LE_Ram

1 minute ago, duncanjwitham said:

No idea if this is your area of expertise but worth asking...

If I understand it, the club is saying we can give players residual values to intangible assets (i.e. players in this case) because we have an expectation (not a guarantee though) of selling them.  The EFL is saying no, you can't *guarantee* you can sell them, so you have to assume they have no residual value at all.

So surely this argument holds for any asset a company might have - you can't (outside of a pre-agreed sale or something) have any guarantee that there's someone on the other end to buy it from you.  So is it normal for companies to be able to give residual values to intangible assets they have an expectation of selling?  Are the EFL trampling over standard accounting practice or are we bending the rules?

You can allocate a residual value to an intangible asset under FRS102, provided that:

- There is a commitment by a third party to buy it at the end of its useful life, OR

- There is an active market for the asset, and its residual value can be determined by reference to the market, and the market will exist at the end of the asset's useful life.

So it looks like Derby are saying - there's clearly an active market for players, and we buy players with the expectation of selling them at the end of their contracts, so it's not fair to allocate a RV of nil because that's ultimately not representative of the true situation. But the EFL says, well at the end of the contract, the player can leave on a free, so you need to amortise down to a RV of nil.

Without looking at the detail for each player it's tough, because some players (probably someone like Jozwiak), DCFC will expect to sell before his contract is up, and so will have some sort of RV; but some like CKR will probably not be sold and should be amortised down to nil value.

There's ultimately a lot of judgment around it because the RV should be set at the amount that Derby will eventually get for the player - who knows how much we'll sell Joz for in a few years, there are so many factors. But in terms of whether it's allowable under FRS102 to allocate a non-nil residual value to an intangible, yes it is.

2 minutes ago, Spanish said:

might be a worthless victory given I can't see how the tribunal can, given they found nothing wrong, apply a penalty.  Worried that it will take months to sort out as seemingly Boro need to be consulted

The EFL move most things at a glacial pace, however I wouldn't put it past them that the one time they get their finger out is to screw over DCFC...

42 minutes ago, OohMartWright said:

The highlighted part beggars belief. In the absence of a prescribed amortisation model, the club, like most other companies, is obliged to follow financial reporting standards, in this case FRS102. The club's auditors, by definition qualified accountants, were clearly satisfied that they did, so how on earth can someone who is not an accountant say that they didn't. It is almost as if they deliberately chose not to have an accountant on the panel so that they could get the decision they wanted without having to let the facts get in the way of their disgusting face-saving ploy.

 

As an external auditor myself, one of our key jobs in any financial audit is ensuring that the accounting policies comply with the applicable standards (as others have mentioned, FRS102).

I personally haven't ever audited a football club, but seeing as the intangible assets are such a material part of the balance sheet I'm sure that any auditor would be massively thorough in auditing that balance (and the amortisation to go along with it).

The auditors sign off to say that the accounts are prepared in line with the applicable standards, so surely they must be. How the EFL can go back now and say that they're not is beyond me.

Agreed - seemed like a lot of people wanted us to go down yesterday, due in no small part I'm sure to the media and celebrity circus which as been created around DCFC in the last couple of years.

Obviously changing the forum name isn't going to be a silver bullet to changing that but we can't complain about Mel's love of celebrity while simultaneously seeming to revel in it.

President's Park in Almaty, Kazakhstan; a rather balmy 30 degrees

Of course I had to take a trip to see the Ramstore