that would look like, though.
Referring to the original panel's conclusions, it seems the second particular will have only been partially ruled in the EFL's favour:
"i) the fact that the Club’s amortisation policy during the relevant financial years did not amortise on straight line basis is not contrary to FRS 102" - Still true. Not using a straight line method is not, in itself, a breach of FRS 102.
"ii) the amortisation schedule does reflect the Club’s expected pattern of consumption of future economic benefits from players’ registrations" - The appeal panel finds this inaccurate, but one would assume that there would be a substantial amount of mitigation in punishment seeing as, like you said, it seems the club, the auditors, the auditor's regulators, and the panel themselves all thought that it did do so.
It will be interesting to see if the club are forced to move to a straight line method, or if they'll be allowed to use their current method solely based around "use" and not "disposal."

Just spotted this tweet from Alan Nixon, it appears he has a copy of the decision report. I wonder how he has that as they've not released it yet?
So, it appears it was the second particular, and that ONLY which the EFL won on appeal.
I don't understand how it can be impermissible to take into account the possible resale value of players when it clearly states in FRS 102, as mentioned in the original decision, that future economic benefits from the intangible asset include use OR disposal?
From the original report
So if it wasn't an unreliable pattern for the years under scrutiny, why do we have to use the straight-line method?
If we don't have to use the straight-line method, given the expected consumption of future economic benefits includes disposal, it shouldn't be impermissible to take into account the resale value, and it being the 'cost model' should make no difference.

In the midst of all the effort the EFL have used to investigate us, what have they actually done that's useful to protect the 72 member clubs during the pandemic ?
 
I am astonished that we've reached the end of the season with none of the members going bust & that's no thanks to the EFL

There is a worrying trend in modern society to convict by media before being proven guilty. The media have whipped up almost a baying mob it seems.

Yes. That was the opinion of the panel (no accountancy expertise). The original ruling from the commission (including an accountant) went into great detail on this and concluded we were compliant (as did three years of auditors signing off accounts). And it’s going back to the same commission (and accountant) to determine the punishment and by implication admit to their own incompetence in the original ruling. 

Yes, I for one will be extremely interested to see whether the EFL publish the justification of their assertion that the accounting treatment is non-compliant

It's bee a while...

What about the auditors regulator?
That quote is from the original decision.
I find it astonishing that the club, its auditors, their regulators and the original IDC (which included an actual accountant - imagine that!) can be under the impression it's all fine and dandy, totally in line with FRS 102. But a new panel, none of which are accountants, can apparently say it's not, and their decision is final...
Unbelievable, absolutely unbelievable.

This is an exercise in the EFL saving face, self justification, and placating bitter football clubs looking to do one over on each other. It is not about protecting football clubs from Portsmouth scenarios or the integrity of the competition. 
The EFL is quite happy to overlook Watford and Forest’s unique methods of circumventing FFP (switch/loan players between clubs for fee values to help their compliance with rules), not penalise the overspending of the likes Villa Bournemouth Leicester QPR Wolves, and overlook the dodgy practices of Steve Gibson and the use of his haulage company to help circumvent rules. 
 
They are choosing to follow this grotesque charade and to ruin the integrity of competition with league positions being decided by arbitration panels instead of addressing the fundamental issue, that parachute payments are creating a grossly unfair competition, creating spiralling wages and resulting in clubs needing to spend beyond their means just to compete. Much has been made of Derby’s spending, yet it’s been dwarfed by the clubs that have come down by the premier league, highlighted by the spending and wages disparity between Derby and both clubs they have lost playoff finals to. The irony of all of this is the main club fighting this - Boro - are doing it because we beat them to the playoffs. Did we have an advantage over them? No. They had a bigger budget than we did due to parachute payments!! They blew it on Assombalonga and others and failed. 
 
How are clubs without parachute payments supposed to compete. Eventually the majority of those that do try and compete will eventually come into problems unless they have luck ie. they somehow get promoted. These clubs don’t want to spend over the odds on wages, they are forced to by the parachute funded clubs that set the market rate, like Boro giving Assombalonga £50k per week.
If they try to apply FFP for the past two seasons (average of 19/20 and 20/21) as has been suggested, half the clubs will fail it, they must do, they’ve had massive revenue cuts so how can they comply? Only the clubs who are parachute funded could possibly comply.
 
We will probably be punished to make a point and then FFP will be scrapped because half the league failing it will be ridiculous. It’s not working, it’s not making clubs more sustainable. How about fixing the distribution of money in the game and introducing salary caps either on players or in line with turnover if player salary caps is too difficult,  it would be far more effective and help level things up.
But regardless of the rights and wrongs of the EFL and Derby. I’m tired. I’m tired of reading about ERVs and FRS102, I’m tired Mel’s war with the other football clubs, I’m tired of all these jokers trying to take over our football club. When can it be just about Football again?! 

 

Hasn’t this been posted about 5 hours ago lol

It’s fact but wasn’t against the rules at the time ( would be now as EFL changed this after ) just like selling the stadium to yourself isn’t. It’s just “creative “ . Just makes Gibson a hypocrite in my eyes happy to use the ( lack of )  rules for himself but cry when someone else has the temerity to do it. If I was him I’d be bollocking my financial guys for not thinking of it themselves. 
Not having a go at you @Pearl Ram at all just pointing out that a lot of other clubs have been “creative “ as you put it not just DCFC .
Hope that makes sense COYR 
 

Yep so assuming Derby chose to amortise the players contract over the length of their contract, they would have nil residual value at the end of their contract.
For example, take a scenario where Derby sign a player for £4m on a 4 year contract.
The EFL argue that the only economic benefit a club gets from the player is them playing matches, and at the end of their contract they can leave for £nil - so you would amortise in line with that economic benefit - the player is expected to play over their contract so you would amortise their registration fee over the 4 years on a straight line - £1m per year gets expensed and increases your loss/decreases the profit. If they leave on a free at the end of their contract, you’ve already amortised down to £nil so there’s no impact to your profit - the carrying amount is £nil and your proceeds on the sale are £nil so there’s no profit or loss.
In that situation, if a player leaves at the end of year 3 for £3m, they’d have had 3 years of amortisation so be carried in the accounts at £1m, and you’d recognise a profit on the sale of the player of £2m.
Derby however say that they get more than just the benefit of the player playing matches, in that they also expect them to be sold before contract expiry. So your economic benefits are the player playing matches and the cash you get in from selling them. This is where ERV comes in - expected recoverable value - this is the amount Derby expects to be able to sell a given player for. Some players won’t be given an ERV if Derby don’t expect to sell them - for example, if our player above was 34 and expected to retire after playing at Derby, the treatment would be the same - £1m charged every year and no value at the end.
However, if it was someone like, say Joz, well DCFC would argue that if he plays well they’ll sell him on - so they decide when and for how much do we think we’ll sell. For example, if they think they’ll sell the player for £3m in three years, they will only charge £333k per year amortisation because you’d expect that by the time they’re sold for £3m, they’re carried in your accounts for £3m.
In both situations, the net P&L impact is the same over the whole contract - it’s just using Derby’s method the profits you make on a transfer are smaller, because your player is valued higher in your accounts, because you’ve charged less total amortisation.
It’ll be interesting to read why the EFL have won this appeal, because as far as I’m aware, both are compliant with the accounting standard.

Poses the question,  if so many clubs are having to be creative,  does it mean the rules aren't fit for purpose 

Might be a really stupid question but.. if they are supposedly finding us guilty of not filing our accounts properly according to accounting practices. Then why aren't the HMRC after us as well?

Plenty of other clubs have been more than creative in recent years Boro , Leicester , QPR ( which affected us directly) , Wolves , Reading , Sheff Wed , Leeds , Wolves , Forest , Watford , Villa , Bournemouth come to mind without even thinking hard about it. 

Maybe this is why they were leaking so much! People will remember the hype about Derby being guilty ... but not the birthing stories about a partial breach.
Thanks, EFL.

My other half scrolls down and only reads the last paragraph of Daily Mail articles. The rest is clickbait. 

I wonder if the EFL just want to get some kind of paper victory so they can try and lump some legal costs back on us. Our sanction might be irrelevant, as long as they can claim we were in the wrong (as happened to Birmingham).

I think that’s harsh. The club statement puts a lot in context about the original ruling and who has been involved in this one. If the media (and the public) relied on the EFL statement they’d think we broke the law, and have no knowledge of the discrepancy in accountancy expertise, or Boro’s determination to insert themselves into another club’s proceedings. I think the EFL statement is pretty misleading with omissions and implied wrongdoing. 

Who nicked it off me (post on here earlier)!!
?