We could do with some proper analysis of this from people who know what they are talking about (i.e. some of the earlier commenters on this thread but in more forensic detail). This is pretty much the only forum that has discussed this in anything like the proper detail that it needs to be, and that worries me.
Well to be fair this is pretty good, silly me!http://www.oftenpartisan.co.uk/archives ... ounts.html
Far be it from me to intrude on private grief, but whilst that link is pretty good, I don't think the author quite understands the implications of some of the comments - and I'll be less cautious than Fergus. For example
we identified that significant payments that might have been related to the group were not disclosed to us in a timely fashion
Related to the group means 'related parties'
which is an accounting term to describe parties not fully independent of the entity whose accounts are being prepared. Transactions 'related to the group' need to be disclosed in the interests of transparency. It's pretty worrying that the auditor is using the term 'might' in respect of might be related to the group because it suggests that they have not satisfied themselves that they have a comprehensive list of potential related parties. The comment 'not disclosed to us in a timely fashion' is a bit like John Prescott and his gifts from a Texan billionaire - only revealed because they were caught.
we were only able to obtain important audit evidence in respect of these payments on the basis that we accepted it “redacted” and that it was not available for discussion with the Board as a whole.
This appears to be prima facie evidence that some Board members are not revealing important relevant information to other directors. Shocking.
These payments have now been agreed to be recorded in the accounts of the parent company.
Note 'have been agreed' indicating that this statutory obligation has only been fulfilled under pressure...
effective of the 2011/12 season, the rights to the net income from the sponsorship of kit was transferred to a wholly owned subsidiary of the parent company named Birmingham (Hong Kong) Ltd.
Enron-esque. The author says that this company can not be found at Companies House. There is no reason why this may not be an overseas company...
…it is appropriate that the net income generated from the sponsorship contract is recorded within the financial statements of BHK and that no income (either from the sponsorship or on a transfer of rights) is recorded with the financial statements of BCFC
If this is a case of moving income overseas relating to advertising that clearly takes place in the UK, HMRC would come down on them like a tonne of bricks. It appears that the directors are beginning to understand the implications of a audit report like the one here. Seeing what Fergus says about the Mail apology suggests that the full picture still has to emerge.
Well, Dom, I'm assuming you no longer hold an audit registration - I do!! So, I'll continue being cautious! Not that I am surprised by the content of your comments, though I should point out that the author of the linked piece did say he'd also checked the Hong Kong Company Registry. ianrobo commented early on that HMRC might well be interested, and I'm not surprised you agree.