So, managed to get a response from Mr P over on OTIB.
His words in italics, my responses in bold.
Well G Star Ram, I probably shouldn't bother but going to address a few points very quickly and likely not in enough depth.
Audit and Accounting Experience
Vast experience clearly, doesn't mean you are necessarily objective however- let's be honest you appear to think Derby are innocent so...wouldn't expect you to be.
Thing is, I agreed with the IDC findings which doesnt necessarily mean I think DCFC are innocent.
I agree the wording was unclear and I have stated that I think residual values may have been manipulated, how is that not objective?
I'd be very interested to hear how someone who started a thread called 'Derby Deserve Relegation' can seriously expect anyone to believe that they are objective?
LAP vs IDC
As we recall, in the initial case which ended last August exonerated Derby in respect of the First Charge- Pride Park Sale and Leaseback, valuation etc, while mostly finding Derby innocent on the 2nd Charge except in terms of Disclosure. However from that, the EFL worked their way up to get a Guilty Verdict from the LAP. Incidentally I do trust their objectivity more than I would yours, as you are a Derby fan albeit as per your post, one with 23 years of Accounting and Auditing Experience and they are objective and Independent. Doubt you can say the same on this matter. When sent back to the IDC, it was £100k fine for Wrong Accounting, a Reprimand in respect of Future Financial Conduct and then the Restatement by 18th August.
Just one thing to say here, how can you trust the objectivity of the LAP but not the IDC. Which body had more experience in the Accounting field?
Importance of Independent Witnesses
Unsure if it was ignorance or arrogance on the part of Mel Morris- but Independent Witnesses are quite important in cases such as this. Why did Derby not choose one or hire one for the matter in front of the League Arbitration Panel? It wouldn't surprise me if Professor Pope helped to tip the balance in favour of the EFL in that particular case. Justifiably so because the Auditors and Accountants on behalf of both Derby and the EFL are hardly going to be purely objective are they, in legal terms Independent Expert Witnesses are quite important- CPS explanation as to why:
The Duty of an Expert Witness. The duty of an expert witness is to help the court to achieve the overriding objective by giving opinion which is objective and unbiased, in relation to matters within their expertise
Their words can carry weight- EFL hired one, Derby didn't for whatever reason. Wouldn't surprise me if it tipped the balance- and on balance I do think I believe the LAP, as there were some quite eminent names on it! Lord Dyson the most known, but also David Phillips QC and Charles Hollander QC are not exactly just starting out!
Could Derby not find one, or was there a belief on their part that one was not needed? My suspicion is that it helped to tip the balance, that extra objective Expert opinion.
Is this correct? Were DCFC given the opportunity to have an expert witness at the LAP hearing?
Difference between Restatement for
P&S and in general
Personally speaking, though it would be interesting, is it that important to Restate in terms of the past and overdue but especially the past Accounts due at CH? Restatement to the EFL/Disciplinary Process for P&S purposes however is required and that is what needs to happen by 18th August. I don't understand why e.g. the outstanding Accounts are not out now but with Internal Restatement for P&S purposes possible. There is some debate as to whether they specifically needed to wait for the Verdict as to the format for CH. Maybe they couldn't be bothered with the extra work that it might entail which I fully get, but a Restatement if it's just about a) Amortisation Schedules and b) Profit on Disposal of Players can be simple enough.
That said, given that there was no Sale guaranteed or lined up for players by the end of their Contract, how a Residual Value can be applied is questionable, IIRC Spanish made a good post on it back in May on the EFL Verdict thread. FFP/P&S=Straight Line or Straight Line with Extensions seems reasonable, for these purposes anyway IMO.
Impermissible under FRS 102. Haven't read it for a while but only permissible IIRC if an Active Market exists to do it that way- clearly not the case in this instance.
Bottom line is that a) EFL had an Independent Witness and Derby chose not to utilise one- probably helped to swing things- b) The LAP with some quite eminent individuals on it ruled it less than compliant.
The use of residual values is very permissible. Whether the correct residual values are being used is for the auditors to conclude. Should huge losses start to arise at the end of players contracts then the auditors should conclude that DCFC are not using correct accounting estimates and either get them to amend or make reference to this in their audit report.
If the auditors did conclude this it would only require changes going forward, no retrospective amendments are required in respect of changes in accounting estimates
Auditors In General
Number of Auditing Scandals in general in recent years, lax practice in the Industry etc- just because Smith Cooper and the Delves signed it off as aok doesn't necessarily mean it was entirely accurate?
This sums up the objectivity that is being applied. We must trust the LAP because they are experts and Independent but we can't trust the auditors even though they are experts and independent.