“The concerns which you raised are blown out of proportion.”
This is a summary of the Normalisation Committee (NC), managers of the T&T Football Association’s, (TTFA) response to concerns raised by Keiron Edwards, president of the Eastern Football Association (EFA) on the TTFA’s audited financial statement, which will go before the membership for approval from 8.30 am this morning at the Home of Football in Balmain, Couva.
Edwards called on the membership to not sign the accounts when it is presented at today’s annual general meetings (AGM) based on the football association’s audited accounts which was done by Aegis Business Solutions, Chartered Accountants.
The EFA’s boss, in a letter to the TTFA/NC on Saturday, quoted from the Aegis’ report for the years ended December 31, 2020 and 31st December 2021, which stated: “We were unable to determine whether any adjustments might have been found necessary in respect of recorded and unrecorded plant and equipment. This was because assets were not tagged and there was no proper record keeping of the fixed asset register, which did not include proper descriptions of assets.”
Edwards said that statement meant that the figure stated for fixed assets on the statement of financial position of the audited financial statement was incorrect, and later questioned how the embattled football association was able to balance their accounts.
Edwards also pointed to five areas of the audited statement where there were other concerns, such as Erroneous Reporting; Unauthorised Removal of Fixed Assets from the Association; Presentation of Financial Statement in an environment of bankruptcy and insolvency proceedings; Neglected Disclosure Notes to the Financial Statements; and Increased Debt under the Normalisation Committee.
FIFA $$$ dependent on approval
Yesterday, however, Robert Hadad, chairman of the NC, in a response told Edwards they had just stated the correct position of the football association and reminded all that the audited accounts needed to be approved for FIFA subventions for the rest of this year and part of next year to be received.
“Their audit opinion specifically addresses the deficiencies in the systems and internal controls applicable to plant and equipment, specifically, the furniture and fixtures, given the difficulty they encountered in verifying some of the assets in this category.
“Given the fact that furniture and fixtures account for 4.3 per cent of the assets on the balance sheet as at that date, I believe that the concerns which you raised are blown out of proportion. The basis for the qualified opinion, in our humble view, in no way shape or form suggests that there may be more erroneous figures on the statements of comprehensive income or cashflow.”
In a four-page document, Hadad sought to clear the air on the concerns raised by saying: “The audit opinion clearly states that except for the effect of the above the accompanying financial statements present fairly, in all material respects, the financial position of the TTFA as at December 31, 2020 and December 31, 2021, and its financial performance and cashflows for the years then ended in accordance with IFRS for SMEs.
“You should note that the NC inherited these deficiencies in the internal controls over the plant and equipment and have been working to strengthen them. Some of the items referred to by the auditors related to purchases made prior to 2017, while others were not clearly described. However, we are pleased to report that the majority of the furniture and equipment at the HOF has now been tagged and our Fixed Asset register has been updated.
There are a few items which are still not accounted for and the accounting staff will be making recommendations to write off if these are not resolved. They have advised that the value of these items will be quite immaterial and will be below the total value of furniture and fixtures, which as noted above represent 4.3 per cent of the TTFA’s total assets as at December 31, 2021. Once resolved, the updated Fixed Asset register with the corresponding asset tags will be shared with the NC.
Hadad denies theft or fraud regarding TTFA Fixed Assets
“We would also like to make it very clear that there is no evidence to suggest ‘... a material amount of theft or fraud regarding the Fixed Assets in the TTFA’.”
Bugged by circulating opinions that the NC has performed poorly for the three-year period it has been in charge of local football, Hadad in his letter also made it clear: “The NC has not appointed an internal audit committee. This will be included in the new governance structure. However, we have been working closely with the FIFA Financial Governance team, which scrutinises all our expenditure and insists that all reports are submitted before disbursing funds.
A FIFA Central Audit team also visited in July 2022 to audit the TTFA’s use of FIFA funds and did not raise any concerns. In fact they advised that since 2020 we had put significant controls in place and we continue to work on improving the control environment. Therefore, we would appreciate if you, Mr. Edwards, could supply evidence to support your assertion that the NC has failed to account for the funding given to the TTFA by FIFA and the GORTT.”
In the area of ‘Going Concern’- Hadad explained that the auditors were right that a material uncertainty exists that may cast significant doubt on the TTFA’s ability to continue as a going concern, and he noted further that that uncertainty is dependent on the outcome of the Bankruptcy and Insolvency Act (BIA) process, which is currently working its way through T&T’s legal system.
“If the proposal is approved all creditors will be paid some portion of the amounts due to them and the TTFA will be in a position to continue serving the football community in T&T, free of debt. If not, the TTFA will be wound up and creditors will receive much less than they have been promised under the BIA.”
Hadad also reminded Edwards of the following:
Disclosures in the financial statements
As stated in their audit opinion, the TTFA’s financial statements are prepared in accordance with International Financial Reporting Standard for Small and Medium-sized Entities (IFRS for SMEs). This is a financial reporting framework applied by entities that are not publicly traded and publish general purpose financial statements for external users.
The standard is designed and tailored to the needs of Small and Medium-sized Entities to ensure these entities are effectively able to comply with the international reporting framework guidelines without significantly affecting their bottom-line. The main difference between full IFRS and IFRS for SMEs is the simplified nature of IFRS for SMEs as some topics in full IFRS are omitted and some accounting policy options are not allowed. Also, many of the recognition and measurement principles in full IFRS have been simplified, and substantially fewer disclosures are required.
However, despite this, it should be noted that depreciation rates and impairment have been captured in note 2(d) and we do not believe that the other notes are relevant since inventory, employee benefits, severance, financial risk management and fair value are not applicable to the TTFA. The latter two are more relevant to financial institutions and larger publicly traded entities.
Debt under the Normalization Committee
Loans and borrowings have actually declined under the NC. Falling by 30.77% from $4.03 million in 2019 to $2.79 million in 2021.
However, Accounts Payable increased by 10.88% over the same period, from $44.11 million in 2019 to $48.91 million in 2021. Of this, interest payable increased by 63.57%, from $519,829 in 2019 to $850,278 in 2021. This represents interest due on the GORTT and CONCACAF loans for which no interest has ever been paid. Therefore, each year we accrue for the interest payable for that year. The interest on the CONCACAF loan must be paid in 2025/26 after the final principal payment is made, as per the agreed amortization loan schedule. Therefore, we can expect this line item to continue to increase going forward.
Other payables and accruals have remained fairly consistent around the $29 to $30 million mark. However, what has been increasing are amounts due to the GORTT for statutory deductions like income tax, national insurance and health surcharge and the interest and penalties due on these. The NC inherited a situation where deductions were made, but not remitted to the statutory authorities. In fact the TTFA was never registered with the Board of Inland Revenue or the National Insurance Board and we found no evidence of remittances being made with respect to statutory deductions. Therefore each year, as interest and penalties rise, these figures continue to increase and as at December 31, 2021 this figure totalled $9,080,751. We are now in the process of regularizing this situation.
Statement of comprehensive income
Revenue has declined by $24.12 million, or 62.5% from 2019 to 2020. As the pandemic shut down activity, grants declined by $13.44 million or 51.4%. Sale of rights, appearance fees, and the write back of statute barred liabilities, which accounted for $9.17 million, disappeared. And sponsorship fell by 55.9%, from $2.47 million to $1.09 million. Thankfully, grants were back up to $20.5 million in 2021, as footballers returned to competition, albeit under constrained circumstances with the support of the FIFA Covid Solidarity Grants.
Total operating expenses also declined from $35.78 million in 2019 to $15.41 million in 2020, before increasing to $25.04 million in 2021. The increase from 2020 to 2021 was primarily due to depreciation on the Home of Football, match fees, overseas travel and professional and legal fees. The technical professional fees were earned by the coaching staff and the administrative professional and legal fees were primarily incurred for the Bankruptcy and Insolvency process, consulting and payroll services. Details can be provided to the Membership on request.
The NC therefore rejects your assertions that it continues to adopt an ostentatious approach to management of the TTFA. In fact we have been quite prudent and have ensured that we did not incur any debts that we could not service.
SOURCE: T&T Guardian