EUC accounts, updated explanation

Dear neighbours:

Today I have seen that the Balance Sheet as of 12-31-2020 and the Profit and Loss Account for fiscal year 2020 have been published on the EUC COSTA ESURI website.

The accounting of the EUC Costa Esuri is a box of surprises, and from year to year they are not lacking.

As usual, the amounts of the previous year are not presented for comparison as provided in the General Accounting Plan, in addition to facilitating their interpretation, some denominations of the items of the same change from year to year, with which their comparison and analysis is more difficult.

PROFIT AND LOSS ACCOUNT:

In the financial statements for 2020, the amounts collected in the Profit and Loss Account DO NOT coincide with those reflected in the document called Entity Income and Expenses.

I detail the most important: In the Entity’s Income and Expenses document, which has been published for a longer time, the owners’ fees are collected as Income with an amount of 950,265.86 euros, and in the published Profit and Loss Account on the 23rd an amount of 950,362.29 euros is collected, there is a small difference that should not be; thus, the result for the year also differs, in the first document it is 378,204.23 and in the second and last published it is 378,300.65.

This difference requires a detailed explanation.

Income from late payment interest of 36,517.51 ​​euros and interest from collections in executive collection of 26,058.01 euros are collected. There is no information on the amounts collected from debts from previous years, which is known to be collected every year. How are these amounts accounted for?

The total amount of the instalments receivable is recorded as income, but it is not reported what amount has been collected during the year and what amount has been unpaid to be collected in future years.

Comparing with the previous year, the most important difference is that, in 2019, operating expenses were 1,040,834.17 euros when including the amount of payments to Confortservi of the overdue debt, and in 2020 they have been 565,196.57 euros.

The result registered in 2019 was a deficit of 60,599.61 and in 2020 a surplus of 378,300.65 euros.

BALANCE SHEET:

Analysing this document is much more complicated, because its form changes from year to year, as well as some names of its items.

The total amounts of Assets and Liabilities, and the Profit for the Year included in the Profit and Loss Account coincide with that included in the Balance Sheet.

ASSETS:

Comparing with the data for 2019, the most striking difference is that the amount of Trade debtors and other accounts receivable corresponding to the amounts of installments pending collection, goes from 5,111,779.99 in the 2019 Balance to the amount of 7,466,997.35, with an increase of 2,487,068.65 euros, why this difference, what is it?

LIABILITIES:

Comparing with fiscal year 2019, the most notable difference is that in section III. Short term debts. Other financial liabilities. Items pending application, has gone from having an amount of -5,264.88 euros in 2019 to 2,105,967.04 euros in 2020. Why, what are these items pending application and what do they mean?

Some of the items included in the Balance Sheet coincide with some of those included in the document presented as JUSTIFICATION OF BALANCE (It has never been explained what this balance means, balance of what? It could be from Own Funds, but It does not coincide either, since in one document there is an amount of 5,394,855.48 and in another, 5,404,259.06 euros); but other quantities I have not been able to relate them.

The items of the Assets of the Balance Sheet: Customers for sales and provision of services with an amount of 6,863,043.32 and that of Customers, group companies 603,954.03, do not appear in the JUSTIFICATION OF THE BALANCE document.

The Liability item of the Balance Sheet: Short-term debts. Other financial liabilities. Items pending application with an amount of 2,105,967.04, does not appear in the JUSTIFICATION OF BALANCE document.

In the Ordinary General Assembly held in 2019, I stated that I was not satisfied with the way the Annual Accounts were presented, it is stated in the Minutes of the Governing Council meetings that the Administrator says that the General Accounting Plan and the accrual principle has been followed, which is not true.

The Annual Accounts presented do not comply with the generally accepted principles and criteria of accounting law.

They are not presented with the figures from the previous year to make a comparison, they do not comply with the accrual principle, they do not make a short-term and long-term temporary classification in some of their items and they mix cash criteria and accrual criteria in some documents .

Nor is a Report on the Annual Accounts formulated to explain and complement some of its items, which would help to understand them.

In short, they are incomplete and inaccurate, they do not show a true image of the Entity’s assets, its rights and obligations; because if in the Balance Sheet it appears as short-term debts 2,105,967.04, to whom is this amount owed?

I hope that these comments that I have been transmitting to you, will help you to understand the details of the Annual Accounts, to assess them and judge them, since they will be submitted for approval at the General Assembly on October 29.

Sincerely,

Francisco Tapia