COMMENTS ON THE REPORT OF AGREED PROCEDURES ON FINANCIAL REPORTS FOR THE YEARS 2019-2022 OF THE EUC COSTA ESURI
Dear CERA members,
The EUC Council has published a report on the financial accounts for the years 2019-2022 on its website. This report consists of 8 pages and for those members who do not usually read this type of document we will make some brief comments.
This report has been published more than two months after the celebration of the last AGM, and NOT at the initiative of the EUC Council but at the request of the Transparency Council of Andalusia after a member of CERA filed a complaint.
As you very well know, every year since the constitution of the EUC, the attendees to its AGM’s kept complaining about the lack of clarity and information of the annual accounts.
Until 2015 the annual accounts were presented according to the General Accounting Plan (although without the annual report). In 2015, the administrator was changed and since then the accounts have adopted the format of the communities of owners, an income/expenses account and a balance justification. This is not correct.
At the A.G.M. held in 2016 the annual accounts for the year 2015 were not approved, nor were they approved in the following year.
At the A.G.M. held in March 2022 the 2021 accounts were NOT approved and it was agreed by the AGM. to conduct an audit of the annual accounts of the last four years, ratifying the agreement taken by the EUC Council at its meeting held on February 2.
During the year 2022 the EUC Council has been looking for an auditor. Which was not easy because the auditors asked for the major accounts of each owner and the administration did not have them.
So first and foremost, the published document IS NOT the report of an AUDITOR, but an AGREED PROCEDURE REPORT (between the EUC Council and the auditor) on the financial information that is attached with the report of the financial years 2019-2022.
This Report, is issued only to obtain economic justification for income and expense in the profit and loss account, and assets and liabilities in the balance sheet for the periods in question, and MAY NOT BE SUITABLE FOR ANY OTHER PURPOSE (as stated on the same).
In summary, the agreement was to check that the accounting entries made have documentary justification, but that if a different procedure had been applied, other matters could have been revealed.
The Report does NOT reflect whether all accounting entries adequately represent and interpret correctly all the financial transactions performed.
Secondly, the financial statements accompanying the Report are those drawn up by the auditor, NOT the documents included in the minutes of the AGM’s. This can be easily checked , because these minutes are published on the EUC website. And from the information contained in the minutes, we doubt that the accounts have had a correct continuity since their inception.
As the Report is not an AUDIT of the annual accounts, the report does not give any opinion on whether the annual accounts correctly reflect the true and fair view of the entity’s equity, financial position and results, which is the subject of an audit.
Third, the Report mentions what they call EXCEPTIONS, which means qualifications or disagreements. Among them:
- For EXPENDITURE:
A) There is a serious breach of the public tendering procedure for contracts for the provision of services by the EUC, maintenance and management, administration and advice to the EUC Council. The company CONFORTSERVI provides its service since the EUC’s constitution and MR MANAGERING MADRID since 2015.
B) According to the auditor, CONFORTSERVI has been paid in excess of €5,899 during the years 2018-2019, for the debt that was owed, or €5.174. depending on the data from which this is taken. This is an issue that the Governing Council and the administrator must clarify.
C) In May 2017, a debt to CONFORTSERVI of €579,708 is recognised in public deed plus VAT a total of €706,622 that are paid between 2018 and 2019. Is there any documentary evidence of invoices with VAT in the years 2018 and 2019? Because in the accounting of those years the accounting was different from the current invoices. It is one thing that should be checked.
- For REVENUE:
The auditor asked the SGTH (Tributaria) for information on unpaid dues for each plot, no reply. This means that neither the EUC Council, nor its administration have information on unpaid fees. Therefore, the auditor could not verify the amounts in the accounts of unpaid fees from previous years, which account for the largest part of the entity’s accounts and assets.
- Regarding the Balance Sheet (ASSETS/LIABILITIES)
The auditor points out several exceptions or anomalies that had already been revealed by a member of the CERA Committee. The EUC Council has never taken them into consideration, nor the administrator. On the contrary, both keep saying that the accounting and accounts were good.
We repeat here the previous comment with regard to unpaid income and assessed fees.
The report made does not clarify all the questions that arise with the method of accounting and the annual accounts. It is very limited. It would be advisable that the EUC Council had talked with the owners by means of and EGM in order to decide what to do and how to do it. We consider the cost that has been paid for the Report is one more useless expenditure.
We will ask the EUC Council to correct all the anomalies noted and others shown on the Report. In the meanwhile, it has to be made clear that an AUDIT HAS NOT been carried out, as the Council will say, and that other aspects of accounting and annual accounts require explanation. That the years to be audited were 2018-2021. Why did the EUC Council modify the period to 2019-2022?
If any member of CERA is interested and wants to have more information, please contact us.
The CERA Committee.
June 2023