MYSTERY surrounds the status of the Scottish Rugby Union’s accounts after the governing body informed member clubs this [Friday] evening that the financial statements will not be made available ahead of AGM2 on 26th November.
The communication stated that “additional work needs to be done before the accounts are approved”, which is bound to spark concern given that the 2019-20 financial year ended on 31st May, meaning that Murrayfield has had 160 days to get their house in order.
The Welsh Rugby Union produced their accounts on 14th October, which was 106 days after their year-end on 30th June 2020. The RFU [England] share that 30th June year-end and produced their accounts on 29th October, which means there was a 121 day lag. And the Irish Rugby Football Union, who have changed their accounting date from 30th April to 31st July in order to align their financial year with their playing season and accommodate any summer tour, produced their accounts on 23rd October, which was 84 days after their accounting period ended.
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The Union’s bye-laws require that the financial statements be laid before an Annual General Meeting “within four calendar months after the Scottish Rugby Union plc’s financial year end but in any event by no later than 31 August in the calendar year, as the Scottish Rugby Board may determine”.
That deadline was pushed back by the SRU when it was decided to hold this year’s AGM in two parts so that the business of a electing and ratifying office-holders could be completed in a timely manner by video conference, while the issues which need discussed such as the two motions being proposed by clubs and the accounts could be dealt with at a point when all delegates were able to meet in the same room.
However, with it becoming apparent that AGM2 could not happen in person before the New Year, it was decided to push ahead by video conference, with the accounts expected in good time before the day of the meeting.
It has now been proposed that a “financial presentation” be given to member clubs instead, before the meeting is adjourned and reconvened when a fuller set of accounts become available in December. The SRU are not in the practice of releasing the full accounts until they have to lodge them at Companies House, which is usually the end of February, but isn’t until 31st May this year because all companies have been given a three month extension to their filing deadline.
The club communication said:
“Following a presentation to the Scottish Rugby Council, the President and the Chairman of Scottish Rugby will be issuing documentation in the course of next week relating to Stage 2 of the 2020 AGM and the Special General Meeting scheduled for 26 November 2020.
The current pandemic has created circumstances where additional work needs to be done before the accounts are approved, providing an additional level of assurance for the organisation and stakeholders that the impact of the pandemic on the organisation has been fully examined and can be explained to members. That work is taking longer than anticipated.
“Ensuring that members are informed about the effect of the pandemic on the organisation and our sport more generally, and in particular, have sufficient time to consider the financial statements and ask questions about them, is a priority for the Council and Board.
“It is therefore proposed that a financial presentation will be given to members at Stage 2 of the AGM, with more detailed financial information following shortly thereafter.
“Following discussion, and with the support of the Scottish Rugby Council, Stage 2 of the resumed AGM on 26 November will therefore focus on club and domestic rugby issues, including the motions submitted by clubs, presentation of the preliminary results for the 2019/20 financial year, and commentary on the organisation’s response to the pandemic and its impact on the current 2020/21 year. The Annual General Meeting will then be adjourned, to enable the Special General Meeting to be held in respect of Biggar RFC’s motion.
“The formal laying of financial statements will take place later in December, allowing stakeholders adequate time in advance to study the accounts and submit questions ahead of that resumed meeting.
“The Council and Board are grateful for members’ continued patience and understanding during these unprecedented times.”
Iain,
Of course it is relevant that RFU, WRU & IRFU 2020 Annual Reports & Accounts have long been approved and out there in the public domain, while up here we won’t be seeing any formal detail from the SRU until December. December!!!
No money, no game – maybe no SRU….. Go figure. As Keith has explained, the SRU’s debt reduction over recent years is nothing like as much as claimed, or as you suggest. Equally, what has not been widely recognised is that despite frequent self-congratulatory announcements regarding domestic sponsorships, etc, the SRU has benefited largely from revenue-generating deals struck collectively by other organisations responsible for staging and marketing rugby to a wider audience – 6 Nations, Pro14 (although this now appears very fragile) and World Rugby / RWC. Quite apart from any possible input from CVC Capital Partners, again to groupings in which the SRU has membership, sometimes on a reduced scale to other partners. It could be argued in these instances that the financially weak (capital and reserves) SRU derives benefits from the collective(s) not because of any particular feature, but in spite of itself.
And one final point in relation to the delayed 2020 SRU Annual Report and Accounts. You should have seen the cosmetic games they played and how they massaged the 2001 & 2002 financial accounts on the back of the Foot & Mouth outbreak resulting in the 2001 home 6N fixture vs Ireland being postponed from the end of one season / financial year (2001) to the beginning of the next season / financial year (2002)….. Makes one wonder, but obviously not if one is prepared to blindly accept as gospel everything that comes out of the mouth of EH12?
Unless there is fraud the accounts should show the situation as at that moment in time. There can of course be many different interpretations of the figures but the accounts should be cast in stone and there should be absolutely no need to spend more time preparing them.
The longer the delay the more suspicion here will be of dubious activity.
Most would accept (or at least wish to believe that, even at the hand of this generally unloved “Junta”) historical fraud is rather unlikely, possibly the least of our concerns going forward.
More probably, with PwC presumably nowadays on their reputational mettle, prompted by pandemic considerations, the hold-up is due to some uncertainty in relation to the SRU auditors’ view of the Governing Body on a “going concern” basis…. Future trading projections, asset valuation(s) and the reliability of cost / revenue (income) estimates going forward, hopefully(!) in accordance with Covid emergency contingency planning, will lie at the heart of this key feature affecting SRU creditworthiness and indeed management credibility.
UK auditing standards acknowledge (in ISA 240, paragraph 5) that:
Owing to the inherent limitations of an audit, there is an unavoidable risk that some material misstatements of the financial statements may not be detected, even though the audit is properly planned and performed in accordance with the ISAs.
This is a long-established and important principle, and one poorly understood.
Auditing is not the same as fraud detection, and a properly performed audit does not, and cannot, provide a guarantee that no material misstatements exist in the financial statements. If it did, it would be more akin to an insurance policy, or a policing activity, than an audit.
The audit opinion is just that, it is an opinion, albeit an expert opinion, based on assessed risk and the performance of extensive procedures to reduce that risk to an acceptable level. The risk cannot be eliminated entirely, not least because of the potential for human error.
We live in interesting times!
Share the concerns here: woeful comms yet again, and if there could possibly be a simple explanation then why have the member clubs not had it?
Accounts should never be delayed without good reason, yet once again a case of more questions than answers from BTM.
Is the reason:
A) Incompetence?
B) Subterfuge?
C) A disagreement over how much Covid can be used to cover over a bad 2019/20, especially the impact of WC19?
D) A realisation that the “No Redundancy” policy means that debt is mounting through paying significant numbers of staff without gainful employment or fully gainful employment?
E) The delay itself adding to concerns in the Board (every individual member as part of their fiduciary duties) and the Auditors on signing the accounts off as a going concern, given debts must be mounting, banking facilities must be getting used, and income forecasts can only be getting bleaker with no crowds in Autumn Games, little chance of big crowds at 6N, and apparent silence on the CVC front.
F) Some or all of the above.
Select your answer, I could not possibly comment.
However, extremely worrying (lack of) news.
I heard on the radio that something like 60% of annual accounts of businesses have been delayed because of Covid. This has approval from the government. The bottom line is delayed or not you can’t falsify the accounts so we will know where we stand. Maybe however by taking this extra time and knowing there has been no crowd income at the Autumn Tests we may have a clearer picture of where we now stand. Remember this is the regime that took over when we were £20 million plus in debt. I’d rather wait and get a clear picture to where we stand than more ifs and buts. Of course I understand the frustration but ultimately we will get the facts regardless.
I’m more worried about the participation side of things than the money.
Iain
These accounts are for June 2019 to May 2020.
The govt has given business latitude to submit their accounts later than usual and many have taken that option.
What doesn’t work so well for you is why England, Wakes and Ireland have managed to get their accounts out well before us.
We’ve already been told that loans have been taken out so all that nonsense of being debt free – which wasn’t true anyway – is now being reinforced as specious.
What else could the Council do? Sorry you need to get the accounts ready for the 26 Nov?
It’s always tricky to try and parse statements. What is it the Council are supporting? That there is an AGM part three for the sole purpose of discussing the accounts. They aren’t supporting the delay to the accounts.
This is the really important part of the statement. “ The current pandemic has created circumstances where additional work needs to be done before the accounts are approved, providing an additional level of assurance for the organisation and stakeholders that the impact of the pandemic on the organisation has been fully examined and can be explained to members”
Does any interpretation of this paragraph suggest that things are good at Scottish Rugby? Screams going concern issues to me.
I hope I’m wrong.
Of course there are concerns, at these times where aren’t there concerns. I just hope we get a clearer picture with this delay.
Dom, why all the interest in what other rugby nations are doing, I really couldn’t care.
What amuses me in all this is that David Barnes is doing a superb job reporting Scottish rugby, great articles on the game, players and what is happening on the pitch which barely gets a reaction. We’ve just had our best 6 Nations for years yet so called rugby supporters hardly bat an eyelid, mention the SRU and suddenly the rafts of negative comments. The accounts will be what they are and ultimately will tell the story, good or bad, I’d be fascinated to hear the reaction if they exceed expectations though I suspect given the current climate they won’t. What I’m interested in is how are national team are faring at the moment, never seen such strength in depth in a Scotland squad. It is quite interesting the gradual success of our national team and pro teams had happened over the last few years, I often wonder who should take the credit for this! This is not a particular go at anyone but just remember where we’ve come from in the last few years, I remember that period 2000-14 pretty clearly. I can’t think of too many highlights on or off the pitch.
The answer to that Iain is professional rugby.
Comparisons are useful to understand how we do things against our competitors. Yes these come on the field and it’s great that we are now producing results. What a difference 12 months makes.
It’s always helpful to look at how we can improve. Usually that’s by learning what other sports and unions are doing well and how that may work in Scotland.
This is a grave health and financial crisis. Professional rugby only exists if there is cash to pay the players. You just have to look down south to the problems the Premiership have at the moment. Directly through not enough revenue to cover their costs.
If Scottish Rugby is having issues with its 19/20 accounts just think what the 20/21 ones will be like. Money and rugby are inextricably linked – whether that’s Scotland, Edinburgh, an S6 side or a regional club.
Iain
Whilst Dom and I share your concern and passion for participation in the club game, I wish we could convince you that the money is connected.
Before I try can I correct you on one of your claims, the “debt” (or more strictly the borrowings at the Bank excluding debenture debts) at the end of 2010/11 was £12.7m) So whilst “this regime” has done a decent job on reducing this since taking over, it has not done anything like the £20m plus you claim.
To the money. The focus on investing from the top down has not helped participation (For example the Exec pay, Old Glory, Four more journeymen overseas players in last two months and not a sniff for S6 players, the Hagibus Fine etc could instead have funded more than 100 additional senior development officers in our schools and clubs). Think of the difference all or some of those could have made?
This from Execs who at AGM1 in answer to a question on adult playing numbers (probably the single biggest concern of all clubs) said “for those interested these will be within the Annual Report at AGM2”
Now of course delayed again!
Don’t tell me SCRUMS too needs “additional work before being approved”?
I’m sure there will be a perfectly innocent explanation for the delay. If the Council are agreeing to the delay and they are the clubs after all, then that’s good enough for me.
I notice The Council have given their support to the delay in issuing the accounts. They are our, the clubs representatives who we elect, I would hope if they thought something was amiss then they would not have given their support.
You would have thought they would have had enough time by now to cook up another set of books wouldn’t you?
‘additional work needs to be done before the accounts are approved’
Is this a euphemistic way of saying that the auditors are refusing to sign off the numbers put to them by the SRU? Pretty damning if that’s the case.
Murky waters…..
I’m going for AGM part 3 taking place on Hogmannay, probably at about 5:22 pm, which is about the same time they send their Club update emails out.
I don’t like this. Not at at all. The year in question ended 31 May. Covid is the SRU excuse for absence of accounts. But the more serious ramifications of Covid are post 31 May! I am now seriously regretting my Nevis and Castle subscriptions. I feel like I have just wasted money on the Emperors New Clothes!
Well said Chris
The 19/20 accounts won’t be pretty. World Cup years are always bad for us and to go out in the group stages doesn’t help.
In effect we are talking about two months of COVID related activity – April and May. And lots of SR staff were on furlough then.
What’s so unique about the SRU that they have had this delay when the other Unions managed it? Yes auditing is an issue.
The bigger issue is the complete sh£&show that is SR comms. On top of the ticketing debacle this is just rank incompetence. The club comms were sent out at 5.31 pm on a Friday. Are you asking us to believe that this suddenly turned up?
Things must be much worse than we feared