AFC Club Licensing Manual 1-2010
AFC Club Licensing Manual 1-2010
AFC Club Licensing Manual 1-2010
MANUAL
VERSION 01/2010
Table of Contents
Article
Definitions 1 2 Introduction Sporting Criteria 2.1 Criteria 2.1.1 2.1.2 2.1.3 3 3.1 Criteria 3.1.1 3.1.2 4 4.1 Criteria 4.1.1 4.1.2 5 5.1 Criteria 5.1.1 5.1.2 5.1.3 6 6.1 A Criteria B Criteria C Criteria A Criteria B Criteria A Criteria B Criteria A Criteria B Criteria C Criteria
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6 11 12 12 12 14 15 16 16 16 17 18 18 18 24 26 26 26 27 27 28 28 28 28 28 31 32 32 32 33 33 41 42 43
Infrastructure Criteria
Legal Criteria
Financial Criteria Overview of the Financial Chapter 6.1.1 6.1.2 6.1.3 6.1.4 6.2 6.2.1 6.2.2 6.2.3 6.2.4 6.2.5 6.2.6 6.2.7 Achieving the Objectives Historic Financial Information Future Financial Information and Subsequent Information Confidentiality of Information and Communication of the Licensing Decision The Criterion Purpose of the Criterion Reporting Period Information to be Prepared by the Licence Applicant Assessment of the Annual Financial Statements Licensor Decision Relevant Appendices
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44 44 44 44 45 47 48 49 50 50 50 50 50 51 52 52 53 53 53 53 53 54 55 55 56 56 56 56 56 57 57 57 58 58 58
Criterion F.03: No Payables Overdue Towards Football Clubs Arising from Transfer Activities
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59 59 60 62 62 62 62 62 62 63 63 63 64 64 64 64 65 66 66 66
Definitions
Definition Accounting policies AFC Club Licensing Manual (Manual) The specific principles, bases, conventions, rules and practices adopted by an entity in preparing and presenting its financial statements. Working document which describes the AFC Club Licensing Regulations. The guidelines of the AFC Club Licensing Regulations provide the Licensor and Licence Applicants further understanding into the reasons behind the criteria as well as a standard interpretation of the criteria and assessment process. In relation to the financial criteria in the Regulations, the Manual also provides details on mandatory and minimum requirements. The regulations consisting of five categories of criteria and a core process. The requirements of the AFC Club Licensing Regulations must be transferred into a National Club Licensing Regulations. Club competitions organized by the Asian Football Confederation (AFC) See Season to be licensed Working document which describes the requirements to be fulfilled by the clubs with regard to the Stadium to be used for AFC club competition matches. In an engagement to perform agreed-upon procedures, an auditor is engaged to carry out those procedures of an audit nature to which the auditor and the entity and any appropriate third parties have agreed and to report on factual findings. The recipients of the report must form their own conclusions from the report by the auditor. The report is restricted to those parties that have agreed to the procedures to be performed since others, unaware of the reasons for the procedures, may misinterpret the results. The systematic allocation of the depreciable amount of an intangible asset over its useful life. For example, for the capitalized direct costs of acquiring a players registration, the useful life is the contract life. A complete set of financial statements prepared as at the statutory closing date, normally including a balance sheet, profit and loss account, a statement of cash flows and those notes, other statements and explanatory material that are an integral part of the financial statements. An entity, including an unincorporated entity such as a partnership, over which the investor has significant influence and that is neither a subsidiary nor an interest in a joint venture. See Core Process The objective of an audit of financial statements is to enable the auditor to express an opinion whether the financial statements are prepared, in all material respect, in accordance with an identified financial reporting framework. The phrases used to express the auditors opinion are give a true and fair view or present fairly, in all material respects, which are equivalent terms. A similar objective applies to the audit of financial or other information prepared in accordance with appropriate criteria. In an audit engagement, the auditor provides a high but not absolute, level of assurance that the information subject to audit is free of material misstatement. This is expressed positively in the audit report as reasonable assurance.
AFC Club Licensing Regulations (Regulations) AFC Club Competitions AFC Season AFC Stadium Regulation Agreed-upon procedures (AUP)
Amortisation
Associate
Budget
The schedules containing an entitys future financial information, based on managements assumptions about events that may occur in the future and possible actions by an entity. Cash comprises cash on hand and demand deposits. Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Financial statements of a group presented as those of a single economic company. The power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. Minimum requirements that the Licensor has to put in place for verification of compliance with the criteria described in the manual as basis for the issuance of a licence to an applicant. Requirements to be fulfilled by the Licence Applicant divided into five categories (sporting, infrastructure, personnel and administrative, legal and financial), with each category being split into three grades: A, B, C (mandatory and best practice recommendation) The date by which each Licensor must submit to AFC the list of clubs that were granted with a licence by the national decision-making bodies. This date is defined by AFC each year and announced to the Licensors. The date by which each Licensor requires Licence Applicants to have submitted all relevant information for its application for a licence. The cost of an asset, or other amount substituted for cost, less its residual value. Residual value is the estimated amount that an entity would currently obtain from disposal of the asset, after deducting the estimated costs of disposal, if the asset were already of the age and in the condition expected at the end of its useful economic life.
Criteria
Deadline for submission of the list of licensed clubs to AFC Deadline for submission of the application to the Licensor Depreciable amount
Those payments to third parties for the acquisition of a players registration, excluding any internal development or other costs. Costs to include: a) Transfer fee payable for securing the registration; b) Transfer fee levy (if applicable); and c) Other direct costs of obtaining the players registration (eg. payments to agents for services to the club, legal fees, compensation payments for training and development of young players in accordance with FIFA and/or domestic transfer regulations and other direct costs in connection with the transfer).
All forms of consideration given by an entity in exchange for service rendered by employees. An event or condition is of major economic importance if it is considered material to the financial statements of the reporting entity and would require a different (adverse) presentation of the results of the operations, financial position and net assets of the reporting entity if it had occurred during the preceding financial year of interim period. The financial reporting period ending on the statutory closing date, whether this is a year or not, and which is not an interim period. Information about the prospective financial effects of future events and possible actions on the entity concerned.
AFC CLUB LICENSING MANUAL
Going concern
A reporting entity is normally viewed as a going concern, that is, as continuing in operation for the foreseeable future. It is assumed that the entity has neither the intention nor the necessity of liquidation, ceasing trading nor seeking protection from creditors pursuant to laws or regulations. A parent and all its subsidiaries. A parent is an entity that has one or more subsidiaries. A subsidiary is an entity, including an unincorporated entity such as a partnership that is controlled by another entity (known as the parent).
Group
Information about the financial effects of past events on the entity concerned. Historic financial information is in respect of the financial performance and position prior to the licensing decision. An auditor who is independent of the entity, in compliance with the IFAC Code of Ethics for Professional Accountants. For additional information, visit www.ifac. org. The term auditor may also be used when describing related services or assurance engagements other than audits. An identifiable non-monetary asset without physical substance, such as the registration of a player. A financial report containing either a complete set of financial statements or a set of condensed financial statements for an interim period. A financial reporting period shorter than a full financial year. Standards and Interpretations adopted by the International Accounting Standards Board (IASB). They comprise: a) International Financial Reporting Standards; b) International Accounting Standards; and c) Interpretations originated by the International Financial Reporting Interpretations Committee (IFRIC) or the former Standing Interpretations Committee (SIC).
Independent auditor
Intangible asset Interim financial statements Interim period International Financial Reporting Standards (IFRS)
The International Auditing and Assurance Standards Board (IAASB) issues International Standards on Auditing as the standards to be applied by auditors in reporting on historical financial information. According to the IAASB, one of its objectives is establishing high quality auditing standards and guidance for financial statement audits that are generally accepted and recognized by investors, auditors, governments, banking regulators, securities regulators and other key stakeholders across the world. For additional information about the IAASB and ISA, visit www.ifac.org
International Standards on Review Engagements (ISRE) International Standards on Related Services (ISRS) Joint venture
The IAASB issues standards applicable to a review of historic financial information. Current ISREs are available from www.ifac.org The IAASB issues engagement standard that include the application of agreedupon procedures to information. Current ISRSs are available from www.ifac.org A contractual arrangement whereby two or more parties (the venturers) undertake an economic activity that is subject to joint control. Where an entity included in the consolidation manages jointly with another entity not included in the consolidation an economic activity that other entity (Joint Venture) may be dealt with in the Group accounts.
Licence Licence Applicant Licensee Licensing administration Licensing cycle Licensing season Licensing process Licensor Management (personnel)
Certificate confirming fulfillment of all mandatory minimum requirements by the licensee in order to start the admission procedure for AFC Champions League. Legal entity fully and solely responsible for the football team participating in national and international club competitions which applies for a licence. Licence Applicant which has been granted with a licence by the Licensor. Body or staff within the Licensor that deals with club licensing matters. See Core process Season for which a licence has been granted (cf. also Season to be licensed) Process in which a licence is granted Body that operates the national licensing system and grants the licence Describes those responsible for the preparation and fair representation of the financial statements and other financial information. Other terms may be appropriate depending on the legal framework in the particular jurisdiction. For example, in some jurisdictions, the appropriate reference may be to those charged with governance (for example, the directors). Omissions or misstatements of items or information are material if they could, individually or collectively, influence the economic decisions of users taken on the basis of the financial information. Materiality depends on the size and nature of the omission or misstatement judged in the surrounding circumstances or context. The size or nature of the item, or a combination of both, could be the determining factor. Indicates a partys discretion to do something (ie. optional, rather than mandatory) Indicates an obligation to do something The accounting and reporting practices and disclosures required of entities in a particular country. Working document which describes the national club licensing system in a particular country. It includes all minimum requirements of the AFC club licensing system as well as any specific national particularities and objectives. An entity that has one or more subsidiaries. The higher of an assets fair value less costs to sell and its value in use. Fair value less costs to sell is the amount obtainable from the sale of an asset in an arms length transaction between knowledgeable, willing parties, less the costs of disposal. Value in use is the present value of future cash flows expected to be derived from the asset. Any legal entity according to national law and/or national association statutes, which is member of the national association and/or its affiliated league. A party is related to an entity if:a) Directly, or indirectly through one or more intermediaries, the party: i) controls, is controlled by, or is under common control with the entity (this includes parents, subsidiaries and fellow subsidiaries); ii) has an interest in the entity that gives it significant influence over the entity; or iii) has joint control over the entity;
Material or Materiality
May Must or shall National accounting practice National Club Licensing Manual Parent Recoverable amount
b) the party is an associate of the entity; c) the party is a joint venture in which the entity is a venturer; d) the party is a member of the key management personnel of the entity or its parent; e) the party is a close member of the family of any individual referred to in (a) or (d); f) the party is an entity that is controlled, jointly controlled or significantly influenced by, or for which significant voting power in such entity resides with, directly or indirectly, any individual referred to in (d) or (e); or g) the party is a post-employment benefit plan for the benefit of employees of the entity, or of any entity that is a related party of the entity. Reporting entity/entities The registered member and/or company or group which, according to the rules of this manual, must provide the Licensor with respectively statutory or consolidated financial statements. The objective of an engagement to review financial information is to enable an auditor to express a conclusion whether, on the basis of the review, anything has come to the auditors attention that causes the auditor to believe that the financial information is not prepared, in all material respects, in accordance with an identified financial reporting framework. A review, in contrast to an audit, is not designed to obtain reasonable assurance that the financial information is free from material misstatement. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review may bring significant matters affecting the financial information to the auditors, but it does not provide the evidence that would be required for an audit. Season to be licensed Significant change Means the AFC season for which the Licence Applicant has applied for the licence; ie. 1 January 31 December Means an event that is considered material to the documentation previously submitted to the Licensor and that would require a different presentation if it had occurred prior to the submission of the licensing documentation. The power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. Means the venue for a competition match including, but not limited to, all properties and facilities near to such stadium (for example, offices, hospitality areas, press centres and accreditation centres). The annual accounting reference date of the reporting entity. Events or conditions occurring after the licensing decision. An entity, including an unincorporated entity such as a partnership that is controlled by another entity (known as the parent). If the minimum requirements of criterion F.01 for content and accounting are not met in the audited annual financial statements, additional information must be prepared and submitted by the Licence Applicant. The content and presentation of the supplementary information, if required at all, will vary between Licence Applicants depending on the amount of information already disclosed in the separate audited annual financial statements.
Review
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Introduction
This AFC Club Licensing Manual (hereinafter known as the Manual) is the working document which describes the AFC Club Licensing Regulations. The guidelines of the AFC Club Licensing Manual aims to provide the Licensor and Licence Applicants with further understanding into the reasons behind the criteria as well as a standard interpretation of the criteria and assessment process stated in the AFC Club Licensing Regulations. This Manual should be read together with the AFC Club Licensing Regulations (in particular Chapters 6-10 of the AFC Club Licensing Regulations). This AFC Club Licensing Manual focuses on the criteria listed in the AFC Club Licensing Regulations. Licensor may incorporate the assessment process into the National Club Licensing Regulations. Note: You will notice that there are fewer criteria listed in this Manual compared to the criteria in the AFC Club Licensing Regulations. The reason some of the criteria are not listed in this Manual is because these missing criteria has no AFC commentaries and/or suggested assessment process. These missing criteria though is still compulsory to be met and must be included in the National Club Licensing Regulations. The national associations are invited to: 1. Read and understand the AFC Club Licensing Manual in conjunction with the AFC Club Licensing Regulations; 2. Decide where applicable, if the proposed assessment process would be applicable to the criteria listed in the AFC Club Licensing Regulations and thereafter to the national context; 3. Review the format (layout) and structure of the assessment process in relation to the criteria in the National Club Licensing Regulations and adapt it accordingly, if available; 4. Take into account national law, statutes and regulations; 5. Adapt, where applicable, its own structure and relevant organisation according to the minimum requirements regarding the core process and further procedures; 6. Consider other more stringent assessment process than those proposed by AFC, and including them into the National Club Licensing Regulations, according to the specific needs and the existing quality of domestic competitions; 7. Exchange opinions and experiences with AFC and other AFC member associations; 8. Incorporate the selected and identified assessment process into the National Club Licensing Regulations; 9. Set-up a working plan for the implementation of the National Club Licensing Regulations taking into account the AFC deadlines for exceptions and accreditation as well as the national decision-making process.
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2
2.1
2.1.1
No. S.01
Sporting Criteria
CRITERIA
A CRITERIA
Grade A Description APPROVED YOUTH DEVELOPMENT PROGRAMME
AFC comment: A club should not only have youth teams, but also needs to educate and train them effectively and efficiently. A written youth development programme creates the basis for a quality and objective-oriented development. Each club is invited to elaborate its youth development programme according to its own needs and objectives with regard to further improvements of the quality of youth education at all levels (administrative, technical, infrastructure, etc). AFCs Grassroots and Youth Department will help the Licensors with the elaboration of a development document to use as a toolkit at club level. Licence Applicants may use this development document and adapt it accordingly or create their own development programme taking into account the mandatory minimum requirements of the criterion described above. The Licence Applicant defines a regular review process and the validity of the programme. The education programme on the Laws Of The Game has the same objectives as specified in S.04. Recommended assessment process: The Licensor defines the competent body with education and coaching know-how and experience (e.g. Technical Committee, Education Manager of national association) to approve such a programme based on its defined minimum standards. This body should also monitor the implementation and application of the programme during the year. A youth development programme may cover at least a period from 3 up to a maximum of 7 years depending on the chosen time frame by the Licence Applicant. The approval for a submitted youth development programme may affect therefore several licensing cycles. Unless one of the following cases comes into effect, the Licence Applicant does not need to submit the previously approved youth development programme to the Licensor for a subsequent licensing cycle: a) Withdrawal of the approval due to the Licence Applicants non respect of its programme; b) Expiry of the validity of the programme; c) Change in the required minimum content of the programme. No. S.02 Grade A Description YOUTH TEAMS
AFC comment: The affiliation to a Licence Applicant is given as soon as the Licence Applicant provides, on a yearly basis, financial and technical support to the youth teams. Affiliated football clubs must geographically be located within the territory of the national association. AFC recommends that youth teams do not play more than the following number of competition matches or programmes per season and player: a) U-21, U-19 and U-17 do not play more than 40 (forty) competitive official matches per year/player. b) U-15 and U-13 do not play more than 30 (thirty) competitive official matches/tournaments per year/player. AFC further promote to start with football education at the so-called the golden age of learning (i.e. under 13).
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Recommended assessment process: The licensing administration or any other responsible body (e.g. youth department, registration department) within the national association verifies if the Licence Applicant complies with the following: a) required minimum number of teams within the given age groups (e.g. admission request to competition); b) teams playing in recognised competitions (e.g. list of competitions organised by national association and its affiliated members); c) youth players being registered (e.g. players lists with registration numbers; date of birth). This information should be corroborated with information submitted by the Licence Applicant (players list, website etc). No. S.03 Grade A Description MEDICAL CARE OF PLAYERS
AFC comment: The Licensor defines the minimum content of such a medical examination for all players being eligible to play for the first squad. It also defines the period when such checks have to be done and by whom in order to have the possibility to assess it later. The registration of a new player (national or international transfers) may be such an opportunity to require a compulsory medical examination. The Licensor may extend these medical tests to all players of the Licence Applicant. In collaboration with its Medical Department, AFC will draft a toolkit with necessary explanations and recommendations, in particular the Players Medical Passport. The execution of such a medical examination may be noted in the Players Medical Passport which may become part of the players registration. It must be assured that these medical checks are done by qualified medical staff and institutions. The results of those tests have to be communicated to the player and club concerned taking into account the confidentiality. Due to incidents happened in the past few years, the Licence Applicant has the responsibility to minimise medical risks of its players, especially of those which are professional. For youth players, the required medical care is covered according to the criterion S.01 (see above). The Licensor may provide Licence Applicants with a template where the date, the content of the medical examination as well as the responsible medical doctor can be specified. Recommended assessment process: The licensing administration or any other responsible body (e.g. Medical Committee) within the national association verifies if each player of the Licence Applicant has undergone a medical examination including cardiovascular screening within the given period by a medical doctor who is a specialist in that field through: a) a confirmation signed by the required players and the responsible doctor executing the medical examination with date and content of the examination; or b) copy of the medical passports of the required players; or c) other valuable documents provided by the Licence Applicant (e.g. forms created by Licensor or Licence Applicant).
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No. S.04
Grade A
AFC comment: It is important that the Licence Applicant enter into legally binding contracts with the players whereby both the national laws and requirement set forth by FIFA, AFC and National Associations are complied with. This is to protect both the Licence Applicant and the players, help to minimize the contractual disputes and serve as a legal base for disputes resolution. It is important to have a minimum standard across the world for the employment relationship of professional football players. The Licensor defines the minimum content of such a player contract which must include the minimum requirements determined by FIFA in its circular no. 1171. The aim is to cover the most important and essential rights and duties of both contractual parties (professional players and clubs). Recommended assessment process: The licensing administration verifies if each professional player of the Licence Applicant has a written contract containing the minimum requirement by: a) determining the number of professional players that the Licence Applicant has; b) getting a copy of the written contract of each of the said professional player of the Licence Applicant; c) checking the written contract of each of the said professional player and ensuring that all minimum requirement as required by the national law, FFIA, AFC and National Association is contained within the written contract.
2.1.2
No. S.05
B CRITERIA 2.1.2
Grade B Description REFEREEING MATTERS AND LAWS OF THE GAME
AFC comment: The national associations should provide the Licence Applicants with the necessary support in order to fulfil the requirement. He may organise such events for one or more clubs or he is represented by referees or a member of the Referees Committee at a session organised by the club(s). As an example, such and event could cover the following agenda: a) Welcome b) Laws of the Game c) New instructions d) Code of Conduct (proper behaviour) e) Questions and Answers f) Conclusions Recommended assessment process: The licensing administration or any other responsible body (e.g. Referee Committee) within the national association verifies if the required persons took part in such an event during the season prior to the AFC season to be licensed through: a) a signed presence list of the event; or b) other valuable document(s) provided by the Licence Applicant. If the criterion is not fulfilled, the Licensor shall sanction the Licence Applicant according to its catalogue of sanctions (cf.2.2.4).
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2.1.3
No. S.06
C CRITERIA
Grade C Description RACIAL EQUALITY PRACTICE
AFC comment: Racism is still pervasive throughout our society. Everyone has a personal responsibility to treat other people fairly, whatever their colour, background, appearance status and circumstances in order to minimise the discriminatory effect of racism. AFC recommends that clubs, with the support of their national association, establish creative activities to ensure the message is heard loud and clear. The Racial Equality Standard for Professional Football Clubs sets out a series of measures in a framework document to support racial equality practice at clubs level. Information may be found under www.kickitout.org.
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3
3.1
3.1.1
No. I.01
Infrastructure Criteria
CRITERIA
A CRITERIA
Grade A Description APPROVED STADIUMS FOR AFC CLUB COMPETITIONS
AFC comment: The Licensor defines the competent body for approving the stadiums on its territory (e.g. Infrastructure expert, Stadium Committee of the national association, etc.) against the minimum requirements of the AFC Stadia Regulation for AFC Champions League and AFC Cup and the National Club Licensing Regulations. Furthermore it establishes the necessary approval process of stadium starting with the formal request by the owner and ending with the final decision by the competent body (e.g. who is doing what, how and by when and with what) as well as the review processes (re-inspection, update, duty to notify). AFC reserves the right to perform at any time inspections of stadiums. In order to start the AFC competitions smoothly and to avoid the lack of approved stadium due to renovation or other use, AFC recommends that by 31 September preceding the season to be licensed (or by an earlier date defined by the Licensor) the stadium availability is clarified for each Licence Applicant. Recommended assessment process: The Licensor shall check that: a) the Licence Applicant legally owns the stadium (e.g. check land register) or that a written confirmation by the owner (e.g. contract, intention paper) for usage of the stadium during the entire AFC club competition season is available; b) the stadium has been assessed and classified by the competent body according to the required minimum quality level (i.e. meeting criteria I.02 to I.12 of the AFC Club Licensing Regulations and the AFC Stadia Regulations for AFC Champions League and AFC Cup); c) the stadium is within the territory of the association. No. I.08 Grade A Description TRAINING FACILITIES AVAILABILITY
AFC comment: The Licensor is the owner of or provides contract(s) for the usage of the required training facilities. Recommended assessment process: The Licensor checks that: a) the Licence Applicant legally owns the training facilities for usage during the entire AFC club competition season (e.g. check land register); and/or b) the Licence Applicant has concluded a written contract with the owner of training facilities for their usage during the entire AFC club competition season.
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3.1.2
No. I.09
B CRITERIA
Grade B Description TRAINING FACILITIES FOR YOUTH PROGRAMME APPROVED INFRASTRUCTURE
AFC comment: Based on the approved youth development programme (S.01) the Licensor fixes the minimum training facilities for Licence Applicants. The Licensor must define the minimum number and the minimum size of outdoor and indoor training facilities, the dressing rooms, the medical rooms and may define any other facility it feels is appropriate. Recommended assessment process: The Licensor verifies by on site inspection if the Licence Applicant provides the minimum number and size of the requested facilities. If the criterion is not fulfilled, the Licensor shall sanction the Licence Applicant according to its catalogue of sanctions (cf.2.2.4).
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4
4.1
4.1.1
No. P.01
AFC comment: The Licensor defines the required minimum surface of the office and the technical equipment. The Licence Applicant defines the opening hours of its secretariat (e.g. ordinary offices hours 5 days a week), which must either be owned or rented by the Licence Applicant. Recommended assessment process: In order to verify if the Licence Applicant is in compliance with the criterion, the Licensor: a) reviews legal documents with regard to use of the club office: owned or rented premises; b) compares defined minimum standard with available office space; c) compares defined minimum technical infrastructure with available equipment (phone, fax and email); d) verifies if the club secretariat is reachable during the announced office hours. No. P.02 Grade A Description GENERAL MANAGER
AFC comment: The role of the General Manager (or any other appropriate denomination for it) is key for the organisation of a Licence Applicant. He reports to its supervisory body (e.g. Board of Directors). He must ensure that the Licence Applicants staff assumes its responsibilities in line with the guidelines and strategy set up by his supervisory body. Recommended assessment process: In order to verify if the Licence Applicant is in compliance with the criterion, the Licensor assesses whether: a) a General Manager has been appointed by the competent body of the Licence Applicant; b) this person has sufficient time available to execute the tasks of the General Manager. No. P.03 Grade A Description FINANCE OFFICER
AFC comment: The main activities of the Finance Officer are: book-keeping, preparation of financial documents for club licensing purposes, budgeting, regular financial reports to Executive Board, financial advisor in decision-making, financial monitoring, etc. Recommended assessment process: In order to verify if the Licence Applicant is in compliance with the criterion, the Licensor assesses whether: a) a Finance Officer has been appointed by the competent body of the Licence Applicant; b) this person has the sufficient time available to execute the tasks of the Finance Officer; c) this person fulfils one of the given alternatives in respect of the required minimum qualification.
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No. P.04
Grade A
AFC comment: The Security Officer ensures a safe and secure event and liaise with the police and other involved authorities. The national association must ensure that regular courses take place. It should organise meetings to exchange experiences, improve standards and train the Security Officers in cooperation with AFC. The rights and duties of the Security Officer may include: a) drawings of the security basic principles; b) maintenance of close contact with supporters of the club and familiarise himself with their customs and preferences; c) co-operation with the local police and other authorities in security/safety matters; d) compilation of a list of all known troublemakers if in accordance with the national law; e) liaison with fellow security officers of other clubs, travel companies, supporters clubs, police authorities, etc. in connection with matches played at home and away; f) responsibility for the evacuation plan and the safety and security strategy of the club in collaboration with the local authorities; g) responsibility for the emergency organisation of medical help and hospitals incl. regular testing of emergency plans with independent review and reporting; h) development of Crisis Management Plans; i) regular independent testing and review of all security standards; j) responsibility for the appointment and training of stewards within the Licence Applicant. Recommended assessment process: In order to verify if the Licence Applicant is in compliance with the criterion, the Licensor assesses whether: a) a Security Officer has been appointed by the competent body of the Licence Applicant; b) this person has sufficient time available to execute the function of the Security Officer; c) this person fulfils one of the given alternatives in respect of the required minimum qualification. No. P.05 Grade A Description MEDIA OFFICER
AFC comment: The national association may organise with the support of AFC specific courses for media officers. The rights and duties of the Media Officer may include: a) distribution of information on both teams before, during and after official matches (team sheets, results, goal scorers, etc.); b) organisation of interviews with players and coaches after the match; c) organisation of regular media conferences before and during the season; d) organisation of simultaneous translation for media conferences for international matches; e) preparation of regular media releases about the club to the local media.
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Recommended assessment process: In order to verify if the Licence Applicant is in compliance with the criterion, the Licensor assesses whether: a) a Media Officer has been appointed by the competent body of the Licence Applicant; b) this person has sufficient time to execute the tasks of the Media Officer; c) this person fulfils one of the given alternatives in respect of the required minimum qualification. No. P.06 Grade A Description MEDICAL DOCTOR
AFC comment: The doctor is responsible for the medical support and advice for the first squad as well as for the doping prevention policy within the Licence Applicant. He must be present during matches and must ensure his services during training (it is not necessary for a doctor to be present during all the trainings as long as appropriate emergency procedures are defined and implemented). The Licensor defines in collaboration with the national health authorities the required minimum qualification for the doctor. The medical support for the youth teams is regulated in S.01. Recommended assessment process: In order to verify if the Licence Applicant is in compliance with the criterion, the Licensor assesses whether: a) the doctor has been appointed by the competent body of the Licence Applicant; b) this person is indeed executing the function of the doctor; c) this person has the appropriate qualification and is recognised and certified by the national health authorities and/ or the national medical board/council; d) this person is duly registered with the national association or the league. No. P.07 Grade A Description PHYSIOTHERAPIST
AFC comment: The physiotherapist (or any other adequate function/denomination) is responsible for the medical treatment and support. He must be present during matches and must ensure his services during training (it is not necessary for the physiotherapist to be present during all the trainings as long as appropriate emergency procedures are defined and implemented). The Licensor defines in collaboration with the national health authorities the required minimum qualification for the physiotherapist. The medical support for the youth teams is regulated in S.01. Recommended assessment process: In order to verify if the Licence Applicant is in compliance with the criterion, the Licensor assesses whether: a) the physiotherapist has been appointed by the competent body of the Licence Applicant; b) this person is indeed executing the function of the physiotherapist; c) this person has the appropriate qualification and is recognised and certified by the national health authorities and/ or the national physiotherapy board/council; d) this person is duly registered with the national association or the league.
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No. P.08
Grade A
AFC comment: The Head Coach is responsible for the first squad of the Licence Applicant. He must be a qualified coach with the necessary coaching diploma. The Head Coach has at least the AFC A certificate or the AFC Professional Diploma. The national association ensures that the necessary coaching education courses at all levels are offered on a regular basis. Recommended assessment process: In order to verify if the Licence Applicant is in compliance with the criterion, the Licensor assesses whether: a) the Head Coach has been appointed by the competent body of the Licence Applicant; b) this person is indeed executing the function of the Head Coach; c) this person fulfils one of the given alternatives in respect of the required minimum qualification; d) this person is duly registered with the national association or the league. No. P.09 Grade A Description ASSISTANT COACH OF FIRST SQUAD
AFC comment: The assistant coach supports the head coach in his tasks for the first squad but must not be the goalkeeper coach or the physical coach of the first squad. The goalkeeper coach and the physical coach are other functions so far not covered by the licensing system. The national association ensures that the necessary coaching education courses at all levels are offered on a regular basis. The assistant coach may take over the function of either the Head of the youth development programme (cf. P.10) or a youth coach (cf. P.11) within the same Licence Applicant. Recommended assessment process: In order to verify if the Licence Applicant is in compliance with the criterion, the Licensor assesses whether: a) the assistant coach has been appointed by the competent body of the Licence Applicant; b) this person is indeed executing the function of the assistant coach; c) this person fulfils one of the given alternatives in respect of the required minimum qualification; d) this person is duly registered with the national association or the league.
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No. P.10
Grade A
AFC comment: The head of youth development programme is responsible for running of the youth sector of the Licence Applicant in technical and administrative matters, for the support of the youth players and his parents as well as the link with the head coach. If an affiliated club is running the youth sector, this function has to be appointed by the affiliated club accordingly and the Licence Applicant has to proof the same requirements. The Head of youth development programme must be a qualified coach. The Licensor selects the applicable alternatives out of the following qualification proposals. He is free to reduce the number of alternatives but may not change or add any further one. The Head of youth development programme may at the same time take the function of either a youth coach (cf. P.11) or the assistant coach of the first squad (cf. P.09) within the same Licence Applicant. The national association ensures that the necessary coaching education courses at all levels are offered on a regular basis. Recommended assessment process: In order to verify if the Licence Applicant is in compliance with the criterion, the Licensor assesses whether: a) the Head of the youth development programme has been appointed by the competent body of the Licence Applicant; b) this person is indeed executing the function of the Head of the youth development programme; c) this person fulfils one of the given alternatives in respect of the required minimum qualification; d) this person is duly registered with the national association or the league. No. P.11 Grade A Description YOUTH COACHES
AFC comment: There are three different main age groups (linked to FIFA transfer rules), which require the different minimum qualification of youth coaches: a) from 15 to 21 b) from 10 to 14 c) below 10 The Licensor defines the coaching licence / certificate, which is required for each single age group taking into account the status of implementation of the AFC Coach Education programme. AFC recommends the following qualifications: a) Youth teams U-21 to U-17 should have at least an AFC A licence / certificate b) Youth teams U-15 to U-11 should have at least an AFC B licence / certificate c) Youth teams below U-10 should have at least an AFC C licence / certificate d) The Licensor should in collaboration with AFC start introducing specific youth coaching diplomas. A youth coach may take over the function of either the assistant coach of the first squad (cf. P.09) or the head of the youth development programme (cf. P.10) within the same Licence Applicant.
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Recommended assessment process: In order to verify if the Licence Applicant is in compliance with the criterion, the Licensor assesses whether: a) the youth coaches have been appointed by the competent body of the Licence Applicant; b) these persons are indeed executing the function of a youth coach; c) these persons fulfil one of the given alternatives in respect of the required minimum qualification; d) these persons are duly registered with the national association or the league. No. P.12 Grade A Description SAFETY AND SECURITY ORGANISATION - STEWARDING
AFC comment: The Licence Applicant is responsible for organising the home matches. The Licensor in collaboration with the competent local authority defines the required minimum qualification of a steward. The number of required stewards is operational matter and depends on the size of the stadium, the risk of the match, the number of visiting supporters, etc., the Licensor shall not define a minimum number. It is up to the Security officer in collaboration with the local police and the involved authorities to fix this number on a case by case basis. The rights and duties of the Stewards may include: a) conduct pre-event safety checks on behalf of the Security Officer; b) Pre-match briefing of all people involved in the Security organisation; c) notify the Security Officer of any apparent visible defects or conditions that may affect the safety of the stadium; d) control and direct spectators who are entering or leaving the ground so that an even flow of people into and out of the stadium is assured safely; e) staff entrances, exits, concessionaire outlets, adjacent developments, perimeters and other areas as required for the control of spectator entry and exit; f) recognise and respond to crowd conditions including stress, and surges, so as to ensure the safe dispersal of spectators and prevent overcrowding; g) assist the emergency services as required; h) provide basic emergency first aid until a qualified medical practitioner is available; i) respond to an incident, investigative request or emergency, raise the alarm and take the necessary immediate action as ordered by the Security Officer; j) perform specific duties in an emergency or as directed by the Security Officer or appropriate emergency service. Recommended assessment process: In order to verify if the Licence Applicant is in compliance with the criterion, the Licensor assesses whether: a) the stewards have been engaged by the Licence Applicant, contracted by the stadium owner or by a security company; b) the stewards fulfil the minimum qualification requirements.
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4.1.2
No. P.13
B CRITERIA
Grade B Description RIGHTS AND DUTIES
AFC comment: An effective and efficient organisation has the responsibilities, the decision-making power, the required education and qualification and the rights and duties clearly defined in writing in order to: a) avoid conflicts of competences (incl. decision-making); b) allow monitoring; c) improve the content on a regular basis; and d) finally offer the replacement person and easy and quick understanding of the tasks and responsibilities, which he has to take over in case of absence of the function holder (holidays, illness, accident, release, etc.). Rights and duties may be specified in the following documents: terms of reference, job description, labour contract, internal rule book, etc. The Licence Applicant and specifically its supervisory body (e.g. Board of Directors) are considered as responsible for approving those rights and duties, which may be proposed by the General Manager. The function holder has to confirm its acknowledgement in writing. This could be done by the signature of the contract, the mandate or the terms of reference. Recommended assessment process: In order to verify if the Licence Applicant is in compliance with the criterion, the Licensor assesses whether: a) the appointed persons have their rights and duties defined in writing; b) the appointed persons duly signed the document. If the criterion is not fulfilled, the Licensor shall sanction the Licence Applicant according to its catalogue of sanctions (cf. 2.2.5). No. P.14 Grade B Description DUTY TO NOTIFY SIGNIFICANT CHANGES
AFC comment: The Licence Applicant is responsible that all information submitted to the Licensor is accurate. Therefore, it is also his duty to notify the Licensor of any event, which has represented a significant change to the information previously submitted and that has an impact on the assessment of the Licence Applicant (i.e. A or B-criterion). This may open the possibility of assistance and support by the Licensor to the Licence Applicant. We consider the notification within ten working days as appropriate, but the Licensor must define it accordingly. Recommended assessment process: In order to verify if the Licence Applicant is in compliance with the criterion, the Licensor assesses whether: a) the Licensor has received a notification of any event, which is related to criteria P.01 to P.12 and which represents a significant change of the previously submitted information; b) the information has been provided within the given deadline. If the criterion is not fulfilled, the Licensor shall sanction the Licence Applicant according to its catalogue of sanctions (cf.2.2.5). This may be done during the season or in respect of the following licensing cycle.
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No. P.15
Grade B
AFC comment: The Licence Applicant has also a responsibility to replace a vacant function during the season. Two cases are differentiated: the ones, which are beyond control of the Licence Applicant and the others, which are based on actions taken in the responsibility of the Licence Applicant. Due to a reason beyond control of the Licence Applicant: the replacement by another person of the Licence Applicant shall be possible for an indefinite or specific period of time depending whether the person who takes over the vacant function fulfils the criterion or not. Due to a decision of the Licence Applicant: as the Licence Applicant is responsible for such vacancy, the rule is stricter and requires that the replacement person fulfils the criterion. The national association fixes a short administrative period for the Licence Applicant to correct the vacancy. If for example a finance officer was released after the licensing decision but before the end of the season, the Licence Applicant must replace him by the start of the next season at the latest. If a release was done after the start of the season but before the document submission date for the next club licensing cycle, a replacement within the administrative deadline fixed by the national association is requested. A Licence Applicant that does not fulfil an Acriterion cannot be granted with a licence. The Licensor may request to approve such replacement for registration purposes (cf. Appendix I). Recommended assessment process: The Licensor verifies whether the Licence Applicant: a) has communicated any replacement within the given period of time; b) the person taking in charge the function fulfils the criterion. If the criterion is not fulfilled, the Licensor shall sanction the Licence Applicant according to its catalogue of sanctions (cf. 2.2.5). This may be done during the season or in respect of the following licensing cycle.
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5
5.1
5.1.1
No. L.01
Legal Criteria
CRITERIA
A CRITERIA
Grade A Description DECLARATION IN RESPECT OF THE PARTICIPATION IN AFC CLUB COMPETITIONS
AFC comment: This criterion is designed to get confirmations by the Licence Applicant on matters being legally important entering to the AFC Champions League. It is designed to make sure that the clubs comply with the obligations set forth in the FIFA / AFC / National Association statutes, rules and regulations. Thus, it is important that the Licensor make available to the Licence Applicant, the FIFA, AFC and National Association statutes, rules and regulations in the original language of the document and translated into the official language of the National Association concerned. Recommended assessment process: In order to verify if the Licence Applicant is in compliance with the criterion, the Licensor assesses whether: a) the content of the written declaration is complete and the licensee understand the obligations set forth in the FIFA, AFC and National Association Statutes, Rules and Regulations; b) the declaration is signed by an authorised person of the Licence Applicant; c) the declaration is signed not more than 3 months prior to its submission deadline. No. L.02 Grade A Description OTHER DOCUMENTS AND CONFIRMATIONS FROM THE LICENCE APPLICANT
AFC comment: This criterion is designed to get confirmation on the legal form and legal status of the Licence Applicant in their own country. This criterion is also to ensure that the clubs legal document is in compliance with the FIFA and AFC Statutes, Rules and Regulations. In order to avoid duplication, in case the Licensor is already in possession of these documents from a previous licensing cycle, the Licence Applicant may replace the submission of its statutes or its company articles (e.g. company act, by-laws) by a declaration confirming the validity of the previously submitted statutes or company articles. Recommended assessment process: In order to verify if the Licence Applicant is in compliance with the criterion, the Licensor assesses whether: a) the Licensor has a copy of the statutes or the company articles of the Licence Applicant; b) these documents have been declared as being valid by the Licence Applicant; c) the declaration is signed by an authorised person of the Licence Applicant; d) the declaration is signed not more than 3 months prior to its submission deadline.
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No. L.03
Grade A
AFC comment: It is of fundamental importance that the sporting integrity of club competitions be protected. To that end, FIFA and AFC reserves the right to intervene and to take appropriate action in any situation in which it transpires that the same natural and legal person is in a position to influence the management, administration and/or sporting performance of more than one club participating in the same club competition. Recommended assessment process: In order to verify if the Licence Applicant is in compliance with the criterion, the Licensor assesses whether: a) A list of share holders shall be produced by the Licence Applicant for the Licensors reference whenever requested.
5.1.2
No. L.04
B CRITERIA
Grade B Description DISCIPLINARY PROCEDURE WITHIN THE CLUB
AFC comment: It is important that the Licence Applicant establish a clear disciplinary regulation which provides for the infringement, disciplinary procedures, the judicial bodies and the sanctions that comply with the national law and FIFA, AFC, National Association statutes, rules and regulations and that can be applied in the event of infringement to club rules and regulations. Recommended assessment process: In order to verify if the Licence Applicant is in compliance with the criterion, the Licensor: a) receives a copy of the Licence Applicants Disciplinary Regulations; b) assesses whether the Disciplinary Regulations comply with national law and FIFA, AFC and National Association statutes, rules and regulations.
5.1.3
No. L.05
C CRITERIA
Grade C Description CODE OF CONDUCT FOR PLAYERS AND OFFICIALS
AFC comment: It is the responsibility of all stakeholders of the game to preserve and develop a good image of football. Therefore, provisions of a Code of Conduct will assist in ensuring that every player and official is familiar with the behaviour and conducts which are required when they are part of the game.
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6
6.1
Financial Criteria
OVERVIEW OF THE FINANCIAL CHAPTER
The financial criteria set out in Chapter 10 of the AFC Club Licensing Regulations and the associated guidance and tools contained in the appendices herewith, in some respects, draw from the content of certain International Financial Reporting Standards and International Standards on Auditing, Assurance and Related Services as available at July 2005.
6.1.1
6.1.2
6.1.3
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Diagram I: Overview of the Club Licensing System in respect of historic financial information
OBJECTIVES
Economic & financial capability Transparency & credibility Protection of creditors Continuity of international competitions Financial fair play
ASSESSMENT PROCEDURES
(Independent Auditor) Review Audit Agreed upon procedures
ASSESSMENT PROCEDURES
(Licensors) Procedures
ASSESSMENT PROCEDURES
(Licensors) Procedures Confidentiality Communication of decision
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Diagram II: Overview of the Club Licensing System in respect of future financial information and subsequent information
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6.1.4
31
6.2
Unless mentioned specifically, the requirements in 6.2.3 to 6.2.6 are mandatory and constitute the minimum requirements for the Licence Applicant in order to fulfill criterion F.01.
6.2.2
32
6.2.3
REPORTING PERIOD
The Licence Applicant must submit audited annual financial statements (and, if required to meet the criterion, supplementary information) in respect of the statutory closing date prior to the deadline for submission of the application to the Licensor and prior to the deadline for submission of the list of licensed clubs to AFC.
6.2.4
Further commentary about underlying financial reporting principles is contained within Appendix II. Each component of the annual financial statements shall be identified clearly. In addition, the following information shall be displayed prominently, and repeated where necessary within the financial statements, for a proper understanding of the information presented: a) the name (and legal form), domicile and business address of the reporting entity and any change in that information from the preceding statutory closing date; b) whether the financial information covers the individual Licence Applicant or a group of entities or some other combination of entities and to describe the structure and composition of any such group or combination;
AFC CLUB LICENSING MANUAL
33
c) the statutory closing date and the period covered by the financial information (for both current and comparative information); and d) the presentation currency. The annual financial statements must be approved by management and this must be evidenced by way of a brief statement and signature on behalf of the executive body of the reporting entity.
6.2.4.2
FOR
THE
CONTENT
OF
ANNUAL
FINANCIAL
Notwithstanding the requirements of national accounting practice or IFRS, the financial criteria do require Licence Applicants to present a specific minimum level of historic financial information to the Licensor. This manual sets out the minimum requirements for the content of annual financial information. Other than in respect of player accounting matters, this manual does not prescribe the basis for recognition and measurement of transactions and other events; as such matters are addressed by national accounting practice and/or IFRS. The audited annual financial statements should aim to meet the minimum requirements for content and accounting summarised in 6.2.4.4 to 6.2.4.9 below. Appendix III sets out a model annual financial statements (and commentary) that illustrate typical disclosures to meet these minimum requirements. If the audited annual financial statements meet the minimum disclosure requirements and accounting principles defined by this manual, then no further supplementary information has to be provided to the Licensor (i.e. alternative 1 in Diagram III below), unless the Licensor requests otherwise.
6.2.4.3
SUPPLEMENTARY INFORMATION
If the minimum requirements for the content and accounting are not met in the audited annual financial statements, then the Licence Applicant must prepare supplementary information in order to meet the minimum information requirements (i.e. alternative 2 in the diagram below). Together, the audited annual financial statements and the supplementary information comprise the annual financial information that is submitted to the Licensor.
Diagram III: The acceptable alternatives for annual financial information submitted to the Licensor
Alternative 1 or Alternative 2
Licensor
Supplementary Information
Licensor
The content and presentation of the supplementary information, if required at all, will vary between Licence Applicants depending on the amount of information already disclosed in the separate audited annual financial statements. For example, the supplementary information document might simply include a certain disclosure note, or notes, not otherwise included in the audited financial statements. For some Licence Applicants, the supplementary information document might be more extensive and might have to include a full balance sheet, profit and loss account, cash flow statement and associated notes if these are not required by the relevant national law for incorporated companies or if, for example, there is a requirement for the Licence Applicant to restate figures as set out in 6.2.4.9 (Accounting requirements for player registration costs).
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The supplementary information must be prepared on a basis of accounting, and accounting policies, consistent with the annual financial statements. Financial information must be extracted from sources consistent with those used for the preparation of the annual financial statements. Where appropriate, disclosures in the supplementary information must agree to, or reconcile to, the relevant disclosures in the annual financial statements.
6.2.4.4
BALANCE SHEET
The minimum requirements for the content in respect of balance sheet items at the statutory closing date (and comparative figures in respect of the prior statutory closing date) are stated below. These minimum requirements are also illustrated in Appendix III. Current assets a) cash and cash equivalents; b) accounts receivable from player transfers; c) accounts receivable from group entities and related parties(3); d) accounts receivable - other; e) inventories; Non current assets f) tangible fixed assets(1);
k) accounts payable relating to player transfers; l) accounts payable to group entities and related parties(3);
m) accounts payable - other; n) tax liabilities; o) short term provisions(4); Non current liabilities p) bank and other loans q) other long term liabilities; r) tax liabilities;
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Equity u) treasury shares; v) issued capital and reserves.(6) Management may consider that line items (i) to (xxii) are best presented on the face of the balance sheet and the additional information (described below) in notes. The minimum information requirements in respect of certain balance sheet items shall also include the following:
(1)
In respect of each of tangible fixed assets and intangible assets, a reconciliation of the carrying amount at the beginning and end of the period, showing additions, disposals, revaluations, impairment, depreciation/amortisation and any other changes. Investments shall include investments in subsidiaries, jointly controlled entities and associates. In respect of investments in subsidiaries, jointly controlled entities and associates, as a minimum, the following information must be disclosed for each investment: i. The name;
(2)
ii. Country of incorporation or residence; iii. Type of business/operations of the entity; iv. Proportion of ownership interest; v. If different, proportion of voting power held; and vi. A description of the method used to account for the investments.
(3)
Sub-classification of the total balance receivable to disclose separately amounts receivable from group entities and amounts receivable from other related parties; and, sub-classification of the total balance payable to disclose separately amounts payable to group entities and amounts payable to other related parties. For each class of provision, disclose the carrying amount at the beginning and end of the period, the amount utilised and any amount released, or credited, in the period. The net assets/liabilities figure, being the aggregate of total assets less total liabilities, is used to determine whether or not the Licence Applicant is in breach of indicator IND.03 as described in 6.7.5.2. Sub-classification of the total balance of issued capital and reserves to disclose separately share capital, share premium, other reserves and retained earnings.
(4)
(5)
(6)
6.2.4.5
36
g) employee benefits expense; h) depreciation and amortisation (1); i) j) impairment of fixed assets (2); other operating expenses.
m) tax expense; n) profit or loss after taxation. The minimum information requirements in respect of certain profit and loss account items also include the following:
(1)
Separate disclosure required of depreciation of tangible fixed assets, amortization of player registration costs and amortisation of other intangible assets. Separate disclosure required of impairment of player registration costs and impairment of other tangible or intangible fixed assets. Separate disclosure required of profit or loss from disposal of player registrations and profit or loss from disposal of other tangible or intangible fixed assets.
(2)
(3)
6.2.4.6
6.2.4.7
37
a) Accounting policies The basis of preparation of the financial statements and a summary of the significant accounting policies used. b) Controlling party When the reporting entity is controlled by another party, there must be disclosure of the related party relationship and the name of that party and, if different, that of the ultimate controlling party. If the controlling party or ultimate controlling party of the reporting entity is not known, that fact shall be disclosed. This information shall be disclosed irrespective of whether any transactions have taken place between the controlling parties and the reporting entity. c) Related party transactions If there have been transactions between related parties during the period, the reporting entity shall disclose the nature of the related party relationship, as well as information about the transactions during the period and outstanding balances at the period end, necessary for an understanding of the potential effect of the relationship on the financial statements. At a minimum, disclosures must include: i. the amount of the transactions;
ii. the amount of outstanding balances and: their terms and conditions, including whether they are secured, and the nature of the consideration to be provided in settlement; and details of any guarantees given or received; iii. provisions for doubtful debts related to the amount of outstanding balances; and iv. the expense recognised during the period in respect of bad or doubtful debts due from related parties. d) Pledged assets and assets under reservation of title Disclose the existence and amounts of restrictions on title, and property, plant and equipment pledged as security for liabilities or guarantees. e) Contingent liabilities Unless the possibility of any outflow in settlement is remote, the reporting entity shall disclose for each class of contingent liability at the statutory closing date a brief description of the nature of the contingent liability and, where practicable: i. an estimate of its financial effect;
ii. an indication of the uncertainties relating to the amount or timing of any outflow; and iii. the possibility of any reimbursement. f) Other disclosure Any additional information or disclosure that is not presented on the face of the balance sheet, profit and loss statement or cash flow statement, but is relevant to an understanding of any of those statements and/or is required to meet the minimum financial information requirements.
6.2.4.8
38
reporting entitys financial performance and financial position and the principal risks and uncertainties it faces. These minimum requirements are also illustrated in the model financial statements set out in Appendix III. The annual financial statements must also include the names of persons who were members of the executive, or board of directors, and supervisory bodies of the reporting entity at any time during the year.
6.2.4.9
39
financial statements. The supplementary information must include a restated balance sheet, profit and loss account and any associated notes to meet the requirements set out above. There must also be included a note (or notes) reconciling the results and financial position shown in the supplementary information document to those shown in the audited financial statements (that were prepared under the national accounting practice). As set out in 6.2.5, the restated financial information must be assessed by the auditor by way of agreed-upon procedures.
g) Disposals (cost and accumulated amortisation); h) Net book value (carrying amount); and i) Profit/(loss) from disposal of players registration.
The relevant players about whom details are required in the table are all those players whose registration is held by the Licence Applicant at any time during the period and some direct acquisition cost has been incurred (at some point in time in the period or prior periods) in respect of the player(s). The following aggregate figures in the player identification table must be reconciled to the relevant figures in the balance sheet and profit and loss account in the audited annual financial statements. a) The aggregate of the amortisation of player registrations in the current period as shown in the player identification table must agree/reconcile to Amortisation of player registrations (disclosed on the face of, or in a note to, the profit and loss account for the period); b) The aggregate of impairment provisions made in the current period as shown in the player identification table must agree/reconcile to Impairment of player registrations (disclosed on the face of, or in a note to, the profit and loss account for the period);
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c) The aggregate of profit/(loss) on disposal of player registrations in the player identification table must agree/reconcile to Profit/(loss) from disposal of player registrations (disclosed on the face of, or in a note to, the profit and loss account for the period); d) The aggregate of the net book value of players registrations in the player identification table must agree/reconcile to the figure for Intangible assets players in the balance sheet (on the face or in the notes thereto) for the period end. Note: For Licence Applicants who have restated player accounting figures to meet the accounting requirements of the manual, these aggregate figures from the player identification table must agree/ reconcile to the restated figures in the annual financial information.
6.2.5
6.2.5.2
ASSESSMENT PROCEDURES
The annual financial statements must be audited by an independent auditor in accordance with either International Standards on Auditing or relevant national auditing standards or practices where these comply with, as a minimum, the requirements of International Standards on Auditing. The auditors report must include a scope paragraph describing the nature of an audit, including a statement that the audit was conducted in accordance with International Standards on Auditing or in accordance with relevant national standards or practices as appropriate. In turn, the Licensor inspects the submitted information and addresses the consequences of any modifications to the audit report (compared to the normal form of unqualified report) and/ or deficiencies compared to the minimum disclosure and accounting requirements. If the annual financial statements meet the minimum requirements for content and accounting defined by this manual, then no further supplementary information has to be provided (i.e. alternative 1 in 6.2.1), unless the Licensor requests otherwise. If the annual financial statements do not meet the minimum requirements for content and accounting, then the Licence Applicant must prepare some supplementary information (i.e. alternative 2 in 6.2.1). The supplementary information must then be assessed by the auditor by way of performance of, as a minimum, agreed-upon procedures. The auditor will provide a report of the factual findings of the agreed-upon procedures. The agreed-upon procedures shall, as a minimum, include: a) Reading the supplementary information prepared by management; b) Making enquiries of management regarding the compilation of the supplementary information; and c) Comparing the supplementary information to the sources from which it was obtained.
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International Standard on Related Services (ISRS) 4400, Engagements to Perform Agreed-upon Procedures Regarding Financial Information provides guidance on the auditors professional responsibilities when an engagement to perform agreed-upon procedures is undertaken and on the form and content of the report that the auditor issues in connection with such an engagement. The Licensor may wish to develop a standard form of agreed-upon procedures, appropriate for its national legislation and practice, through consultation with the national institute of chartered accountants (or similar body) in the territory. Some further guidance is provided in Appendix V.
6.2.5.3
ii. Qualified opinion; iii. Disclaimer of opinion; or iv. Adverse opinion. Since the going concern assumption is a fundamental principle in the preparation of the financial statements, management of the Licence Applicant have a responsibility to assess the reporting entitys ability to continue as a going concern. In turn, the auditors responsibility is to consider the appropriateness of managements use of the going concern assumption in the preparation of the financial statements, and consider whether there are material uncertainties about the reporting entitys ability to continue as a going concern that need to be disclosed in the financial statements. Matters relating to going concern can give rise to modifications to the audit report (any of the items i) to iv) above) and will have implications for the Licensors own assessment procedures (as set out in 6.2.6 below).
6.2.6
LICENSOR DECISION
It is the responsibility of the Licensor to assess the annual financial statements (that may also include supplementary information) to form the basis for his licensing decision. As part of his assessment, the Licensor shall read and consider the annual financial statements and the auditors report thereon. The licence must be refused: a) If the annual financial statements (that may also include supplementary information) are not submitted to the Licensor within the defined deadline. b) If the Licence Applicant submits annual financial statements (that may also include supplementary information) that do not meet the minimum requirements for the content and accounting.
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Having read the auditors report on the annual financial statements, the Licensor must assess it according to the points below: c) If the auditors report has an unqualified opinion, without any modification, this provides a satisfactory basis for granting the licence in respect of criterion F.01. d) If the auditors report has a disclaimer of opinion or an adverse opinion, the licence must be refused, unless a subsequent audit opinion without disclaimer of opinion or an adverse opinion is provided (in relation to another set of financial statements for the same financial year, that meet the minimum requirements) and the Licensor is satisfied with the subsequent audit opinion. e) If the auditors report has, in respect of going concern, either an emphasis of matter or a qualified except for opinion, the licence must be refused, unless either: i. a subsequent audit opinion without going concern emphasis of matter or qualification is provided, in relation to the same financial year; or ii. additional documentary evidence demonstrating the Licence Applicants ability to continue as a going concern until at least the end of the season to be licensed has been provided to, and assessed by, the Licensor to his satisfaction. The additional documentary evidence includes, but is not necessarily limited to, the information described in 6.7 (Future financial information). If the auditors report in respect of the annual financial statements submitted in accordance with F.01 includes an emphasis of matter or a qualified except for opinion in respect of going concern, then the Licence Applicant/ licensee shall be in breach of indicator IND.01 (as set out in 6.7.5). As a result, the Licensor must undertake more extensive assessment procedures in respect of criterion F.06 (Future financial information) and, if granted a licence, the licensee must also comply with criterion F.08 (Duty to update future financial information). f) If the auditors report has, in respect of a matter other than going concern, either an emphasis of matter or a qualified except for opinion, then the Licensor must consider the implications of the modification for club licensing purposes. The licence may be refused, unless additional documentary evidence is provided, and assessed, to the satisfaction of the Licensor. The additional evidence that may be requested by the Licensor will be dependent on the reason for the modification to the audit report. If the Licence Applicant provides supplementary information (according to alternative 2 in 6.2.1) the Licensor shall additionally assess the auditors report of the agreed-upon procedures in respect of the supplementary information. g) If the auditors report of factual findings from the agreed-upon procedures includes reference to errors and/ or exceptions found, the licence may be refused. Appendix VII provides a diagrammatic summary of implications on the licensing decision of different modifications to the audit report. The Licensor may ask for additional evidence to enable the assessment of the Licence Applicant to his satisfaction.
6.2.7
RELEVANT APPENDICES
Annual financial reporting: Overall considerations and underlying principles (Appendix II) Annual financial reporting: Model financial statements and commentary (Appendix III) Annual financial reporting: Player identification table (Appendix IV) Annual financial reporting: Illustrative form of agreed-upon procedures on supplementary information (Appendix V) Annual financial reporting: Commentary regarding audit reports contents and different forms of opinion (Appendix VI)
AFC CLUB LICENSING MANUAL
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6.3
Annual financial reporting: Diagrammatic summary of implications on the licensing decision of different modifications to the auditors report (Appendix VII) Promoted applicants: Guidance on relaxation of disclosure requirements (Appendix XXIV)
Criterion F.02 is a C criterion and as per section 2.1 of the AFC Club Licensing Regulations, C criteria are best practice recommendations. Non-fulfilment of any C-criteria does not lead to any sanction or to the refusal of the licence. It is recommended that Licence Applicant fulfils if the statutory closing date of the Licence Applicant is more than six months before the deadline for submission of the list of licensed clubs to AFC. Whenever the Licence Applicant submits an interim financial statement, requirements in 6.3.3 to 6.3.6 are mandatory and constitute the minimum requirements for the Licence Applicant in order to fulfill criterion F.02.
6.3.1
THE CRITERION
No. F.02 Grade C Description FINANCIAL STATEMENTS FOR THE INTERIM PERIOD REVIEWED If the statutory closing date of the Licence Applicant is more than six months before the deadline for submission of the list of licensed clubs to AFC, then additional financial statements covering the interim period must be prepared and submitted. These must cover the interim period up to a date within six months preceding the deadline for submission of the list of licensed clubs to AFC and must be reviewed by independent auditors. The interim financial statements shall meet the minimum disclosure requirements and accounting principles defined by this manual.
6.3.2
6.3.3
REPORTING PERIOD
For those Licence Applicants preparing interim financial statements, they shall cover the interim period beginning on the day immediately after the statutory closing date and ending on a date within six months preceding the
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deadline for submission of the list of licensed clubs to AFC. An interim period does not necessarily have to be a six month period, but is defined as a financial reporting period shorter than a full financial year. For example, if the Licence Applicant has a statutory closing date of 31 December, and AFC has set a deadline of 30 November (in the following year) for the submission date, the interim financial statements would cover at least the 5 months from 1 January to 31 May or would normally be expected to cover the 6 months to 30 June. Interim financial statements must be presented to include the following: a) balance sheet as of the end of the interim period and a comparative balance sheet as of the end of the immediately preceding full financial year; b) profit and loss account for the interim period, with comparative profit and loss accounts for the comparable interim period of the immediately preceding financial year; and c) cash flow statement for the interim period, with a comparative statement for the comparable interim period of the immediately preceding financial year. If the Licence Applicant did not have to prepare interim financial statements for the comparable interim period of the immediately preceding financial year, comparative figures may refer to the figures from the financial statements of the immediately preceding full financial year. For example, this may be the case for a club promoted from a lower division not having previously undergone the licensing system in its preceding financial years (see Appendix XXIV).
6.3.4
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A Licence Applicant must apply the same accounting policies in its interim financial statements as are applied in its annual financial statements, except for accounting policy changes made after the date of the most recent full annual financial statements that are to be reflected in the next annual financial statements - in which case details shall be disclosed in the interim financial statements. For club licensing purposes, interim financial statements must be based on national accounting practice or IFRS. The frequency of a Licence Applicants reporting should not affect the measurement of its annual results. To achieve that objective, measurements for interim reporting purposes are made on a year-to-date basis. In Appendix VIII, some further guidance notes are provided about recognition and measurement principles that may be appropriate for the management to consider in preparing interim financial statements. Each component of the interim financial statements shall be identified clearly. In addition, the following information shall be displayed prominently, and repeated where necessary within the interim financial statements, for a proper understanding of the information presented: a) the name (and legal form), domicile and business address of the reporting entity and any change in that information from the preceding statutory closing date; b) whether the financial information covers the individual entity or a group of entities or some other combination of entities, and to describe the structure and composition of any such group or combination; c) the balance sheet date and the interim period covered by the financial information; and d) the presentation currency.
6.3.4.2
ii. Disclosure of any events or transactions that are material to an understanding of the current interim period. Additional line items or notes shall be included if their omission would make the interim financial statements misleading. The minimum requirements for the explanatory notes, as set out above, are limited. Appendix IX provides some additional commentary about what explanatory notes may be included as good practice.
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6.3.4.3
6.3.5
6.3.5.2
ASSESSMENT PROCEDURES
The interim financial statements must, as a minimum, be the subject of a review by an independent auditor in accordance with either International Standard on Review Engagements (ISRE) 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity or relevant national standards or practices for such reviews where these comply with, as a minimum, the requirements of ISRE 2410. Alternatively, the Licence Applicant may choose to have the interim financial statements audited. The auditors report must include a scope paragraph describing the nature of a review, including a reference to ISRE 2410 or relevant national standards or practices. A review, in contrast to an audit, is not designed to obtain reasonable assurance that the financial information is free from material misstatement. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review may bring significant matters affecting the financial information to the auditors attention, but it does not provide the evidence that would be required for an audit. As part of the work, the auditor considers whether any significant factors identified at the previous audit have changed to such an extent as to affect the appropriateness of the going concern assumption. An illustrative form of reporting by the independent auditor for the scope of the review of the interim financial statements is set out in Appendix X. The Licensor may wish to develop a standard form of review report, appropriate for its national legislation and practice, through consultation with the national institute of chartered accountants (or similar body) in the territory. In turn, as described in 6.3.6, the Licensor inspects the submitted information and, if necessary, addresses the consequences of any modifications to the review report.
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6.3.5.3
6.3.6
LICENSOR DECISION
For those Licence Applicants required to submit reviewed interim financial statements, they must be assessed by the Licensor to form the basis for his licensing decision in respect of criterion F.02. As part of his assessment, the Licensor shall read the interim financial statements and the auditors review report on the interim financial statements.
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The licence must be refused: a) If the interim financial statements are not submitted to the Licensor within the defined deadline. b) If the Licence Applicant submits interim financial statements that do not meet the minimum requirements for the content and accounting. Having read and considered the auditors review report on the interim financial statements, the Licensor must assess it according to the points below: c) If the auditors review report states that nothing has come to the auditors attention, based on the review, that causes the auditor to believe the financial statements do not give a true and fair view (or are not presented fairly, in all material respects) in accordance with the identified financial reporting framework (negative assurance), this provides a satisfactory basis for granting the licence in respect of criterion F.02. d) If the auditors review report disclaims a conclusion or gives an adverse conclusion, the licence must be refused. e) If the auditors review report expresses, in respect of going concern, either an emphasis of matter or a qualified conclusion, then the licence must be refused, unless additional documentary evidence demonstrating the Licence Applicants ability to continue as a going concern until at least the end of the season to be licensed has been provided to, and assessed by, the Licensor to his satisfaction. The additional documentary evidence includes, but is not necessarily limited to, the information described in 6.7 (Future financial information). If the auditors review report in respect of the interim financial statements submitted in accordance with F.02 expresses an emphasis of matter or a qualified conclusion in respect of going concern, then the Licence Applicant/licensee shall be in breach of indicator IND.02 (as set out in 6.7.5). As a result, the Licensor must undertake more extensive assessment procedures in respect of criterion F.06 (Future financial information) and, if granted a licence, the licensee must also comply with criterion F.08 (Duty to update future financial information). f) If the auditors review report expresses, in respect of a matter other than going concern, either an emphasis of matter or a qualified conclusion, then the Licensor must consider the implications of the modification for club licensing purposes. The licence may be refused, unless additional documentary evidence is provided to, and assessed by, the Licensor to his satisfaction.
Appendix XI provides a diagrammatic summary of the implications on the licensing decision of different modifications to the auditors review report. If the interim financial statements have been subject to an audit, rather than a review, having read and considered the auditors report on the interim financial statements, the Licensor must assess it according to the points set out in (c) to (f) in 6.2.6.
6.3.7
RELEVANT APPENDICES
Interim financial reporting: Commentary on recognition and measurement (Appendix VIII) Interim financial reporting: Commentary on specific explanatory notes (Appendix IX) Interim financial reporting: Illustrative form of review report that may be issued from an engagement to review interim financial statements (Appendix X) Interim financial reporting: Diagrammatic summary of implications on the licensing decision of different modifications to the auditors review report (Appendix XI) Promoted applicants: Guidance on relaxation of disclosure requirements (Appendix XXIV)
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6.4
CRITERION F.03: NO PAYABLES OVERDUE TOWARDS FOOTBALL CLUBS ARISING FROM TRANSFER ACTIVITIES
Unless mentioned specifically, the requirements in 6.4.3 to 6.4.6 are mandatory and constitute the minimum requirements for the Licence Applicant in order to fulfill criterion F.03.
6.4.1
THE CRITERION
No. F.03 Grade A Description NO PAYABLES OVERDUE TOWARDS FOOTBALL CLUBS ARISING FROM TRANSFER ACTIVITIES The Licence Applicant must prove that it has no payables overdue (e.g. final and binding decisions of the FIFA Players Status Committee, the FIFA Dispute Resolution Chamber and the Court of Arbitration for Sport) towards football clubs arising from transfer activities as at 31 December of the year preceding the season to be licensed, unless by the following 31 March they have been fully settled, deferred by mutual agreement with the creditor or are subject to a not obviously unfounded dispute submitted to a competent authority.
6.4.2
6.4.3 6.4.4
6.4.4.2
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The transfer payables table must contain a separate entry in respect of each player acquisition (including loans) for which there is an amount outstanding to be paid at 31 December. The following information must be given as a minimum: a) player (identification by name or number); b) date of the transfer/loan agreement; c) the name of the football club that formerly held the registration; d) transfer (or loan) fee paid and/or payable (including training compensation); e) other direct costs of acquiring the registration paid and/or payable; f) amount settled/paid; and
g) the balance in respect of each player acquisition payable at 31 December, detailed by due date(s) for each unpaid element of the transfer payables. The Licence Applicant must reconcile the total liability per the transfer payables table with the figure in the balance sheet (if applicable) for Accounts payable relating to player transfers. The Licence Applicant is required to report in this table all overdue payables even if payment has not been requested by the creditor. The transfer payables table must be approved by management and this must be evidenced by way of a brief statement and signature on behalf of the executive body of the reporting entity. The Licensor may request further information. It is recommended that similar information be provided by each Licence Applicant for the player transfer receivables (i.e. receivables arising from the transfer of player registrations to other clubs). An illustration of a transfer receivables table is provided in Appendix XIII.
6.4.5
6.4.5.2
ASSESSMENT PROCEDURES
The procedures to be performed to assess the information from Licence Applicants may vary depending on whether they are to be performed by the Licensor or by independent auditors. It will also depend on the Licensors size, internal structure and organisation. The Licensor can implement its own framework of assessment procedures, with or without the use of independent auditors, that it believes fits best to its needs and organisation. Through the accreditation process, AFC will ensure that the applied processes are suitable and consistent with the procedures proposed in this manual. If the assessment procedures involve an auditor, the work may be performed by way of agreed-upon procedures. The Licensor will still be required to perform some assessment work, including reading the auditors report on the agreed-upon procedures in respect of the payables towards football clubs from transfer activities.
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International Standard on Related Services 4400 Engagements to Perform Agreed- Upon Procedures Regarding Financial Information provides guidance on the auditors professional responsibilities when an engagement to perform agreed-upon procedures is undertaken and on the form and content of the report that the auditor issues in connection with such an engagement. The agreed-upon procedures include procedures such as: a) Reading the transfer payables table prepared by management; b) Making enquires of management regarding the compilation of the transfer payables table; and c) Comparing the information to the sources from which it was obtained. The Licensor may wish to develop a standard form of agreed-upon procedures, appropriate for its national legislation and practice, through consultation with the national institute of chartered accountants (or similar body). In Appendix XIV further guidance is provided in respect of the agreed-upon procedures steps that may be performed by the auditor.
6.4.6
LICENSOR DECISION
The Licensor shall, as part of his assessment, read the information in respect of payables from transfer activities and also read the auditors report on the agreed-upon procedures, if such a report is submitted. The licence must be refused: a) If the information in respect of payables from transfer activities is not submitted to the Licensor. b) If the Licence Applicant submits information that does not meet the minimum disclosure requirements. c) If the Licence Applicant has payables overdue towards football clubs arising from transfer activities as at 31 December of the year preceding the season to be licensed. For the purpose of the licensing system, if the Licence Applicant has overdue payables at 31 December preceding the season to be licensed (see point c) above), the licence may still be granted if the Licence Applicant is able to prove by the following 31 March that: i. It has fully settled; i.e. paid in full the overdue payables, unless otherwise individually agreed with the creditor; or
ii. It has concluded a written agreement with the creditor to extend the deadline of the payment of these payables overdue. (Note, if the creditor has not requested payment of an overdue amount, this is not considered as an extension of the deadline for payment); or iii. Proceedings have been opened with the competent authority according to national legislation, or proceedings have been opened with the statutory national or international football authorities or relevant Arbitration Tribunal, with regard to these overdue payables. If the decision-making bodies consider that proceedings may have been opened by the Licence Applicant with the sole purpose to bring overdue balances into the disputed category (as a way of creating a situation as described in iii) above and buying time), the Licensor may request additional evidence in order to be satisfied that it is a not obviously unfounded dispute.
6.4.7
RELEVANT APPENDICES
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Transfer payables table (Appendix XII) Transfer receivables table (Appendix XIII) Transfer payables reporting: Illustrative form of agreed-upon procedures (Appendix XIV)
6.5
Unless mentioned specifically, the requirements in 6.5.3 to 6.5.6 are mandatory and constitute the minimum requirements for the Licence Applicant in order to fulfill criterion F.04.
6.5.1
THE CRITERION
No. F.04 Grade A Description NO PAYABLES OVERDUE TOWARDS EMPLOYEES AND SOCIAL / TAX AUTHORITIES The Licence Applicant must prove that, in respect of contractual and legal obligations with its current and former employees (including all professional players according to the applicable FIFA Regulations on Status and Transfer of Players, the general manager (P.02), the finance officer (P.03), the security officer (P.04), the media officer (P.05), the medical doctor (P.06), the physiotherapist (P.07), the head coach of first-team squad (P.08), the assistant coach of first squad (P.09), the head of youth development (P.10) and the youth coaches (P.11); list exhaustive), it has no payables overdue towards employees and social/ tax authorities as at 31 December of the year preceding the season to be licensed, unless by the following 31 March they have been fully settled, deferred by mutual agreement with the creditor or are subject to a not obviously unfounded dispute submitted to a competent authority.
6.5.2
6.5.3
REPORTING DATE
Regardless of the statutory closing date or interim financial reporting date of a Licence Applicant, the criterion is to be assessed as at 31 December of the year preceding the season to be licensed.
6.5.4
All professional players according to the applicable FIFA Regulations for the Status and Transfer of Players; and Those administrative, technical and security staff who are, according to Chapter 8 of the AFC Club Licensing Regulations, graded A and more specifically: the general manager (P.02), the finance officer (P.03), the security officer (P.04), the media officer (P.05), the medical doctor (P.06), the physiotherapist (P.07), the head coach of first squad (P.08), the assistant coach of first squad (P.09), the head of youth development programme (P.10) and the youth coaches (P.11). The list is exhaustive.
Amounts payable at 31 December will sometimes include amounts due to people who, for various reasons, are no longer employed by the applicant. Regardless of the way such payables are accounted for in the financial statements, they fall within the framework of criterion F.04 which requires the obligation to be settled/paid within the period or duration stipulated in the contract and/ or defined by law.
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The Licensor may, if he chooses, also include within the requirements of this criterion employees other than those described above.
6.5.4.2
LIST OF EMPLOYEES
The Licence Applicant shall prepare a schedule showing all employees who were employed at any time during the year to 31 December preceding the season to be licensed; i.e. not just those who remain at year end. The schedule shall be submitted to the Licensor. The following information must be given, as a minimum, in respect of each employee: a) Name of the employee; b) Position/Function of the employee; c) Start date; d) Termination date (if applicable); and e) Any overdue payable as at 31 December, together with explanatory comment. The employees schedule must be approved by management and this must be evidenced by way of a brief statement and signature on behalf of the executive body of the Licence Applicant.
6.5.4.3
6.5.5
6.5.5.2
ASSESSMENT PROCEDURES
The procedures to be performed to assess the information from Licence Applicants may vary depending on whether they are to be performed by the Licensor or by an independent auditor. They will also depend on the Licensors size, internal structure and organisation. The Licensor can implement its own framework of assessment procedures, with or without the use of independent auditors, that it believes fits best to its needs and organisation. Through the accreditation process, AFC will ensure that the applied processes are suitable. If the assessment procedures involve an auditor, the work may be performed by way of agreed-upon procedures. The Licensor will still be required to perform some assessment work, including reading the auditors report of the agreed-upon procedures in respect of the payables towards employees and social/tax authorities.
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International Standard on Related Services 4400 Engagements to Perform Agreed- Upon Procedures Regarding Financial Information provides guidance on the auditors professional responsibilities when an engagement to perform agreed-upon procedures is undertaken and on the form and content of the report that the auditor issues in connection with such an engagement. The agreed-upon procedures include procedures such as: a. b. c. d. Reading the information prepared by management; Making enquires of management regarding the compilation of the in formation; Obtaining and inspecting confirmation letters from employees; and Comparing the information to the sources from which it was obtained.
The Licensor may wish to develop a standard form of agreed-upon procedures, appropriate for its national legislation and practice, through consultation with the national institute of chartered accountants (or similar body). Appendices XV and XVI contain further guidance in respect of the agreed-upon procedures that may be performed by the auditor.
6.5.6
LICENSOR DECISION
The Licensor shall, as part of his assessment, read the information in respect of payables towards employees and social/tax authorities and also read the auditors report of factual findings, if such a report is submitted. The licence must be refused: a) If the information in respect of payables overdue towards employees and social/tax authorities is not submitted to the Licensor. b) If the Licence Applicant submits information that does not meet the minimum disclosure requirements. c) If the Licence Applicant has payables overdue towards employees and social/tax authorities as at 31 December of the year preceding the season to be licensed. For the purpose of the licensing system, if the Licence Applicant has overdue payables at 31 December preceding the season to be licensed (see point c) above), the licence may still be granted if the Licence Applicant is able to prove by the following 31 March that: i. It has fully settled; i.e. paid in full the overdue payables, unless otherwise individually agreed with the creditor; or
ii. It has concluded a written agreement with the creditor to extend the deadline of the payment of these payables overdue (Note, if the creditor has not requested payment of an overdue amount, this is not considered as an extension of the deadline for payment); or iii. Proceedings have been opened with the competent authority according to national legislation, or proceedings have been opened with the statutory national or international football authorities or relevant Arbitration Tribunal, with regard to these payables overdue. If the decision-making bodies consider that proceedings may have been opened by the Licence Applicant with the sole purpose to bring overdue balances into the disputed category (as a way of creating a situation as described in iii) above and buying time), the Licensor may request additional evidence in order to be satisfied that it is a not obviously unfounded dispute.
6.5.7
RELEVANT APPENDICES
Employee payables reporting: Illustrative form of agreed-upon procedures (Appendix XV) Employee payables reporting: Illustrative confirmation letter from employees (Appendix XVI)
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6.6
Unless mentioned specifically, the requirements in 6.6.3 to 6.6.6 are mandatory and constitute the minimum requirements for the Licence Applicant in order to fulfill criterion F.05.
6.6.1
THE CRITERION
No. F.05 Grade A Description WRITTEN REPRESENTATIONS PRIOR TO THE LICENSING DECISION Within seven days prior to the start of the period in which the licensing decision is to be made by the First Instance Body, the Licence Applicant must make written representations to the Licensor. The written representations shall state whether or not any events or conditions of major economic importance have occurred, that may have an adverse impact on the Licence Applicants financial position since the balance sheet date of the preceding audited annual financial statements or reviewed interim financial statements (if applicable).
6.6.2
6.6.3
REPORTING PERIOD
The Licence Applicant must prepare and submit to the Licensor a management representations letter, within the seven day period prior to the start of the period in which the licensing decision is to be made by the FIB. The deadline date must be defined by the Licensor and communicated, in advance, to the Licence Applicants in writing.
6.6.4
56
b) Indications of withdrawal of financial support by financiers and other creditors; c) Substantial operating losses since the last submitted financial statements; d) Inability to pay creditors on due dates; e) Inability to comply with the terms of loan agreements with finance providers; f) Discovery and confirmation of material fraud or errors that show the financial statements are incorrect;
g) Determination of pending legal proceedings against the applicant that result in claims that are unlikely to be satisfied; h) The executive responsibilities of the Licence Applicant are being undertaken by a person(s) under some external appointment, relating to legal or insolvency procedures, rather than by the management; i) j) A significant change of key management; Management determines that it intends to liquidate the entity, cease trading, or seek protection from creditors pursuant to laws or regulations, or that it has no realistic alternative but to do so.
This listing is not all-inclusive, nor does the existence of one or more of the items always signify that an adverse impact on the Licence Applicants financial position exists.
6.6.5
6.6.6
LICENSOR DECISION
The Licensor shall, as part of his assessment, read and consider the information in respect of any event or condition of major economic importance, in combination with the historic financial information and future financial information provided by the Licence Applicant. The licence must be refused: a) If the management representations letter is not submitted to the Licensor within the defined deadline. b) If, based on the information in respect of any event or condition of major economic importance, historic financial information and future financial information that the Licensor has assessed, in the Licensors judgement, the applicant may not be able to continue as a going concern until at least the end of the season to be licensed.
6.6.7
RELEVANT APPENDICES
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6.7
Unless mentioned specifically, the requirements in 6.7.3 to 6.7.6 are mandatory and constitute the minimum requirements for the Licence Applicant in order to fulfill criterion F.06.
6.7.1
THE CRITERION
No. F.06 Grade A/B cf. Note Description FUTURE FINANCIAL INFORMATION Future financial information shall be prepared and submitted by the Licence Applicant, consisting of: a) A budgeted profit and loss account; b) A budgeted cash flow; and c) Explanatory notes including assumptions and risks and comparison of budget to actual figures. The future financial information shall be based on assumptions that are not unreasonable and meet the minimum disclosure requirements defined by this manual. Note: If the Licence Applicant exhibits a breach of any of the indicators, then the Licensor must undertake more detailed assessment procedures upon the submitted future financial information and, in certain circumstances, this may provide the basis for a licence refusal. If the Licence Applicant does not exhibit a breach of any indicators, then the Licensor does not have to undertake more detailed assessment procedures and, in certain circumstances, the Licence Applicant may be subject to a sanction, but not a licence refusal.
6.7.2
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6.7.3
REPORTING PERIOD
The Licence Applicant must prepare future financial information covering the period commencing immediately after the later of the statutory closing date of the annual financial statements (submitted in accordance to F.01) or, if applicable, the balance sheet date of the interim financial statements (submitted in accordance with criterion F.02); and covering the entire season to be licensed.
6.7.4
6.7.4.2
FOR
THE
CONTENT
OF
FUTURE
FINANCIAL
The future financial information must include, as a minimum: a) In respect of the budgeted profit and loss account, the equivalent of each of the line items listed from (i) to (xiv) in 6.2.4.5, plus the total equity at the beginning of the period and budgeted for the end of the period; and b) In respect of the budgeted cash flow, budget cash flows during the period(s) classified by operating, investing and financing activities, in a manner which management consider most appropriate. Additional line items or notes shall be included if they provide clarification or if their omission would make the future financial information misleading.
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A Licence Applicant must apply the same accounting policies for its future financial information as are applied in its annual financial statements, except for accounting policy changes which have been made after the date of the most recent annual financial statements and which are to be reflected in the next annual financial statements. In such a case, details of the changes shall be disclosed. The future financial information must include a brief description of each of the significant assumptions (by reference to the relevant aspects of historic financial and other information) that have been used to prepare the budgeted profit and loss account and cash flow statement, and also briefly describe the key risks that may affect the future financial results. This manual does not prescribe the basis for recognition or measurement of transactions and other events and does not prescribe the basis for determining reasonable assumptions, except that the bases adopted should be consistent with those used in the Licence Applicants historic financial information. Hence, each of the significant assumptions should be described by reference to the relevant aspects of historic financial and other information. Some commentary about the preparation of future financial information is contained in Appendix XIX. The minimum disclosure requirements for future financial information in accordance with F.06 are also illustrated in Appendix XX. For the purpose of the minimum requirements of criterion F.06, there is no requirement for a balance sheet to be prepared. However, it is good practice for the Licence Applicant to prepare a balance sheet, integrated with the profit and loss account and cash flow, covering the same period.
6.7.5
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6.7.5.2
IND.02
IND.03
6.7.5.3
ASSESSMENT PROCEDURES
The Licensor may choose to perform, or request performance by the applicants independent auditor, of any reasonable assessment procedures it believes are appropriate. No breach of indicators If the Licence Applicant is not in breach of any indicator, the Licensor may evaluate the future financial information provided to it. Breach of indicators If the Licence Applicant is in breach of any indicator, the future financial information must be subject to certain minimum assessment procedures carried out by the Licensor or an independent auditor. The assessment procedures must include, as a minimum, the following: a) check whether the future financial information is arithmetically accurate; b) through discussion with management and review of the future financial information, determination whether the future financial information has been prepared using the disclosed assumptions and risks; c) check that the opening balances contained within the future financial information are consistent with the balance sheet shown in the immediately preceding audited annual financial statements or reviewed interim financial statements (if such interim statements have been submitted); and d) check that the future financial information has been formally approved by the executive body of the Licence Applicant. If an independent auditor is involved, the work can be carried out by way of agreed upon procedures. The auditor should be the same as the auditor selected to carry out the audit of the immediately preceding annual financial statements. The Licence Applicant must submit to the Licensor a copy of the future financial information approved by management and a copy of the auditors report of factual findings which must be assessed by the Licensor.
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6.7.6
LICENSOR DECISION
No breach of indicators a) The Licence Applicant must be sanctioned if it does not submit future financial information that meets the minimum requirements for the content within the defined deadline. Breach of indicators b) The licence must be refused if, based on the historic financial information and future financial information, in the Licensors judgement, the applicant may not be able to continue as a going concern until at least the end of the season to be licensed. c) If, in the Licensors judgement, the Licence Applicant is in breach of any indicator then, subsequent to the licensing decision, the licensee must also fulfil criterion F.08 (Duty to update future financial information), as set out in 6.9.
6.7.7
RELEVANT APPENDICES
6.8
Future financial information: Commentary on preparation (Appendix XIX) Illustrative future financial information (Appendix XX) Indicators: Guidance on interpretation of IND.03 in respect of net assets/liabilities (Appendix XXI) Future financial information: Commentary on possible additional assessment procedures (Appendix XXII)
Unless mentioned specifically, the requirements in 6.8.3 to 6.8.6 are mandatory and constitute the minimum requirements for the Licence Applicant to fulfill criterion F.07.
6.8.1
THE CRITERION
No. F.07 Grade B Description DUTY TO NOTIFY SUBSEQUENT EVENTS Following the licensing decision by the decision-making body, the licensee must promptly notify the Licensor in writing about any subsequent events that may cast significant doubt upon the licensees ability to continue as a going concern until at least the end of the season for which the licence has been granted. Compliance with this criterion shall be assessed by the Licensor in respect of the following licensing cycle.
6.8.2
6.8.3
REPORTING PERIOD
After it has been issued a licence, up until the end of the season for which the licence has been granted, the licensee must promptly notify the Licensor in writing of any subsequent event that may cast significant doubt upon the licensees ability to continue as a going concern up to the end of the season for which the licence has been granted. At any time, the Licensor may request information and/or written representations from management about any possible such events or conditions.
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6.8.4
6.8.5
6.8.6
LICENSOR DECISION
Compliance with criterion F.07 shall be assessed by the decision-making bodies in respect of the following licensing cycle. The licensee must be sanctioned if any subsequent event that may cast significant doubt about the licensees ability to continue as a going concern until at least the end of the season for which the licence has been granted, is not notified to the Licensor without undue delay.
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6.9
Unless mentioned specifically, the requirements in 6.9.3 to 6.9.6 are mandatory and constitute the minimum requirements for the Licence Applicant in order to fulfill criterion F.08.
6.9.1
THE CRITERION
No. F.08 Grade B Description DUTY TO UPDATE FUTURE FINANCIAL INFORMATION If the licensee is in breach of one or more of the indicators, then the licensee must prepare and submit an updated version of the future financial information (prepared according to F.06). In addition, the prepared information shall include a comparison of budget to actual figures including explanations of variances. The updated version of the future financial information must be prepared, as a minimum, on a six-month basis. The updated future financial information shall meet the minimum disclosure requirements defined by this manual. Compliance with this criterion shall be assessed by the Licensor in respect of the following licensing cycle.
6.9.2
6.9.3
REPORTING PERIOD
The licensee must prepare, as a minimum, updated future financial information on a six month basis; e.g. in respect of the period from the interval date of 30 June and 31 December of the licensing season through to 30 June of the following year. The updated future financial information must be submitted to the Licensor within the set deadlines. The deadline for submission of the updated future financial information must be no later than three months after each of the interval dates.
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6.9.4
6.9.4.2
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6.9.5
6.9.6
LICENSOR DECISION
Compliance with criterion F.08 shall be assessed by the decision-making bodies in respect of the following licensing cycle. For the following licensing cycle, the licensee must be sanctioned: a) If the updated future financial information is not submitted within the defined deadline. b) If the licensee submits information that does not meet the minimum information requirements for the content (as set out in 6.9.4). c) If the licensee does not submit further information and/or representations from management regarding its plans for the future, if such information/representations have been requested by the Licensor, or if such information/representations are not complete.
6.9.7
RELEVANT APPENDICES
Updated future financial information: Summary of information to be provided as part of the updated future financial information (Appendix XXIII)
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Appendices
Page
Appendix I Appendix II Appendix III Appendix IV Appendix V Appendix VI Appendix VII Appendix VIII Appendix IX Appendix X Appendix XI Appendix XII Appendix XIII Appendix XIV Appendix XV Appendix XVI Appendix XVII Appendix XVIII Appendix XIX Appendix XX Appendix XXI Appendix XXII Appendix XXIII Appendix XXIV Registration of Football Staff Individual Licence for Persons in the Technical Zone Annual financial reporting: Overall considerations and underlying principles Annual financial reporting: Model financial statements and commentary Annual financial reporting: Player identification table Annual financial reporting: Illustrative form of agreed-upon procedures on supplementary information Annual financial reporting: Commentary regarding audit reports contents and different forms of opinion Annual financial reporting: Diagrammatic summary of implications on the licensing decision of different modifications to the auditors report Interim financial reporting: Commentary on recognition and measurement Interim financial reporting: Commentary on specific explanatory notes Interim financial reporting: Illustrative form of review report that may be issued from an engagement to review interim financial statements Interim financial reporting: Diagrammatic summary of implications on the licensing decision of different modification to the auditors review report Transfer payables table Transfer receivables table Transfer payables reporting: Illustrative form of agreed-upon procedures Employees payables reporting: Illustrative form of agreed-upon procedures Employees payables reporting: Illustrative confirmation letter from employees Illustrative management representations letter to Licensor Financial information extracts: Illustration of agreement or reconciliation between different types of information supplied by Licence Applicants Future financial information: Commentary on preparation Illustrative future financial information Indicators: Guidance on interpretation of Ind. 03 regarding net assets/liabilities Future financial information: Commentary on possible additional assessment procedures Updated future financial information: Summary of information to be provided as part of the updated future financial information Promoted applicants: Guidance on relaxation of disclosure requirements 69 70 72 123 125 128 131 132 134 135 137 138 140 142 146 149 150 151 161 163 169 171 173 177
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Appendix I:
Registration of Football Staff Individual Licence for Persons in the Technical Zone
AFC recommends the national associations to establish a regulation for the registration of individuals taking over the function defined by criteria P.05 P.11. These persons are allowed to be in the technical zone during an AFC competition match. The registration of the person occupying these functions aims to: a) define the obligations of an individual taking over such a function and provide him with a licence like the players passport; b) describe the licence for those functions and its scope of application (territory and duration); c) subordinate him to the disciplinary power of the national association and all other football bodies (FIFA, AFC, etc); d) verify that this individual has successfully completed the corresponding education course for which he provides a diploma; e) ensure that the knowledge is maintained and updated through mandatory participation in repetition courses (eg. for coaches, yearly weekend course for A-license holders); f) define the obligations of the club with regard to the registration (submit a copy of the signed contract to the national association, etc); g) describe consequences of the non-fulfillment of the registration requirements for any person and the club (fine, reduction of points, etc). The national association defines the interval of this registration procedure for all these individuals. The national association is responsible for the registration procedure and requires, for example, the submission of the following documents (eg.): a) copy of the contract (if an employee); b) proof that the required coaching diploma/certificate has been achieved; c) proof to have successfully participated in the required repetition course; d) working permit (if applicable and required by law); e) confirmation from the person in charge to recognize the statutes, regulations of and decisions taken by the football authorities (FIFA, AFC, FA, League and club) as well as to recognize the corresponding arbitration tribunal for any dispute (insert correct name); f) other documents (eg. CV, activity report before joining the new association etc). The output of a successful procedure within the national association is a licence for the individual valid for the fixed period/season.
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Appendix II:
This appendix provides additional commentary about the underlying principles of accounting practice, such that the accounting practice provides a suitable framework for the preparation and presentation of financial statements. Fair presentation and compliance with accounting standards Financial statements shall present fairly the financial position, financial performance and cash flows of an entity. Fair presentation requires the faithful representation of the effects of transactions, other events and conditions in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses set out in the framework. A fair presentation also requires an entity: (a) to select and apply accounting policies in accordance with applicable accounting standards; (b) to present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information; (c) to provide additional disclosures when compliance with the specific requirements in the applicable accounting standards is insufficient to enable users to understand properly the impact of particular transactions, other events and conditions on the entitys financial position and financial performance or when the omission of the additional disclosures would render the information presented as misleading. Inappropriate accounting policies are not rectified either by disclosure of the accounting policies used or by notes or explanatory material. Going concern When preparing financial statements, management shall make an assessment of an entitys ability to continue as a going concern. Financial statements shall be prepared on a going concern basis unless management either intends to liquidate the entity or to cease trading, or has no realistic alternative but to do so. When management is aware, in making its assessment, of material uncertainties related to events or conditions that may cast significant doubt upon the entitys ability to continue as a going concern, those uncertainties shall be disclosed. When financial statements are not prepared on a going concern basis, that fact shall be disclosed, together with the basis on which the financial statements are prepared and the reason why the entity is not regarded as a going concern. In assessing whether the going concern assumption is appropriate, management takes into account all available information about the future, which is at least, but is not limited to, twelve months from the balance sheet date (this may be different in some jurisdictions). The degree of consideration depends on the facts in each case. When an entity has a history of profitable operations and ready access to financial resources, a conclusion that the going concern basis of accounting is appropriate may be reached without detailed analysis. In other cases, management may need to consider a wide range of factors relating to current and expected profitability, debt repayment schedules and potential sources of replacement financing before it can satisfy itself that the going concern basis is appropriate. Accrual basis of accounting An entity shall prepare its financial statements, except for cash flow information, using the accrual basis of accounting. Under this basis, the effects of transactions and other events are recognized when they occur (and not as cash or its equivalent are received or paid) and they are recorded in the accounting records and reported in the financial statements of the periods to which they relate. Financial statements prepared on the accruals basis inform users not only of past transactions involving the payment and receipt of cash but also of obligations to pay cash in the future and of resources that represent cash to be received in the future. Hence, they provide the type of information about past transactions and other events that is most useful to users in making economic decisions.
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Consistency of presentation The presentation and classification of items in the financial statements shall be retained from one period to the next unless: (a) it is apparent, following a significant change in the nature of the entitys operations or a review of its financial statements, that another presentation or classification would be more appropriate having regard to the criteria for the selection and application of accounting policies in the applicable accounting standard; (b) a Standard or an interpretation requires a change in presentation. Materiality and aggregation Each material class of similar items shall be presented separately in the financial statements. Items of a dissimilar nature or function shall be presented separately unless they are immaterial. Financial statements result from processing large numbers of transactions or other events that are aggregated into classes according to their nature or function. The final stage in the process of aggregation and classification is the presentation of condensed and classified data, which form line items on the face of the balance sheet, profit and loss account, statement of changes in equity and cash flow statement, or in the notes. If a line items is not individually material, it is aggregated with other items either on the face of those statements on in the notes. An item that is not sufficiently material to warrant separate presentation on the face of those statements may nevertheless be sufficiently material for it to be presented separately in the notes to the statements. Offsetting Assets and liabilities, and income and expenses, shall not be offset unless offset is specifically required or permitted by national accounting practice. It is important that assets and liabilities, and income and expenses, are reported separately. Offsetting in the profit and loss account or the balance sheet, except when offsetting reflects the substance of the transaction or other event, detracts from the ability of users both to understand the transactions, other events and conditions that have occurred and to assess the entitys future cash flows. Measuring assets net of valuation allowances for example, obsolescence allowances on inventories and doubtful debts allowances on receivables is not offsetting. Comparative information Except when national accounting practice permits or requires otherwise, comparative information shall be disclosed in respect of the previous period for all amounts reported in the financial statements. Comparative information shall be included for narrative and descriptive information when it is relevant to an understanding of the current periods financial statements.
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Appendix III:
Introduction
These model financial statements illustrate the typical disclosures to meet the minimum requirements of criterion F.01 for reporting annual financial information. In some instances, the commentary and/or the model financial statements, contained within this Appendix VII, illustrate greater disclosures than the minimum requirements where this is the case, the disclosure is marked as good practice and has a shaded background. The model financial statements are presented on each right hand page and the associated commentary and guidance is presented on each facing page. This commentary and guidance is applicable as at the date of publication of the revised manual. It is the responsibility of the Licensor to ensure that commentary and guidance included in the national licensing manual is kept up to date so that it reflects, for instance, any future changes to International Standards on Auditing (ISAs) and International Accounting Standards (IASs). The model financial statements and commentary are only a summary and are not a substitute for using a comprehensive disclosure checklist to meet nationally accepted accounting practice requirements. Reference to the underlying law and accounting standards will be required in more complex situations. In many cases the wording used in the financial statements is purely illustrative and, in practice, will need to be modified to reflect the specific circumstances of the Licence Applicant. The annual financial statements shall be prepared on the basis of national accounting practice requirements. In general, the manual and this appendix are intended to provide illustrative guidance on disclosure and financial reporting. Note that the requirements of national accounting practice may require presentation in a different form, in certain respects, from the illustrative presentation given in this Appendix. This manual and this Appendix are not meant to provide guidance on accounting practice. However, as set out in 6.2.4.9, this manual does not include specific accounting requirements in relation to player registration costs carried as intangible fixed assets. As described in section 6.2 of the manual, if the audited financial statements do not meet the minimum disclosure requirements and accounting principles defined by this manual, then supplementary information must be prepared by the Licence Applicant and assessed by the auditor.
Commentary/Guidance
Entity name The name and legal form of the reporting entity should be clearly disclosed. It must be clear whether the financial information covers the individual entity or a group of entities or some other combination of entities. Consolidated financial statements are the financial statements of a group presented as those of a single economic entity. A group is a parent and all its subsidiaries. A subsidiary is an entity, including an unincorporated entity such as a partnership, that is controlled by another entity (known as the parent). It is a requirement to describe in the financial statements the structure and compositin of any such group or combination.
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Registered number It is good practice for the reporting entitys registered number (if relevant under national corporation or tax law) to be prominently displayed on the financial statements. Statutory closing date If the directors wish to change the statutory closing date, they may do so. The resulting financial statements will be presented for an accounting period which may be more than or less than one year. Any changes to the statutory closing date shall be clearly marked on the balance sheet. The resulting changes to the accounting period shall be clearly marked on both the profit and loss account and the cash flow statement. The prior year comparative figures shall not be restated.
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[Name of Reporting Entity] [Annual] financial statements for the year/period ended [date] 20XX Registered Number: [insert]
Contents
Management review/Directors report Balance sheet Profit and loss account Cash flow statement Notes to the financial statements
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The development and performance of the football club business; The year-end position; Underlying trends and factors (relating to both past and future developments, performance and position); and Major business developments and plans (for example stadium projects; new business ventures; significant contracts; major player transfers; etc).
Directors The directors, who served throughout the year, except as noted, were as follows: [Insert full list of directors] Directors interests The directors who held office at [year end date] had the following interests in the shares and debentures of the entity: [insert details of name of director and shares/debentures held] [insert details of the name of director, number of shares held and percentage of called up share capital held]
[Date]
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Current assets Cash and cash equivalents Accounts receivable from player transfers Accounts receivable from group entities and other related parties Accounts receivable other Inventories Non current assets Tangible fixed assets Intangible assets - players Intangible assets - others Investments Total assets Current liabilities Bank overdrafts and loans Accounts payable relating to player transfer Accounts payable to group entities and other related parties Accounts payable other Tax liabilities Short term provisions Non Current liabilities Bank and other loans Other long term liabilities Tax liabilities Long term provisions Total liabilities Net assets/(liabilities) Equity Treasury shares (own shares) Issued capital and reserves Total equity
10
11
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11
12 12
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The financial statements were approved by the board of directors and authorized for issue on [date]. They were signed on its behalf by: [Name] [Name of signatory to be stated] Director Date: [Date]
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Are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes (for example, the clubs stadium, training ground and offices); and Are expected to be used during more than one financial period.
Intangible assets An intangible asset is an identifiable non-monetary asset without physical substance. Intangible fixed assets includes the capitalized direct costs of obtaining players registrations. This total should be disclosed separately (see 6.2.4.9 of the manual). This disclosure will be supported by a Player identification table see Appendix IV although the Player identification table does not have to be included in the annual financial statements.
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Current assets Cash and cash equivalents Accounts receivable from player transfers Accounts receivable from group entities and other related parties Accounts receivable other Inventories Non current assets Tangible fixed assets Intangible assets - players Intangible assets - others Investments Total assets Current liabilities Bank overdrafts and loans Accounts payable relating to player transfer Accounts payable to group entities and other related parties Accounts payable other Tax liabilities Short term provisions Non Current liabilities Bank and other loans Other long term liabilities Tax liabilities Long term provisions Total liabilities Net assets/(liabilities) Equity Treasury shares (own shares) Issued capital and reserves Total equity
10
11
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11
12 12
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The financial statements were approved by the board of directors and authorized for issue on [date]. They were signed on its behalf by: [Name] [Name of signatory to be stated] Director Date: [Date]
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Current assets Cash and cash equivalents Accounts receivable from player transfers Accounts receivable from group entities and other related parties Accounts receivable other Inventories Non current assets Tangible fixed assets Intangible assets - players Intangible assets - others Investments Total assets Current liabilities Bank overdrafts and loans Accounts payable relating to player transfer Accounts payable to group entities and other related parties Accounts payable other Tax liabilities Short term provisions Non Current liabilities Bank and other loans Other long term liabilities Tax liabilities Long term provisions Total liabilities Net assets/(liabilities) Equity Treasury shares (own shares) Issued capital and reserves Total equity
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10
11
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11
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12 12
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The financial statements were approved by the board of directors and authorized for issue on [date]. They were signed on its behalf by: [Name] [Name of signatory to be stated] Director Date: [Date]
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Current assets Cash and cash equivalents Accounts receivable from player transfers Accounts receivable from group entities and other related parties Accounts receivable other Inventories Non current assets Tangible fixed assets Intangible assets - players Intangible assets - others Investments Total assets Current liabilities Bank overdrafts and loans Accounts payable relating to player transfer Accounts payable to group entities and other related parties Accounts payable other Tax liabilities Short term provisions Non Current liabilities Bank and other loans Other long term liabilities Tax liabilities Long term provisions Total liabilities Net assets/(liabilities) Equity Treasury shares (own shares) Issued capital and reserves Total equity
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10
11
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11
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12 12
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The financial statements were approved by the board of directors and authorized for issue on [date]. They were signed on its behalf by: [Name] [Name of signatory to be stated] Director Date: [Date]
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Revenue Gate receipts Sponsorship and advertising Broadcasting rights Commercial Other operating income Expenses Cost of sales/materials Employee benefits expense Depreciation and amortization Impairment of fixed assets Other operating expenses Operating profit/(loss) Profit/loss on disposal of fixed assets Finance costs Tax expense Profit or loss after taxation
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2 3 4 12
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depreciation of tangible fixed assets (such as the stadium); amortization of player registration costs; and amortization of other intangible fixed assets.
Separate disclosure is required in the financial statements. In this illustration; these items are shown as separately disclosed in the notes to the financial statements. Refer to note [7] (Tangible fixed assets) and [8] (Intangible fixed assets) Impairment of fixed assets Separate disclosure required of impairment of player registration costs and impairment of other tangible or intangible fixed assets. In this illustration; these items are shown as separately disclosed in the notes to the financial statements. An asset is impaired when the carrying amount of the asset exceeds its recoverable amount. Both tangible assets (for example, a clubs stadium) and intangible assets (for example, a players registration) may be impaired in relevant and applicable circumstances. Carrying amount is the amount at which an asset is recognized in the balance sheet after deducting any accumulated depreciation (amortization) and accumulated impairment losses thereon. Recoverable amount is the higher of an assets net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. Net selling price is the amount obtainable from the sale of an asset in an arms length transaction between knowledgeable, willing parties, less the costs of disposal. If, and only if, the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset should be reduced to its recoverable amount. That reduction is an impairment loss. An impairment loss must be recognized as an expense in the income statement immediately. After the recognition of an impairment loss, the depreciation (amortization) charge for the asset should be adjusted in future periods to allocate the assets revised carrying amount, less its residual value (if any), on a systematic basis over its remaining useful life.
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Revenue Gate receipts Sponsorship and advertising Broadcasting rights Commercial Other operating income Expenses Cost of sales/materials Employee benefits expense Depreciation and amortization Impairment of fixed assets Other operating expenses Operating profit/(loss) Profit/loss on disposal of fixed assets Finance costs Tax expense Profit or loss after taxation
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2 3 4 12
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Revenue Gate receipts Sponsorship and advertising Broadcasting rights Commercial Other operating income Expenses Cost of sales/materials Employee benefits expense Depreciation and amortization Impairment of fixed assets Other operating expenses Operating profit/(loss) Profit/loss on disposal of fixed assets Finance costs Tax expense Profit or loss after taxation
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2 3 4 12
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ii. the indirect method, whereby net profit or loss is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments, and items of income and expense associated with investing or financing cash flows. The amount of cash flows arising from operating activities is a key indicator of the extent to which the operations of the entity have generated sufficient cash flows to repay loans, maintain the operating capability of the entity, pay dividends and make new investments without recourse to external sources of financing. Information about the specific components of historical operating cash flows is useful, in conjunction with other information, in forecasting future operating cash flows. Cash flows from operating activities are primarily derived from the principal revenue-producing activities of the entity. Therefore, they generally result from the transactions and other events that enter into the determination of net profit or loss. Examples of cash flows from operating activities of a football club are shown opposite (in a direct method format). Licence Applicants are encouraged to report cash flows from operating activities using the direct method. The direct method provides information which may be useful in estimating future cash flows and which is not available under the indirect method.
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Cash flows from operating activities Cash receipts from gate receipts Cash receipts from sponsorship and advertising Cash receipts from broadcasting rights Cash receipts from commercial activities Cash receipts from other operating activities Cash payments to suppliers for goods and services Cash payments to and on behalf of employees Cash payments in relation to other operating expenses
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Cash inflow/outflow from operating activities Taxation Cash flows from investing activities Cash receipts from sale of property, plant and equipment Cash payments to acquire property, plant and equipment Cash receipts from sale of player registrations Cash payments to acquire player registrations Cash receipts from sale of other long term assets Cash payments to acquire other long term assets Cash receipts from sale of financial investments Cash payments to acquire new financial investments Cash receipts in relation to receipts of loans from non-financial institutions Cash payments in relation to repayment of loans to non-financial institutions Cash inflow/outflow from investing activities Cash flows from financing activities Cash receipts from issuing short or long-term borrowings Cash payments in relation to repayment of amounts borrowed Cash receipts from an increase in capital Cash payments to acquire or redeem the entitys shares Cash inflow/outflow from financing activities Net increase/decrease in cash
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95
Cash flows from operating activities Cash receipts from gate receipts Cash receipts from sponsorship and advertising Cash receipts from broadcasting rights Cash receipts from commercial activities Cash receipts from other operating activities Cash payments to suppliers for goods and services Cash payments to and on behalf of employees Cash payments in relation to other operating expenses
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Cash inflow/outflow from operating activities Taxation Cash flows from investing activities Cash receipts from sale of property, plant and equipment Cash payments to acquire property, plant and equipment Cash receipts from sale of player registrations Cash payments to acquire player registrations Cash receipts from sale of other long term assets Cash payments to acquire other long term assets Cash receipts from sale of financial investments Cash payments to acquire new financial investments Cash receipts in relation to receipts of loans from non-financial institutions Cash payments in relation to repayment of loans to non-financial institutions Cash inflow/outflow from investing activities Cash flows from financing activities Cash receipts from issuing short or long-term borrowings Cash payments in relation to repayment of amounts borrowed Cash receipts from an increase in capital Cash payments to acquire or redeem the entitys shares Cash inflow/outflow from financing activities Net increase/decrease in cash
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Assets held under finance leases are depreciated over their expected useful economic lives on the same basis as owned assets or, where shorter, over the term of the relevant lease. The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in income. Intangible fixed assets The transfer and incidental costs associated with the acquisition of players registrations are capitalized as intangible fixed assets. These costs are fully amortised, in equal annual instalments, over the period of the respective players contracts. Players registrations are written down for impairment when the carrying amount exceeds the amount recoverable through use or sale. Revenue Revenue represents income receivable from the entitys principal activities excluding transfer fees for the sale of player registrations and sales tax. Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, net of discounts and sales related taxes. Gate receipts Gate receipts comprised revenue from all home match day activities, together with the clubs share of gate receipts from matches at other venues. Sponsorship and advertising Comprises revenue from the exploitation of the clubs brand through sponsorship and advertising agreements.
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99
100
Profit/loss on disposal of player registrations Profit/loss on disposal of other intangible fixed assets Profit/loss on disposal of tangible fixed assets Total 3. Finance costs
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_______________
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Notes
Interest on bank overdrafts and loans Interest on convertible loan notes Interest on obligations under finance leases Total borrowing costs 4. Tax expense
20XX [currency]
20YY [currency]
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Notes
20XX [currency]
20XX %
20YY [currency]
20YY %
Tax is calculated at [x] percent (20YY: [x] per cent) of the estimated assessable profit for the year. The charge for the year can be reconciled to the profit per the profit and loss account as follows: Notes 20XX [currency] 20XX % 20YY [currency] 20YY %
Tax at the [name of country] [name of tax] rate of [25]% (20YY: [25]%) Tax effect of share of results of associates Tax effect of expenses that are not deductible in determining taxable profit Tax effect of utilization of tax losses not previously recognized Increase in opening deferred tax liability resulting from an increase in tax rates Effect of different tax rates of subsidiaries operating in other jurisdictions Tax expense and effective tax rate for the year
_ ______________________________________________________________ _________________________________________________________
101
102
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Details of the entitys associates as at [date] 20XX are as follows: Name of subsidiary [Names] Place of incorporation (or registration) Type of business/ operations Proportion of ownership interest % Proportion of voting power held % Method used to account for investment
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Held by an entity for use in the production or supply of goods or services, for rental to others, or for administrative purposes; and Expected to be used during more than one financial period.
Separate disclosure of each class of tangible fixed assets shall be made. A class of property, plant and equipment is a grouping of assets of a similar nature and use in an enterprises operations. The following are examples of separate classes:
Land; Land and buildings (including stadium and training ground); Plant and machinery; Motor vehicles; Fixtures and fittings; Office equipment.
The following information shall be disclosed for each class of tangible fixed assets: The gross carrying amount and the accumulated depreciation (aggregated with accumulated impairment losses) at the beginning and end of the period; and A reconciliation of the carrying amount at the beginning and the end of the period showing: Additions; Disposals; Increases of decreases during the period resulting from revaluations; Impairment losses recognized in the profit and loss account during the period (if any); Impairment losses reversed in the profit and loss account during the period (if any); Depreciation; and Other changes.
The depreciation methods and useful lives (or depreciation rates) used shall be disclosed in the accounting policy note. These are matters of judgement and such disclosure provides information that allows comparison to be made with other entities. The financial statements shall also disclose the existence and amounts of restrictions on title, and tangible fixed assets pledged as security for liabilities. Where tangible fixed assets such as the stadium, are stated at revalued amounts, the following additional information may be disclosed (as good practice):
The effective date of the revaluation; Whether an independent valuer was involved; The methods and significant assumptions applied in estimating the items fair value;
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The extent to which the items fair values were determined by reference to observable prices in an active market or recent market transactions on arms length terms or were estimated using other valuation techniques; The carrying amount that would have been recognized had the assets been carried under the historical cost model; and The revaluation surplus, indicating the change for the period and any restrictions on the distribution of the balance to the shareholders.
8. Intangible fixed assets Separate disclosures of each class of intangible fixed assets shall be made. A class of intangible assets is a grouping of assets of a similar nature and use in an enterprises operations. The following are examples of separate classes:
Player registrations In relation to amounts capitalized and amortised in respect of player registrations, the note should include a reconciliation of the cost, amortization, net carrying value and movements in the accounting period. For further information and guidance in relation to accounting for player registrations, refer to section 6.2 and Appendix IV. Goodwill and other intangible assets In relation to amounts capitalized and amortised in respect of other intangible assets, the note should include a reconciliation of the cost, amortization, net carrying value and movements in the accounting period. The existence and carrying amounts of intangible assets whose title is restricted and the carrying amount of intangible assets pledged as security for liabilities shall be disclosed.
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Cost or valuation At beginning of period Additions Disposals Revaluation increase At end of period Comprising At cost At evaluation Accumulated depreciation and impairment At beginning of period Charge for the year Eliminated on disposals Impairment Eliminated on revaluation At end of period Carrying amount At end of period At beginning of period
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The entity has pledged tangible fixed assets having a carrying value of approximately [amount] to secure banking facilities granted for the entity. Land and buildings were revalued at [date of revaluation] by [name of company which performed valuation], independent valuers not connected with the entity, on the basis of market value. The valuation confirms to International Valuation Standards and was based on recent market transactions on arms length terms for similar properties. As at [date of revaluation], had the land and buildings been carried at historical cost less accumulated depreciation, their carrying value would have been approximately US$100 (20YY: US$100). The revaluation surplus is disclosed in note 12.
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Cost Brought forward from previous period Additions Disposals Carried forward at end of period Amortisation Brought forward from previous period Amortisation charge for the period Disposals Impairment Carried forward at end of period Carrying amount At end of period At beginning of period
Notes
Other [currency]
Total [currency]
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Information about the extent and nature of the financial instruments, including amounts and duration and also any significant terms and conditions that may affect the amount, timing and certainty of future cash flows; and The accounting policies and methods adopted, including the criteria for recognition and the basis of measurement applied.
For borrowing facilities the following information may be disclosed as good practice: Promised credit facilities; Balance outstanding at closing date; Name of lender; and Duration of the facilities.
10. Accounts payable to group entities and other related parties Group entities are entities that are under common control. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. Group entities include parents, subsidiaries and fellow subsidiaries. Other related parties include associates. For further details and definitions of other related parties, refer to note [13] Related party transactions.
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Bank overdrafts Bank loans The borrowings are repayable as follows: On demand or within one year In the second year In the third to fifth years inclusive After five years Less: Amount due for settlement within 12 months (shown under current liabilities) Amount due for settlement after 12 months
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10. Accounts payable to group entities and other related parties 20XX [currency] 20YY [currency]
Notes Amount payable to group entities Amounts payable to other related parties Total
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The carrying amount at the beginning and end of the period; Additional provisions made in the period, including increases to existing provisions; Amounts used (ie. incurred and charged against the provision) during the period; Unused amounts reversed during the period; and The increase during the period in the discounted amount arising from the passage of time and the effect of any change in the discount rate.
Comparative information is not required for the disclosures described above. The entity is encouraged to disclose (as good practice) the following for each class of provision:
A brief description of the nature of the obligation and the expected timing of any resulting outflows of economic benefits; An indication of the uncertainties about the timing of those outflows including, where necessary to provide adequate information, the major assumptions made concerning future events; and The amount of any expected reimbursement (for example from a counterclaim or insurance recovery), stating the amount of any asset that has been recognized for that expected reimbursement.
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At beginning of period Additional provision in the year Utilisation of provision At end of period Total Included in current liabilities Included in non-current liabilities
Notes
Total [currency]
____________ ____________ ____________ ___________ ___________ ___________ ___________ __________ ____________ ____________ ____________ ___________ ____________ ____________ ____________ ___________
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The number of shares authorised; The number of shares issued and fully paid, and issued but not fully paid; Par value per share (or that the shares have no par value); A reconciliation of the number of shares outstanding at the beginning and at the end of the period; The rights, preferences and restrictions attaching to that class including restrictions on the distribution of dividends and the repayment of capital; Shares in the entity held by the entity or by its subsidiaries or associates; and Shares reserved for issue under options and contracts for the sale of shares, including the terms and amounts.
The following may be disclosed (as good practice) in relation to share capital issued during the current year: The number and type of shares issued; The share premium (if applicable) arising on the shares issued; The total amount raised as a result of the issuing of shares; The reason for the issuing of new shares.
Other reserves For instance, it is good practice, where items of property, plant and equipment are stated at revalued amounts, the revaluation surplus, indicating the change for the period and any restrictions on the distribution of the balance to shareholders, shall be disclosed. Retained earnings The balance of retained earnings (ie. accumulated profit or loss) at the beginning of the period and at the balance sheet date, and the changes during the period, shall be disclosed. It is good practice to disclose the amount of distributable and non-distributable reserves.
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Notes
Authorised: [number] ordinary shares of [amount] each Issued and fully paid: [number] ordinary shares of [amount] each
During the year an amount of US$x was raised for [insert the purpose of the issue of the share capital] through the issue of [y] ordinary shares [at a premium of [US$y] per share] Reserves Share premium At beginning of period Premium arising on issue of equity shares Expenses of issue of equity shares Acquired in the period Disposal of an exercise of options Increase in reserve Decrease in reserve Dividends paid Retained profit after tax for the year At end of period Treasury shares (Own shares)
Other reserves
Retained earnings
[x] [x] [x] [x] [x] [x] [x] [x] _ _______________________________________________ _ __________________________________________
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The following paragraphs give details of all related party transactions involving the entity and any of its subsidiary undertakings. ABC Holdings is a related party of the entity because [give reasons]. The amount owing to ABC Holdings at the year end of [US$100] is interest bearing at a rate of [5]% per annum. [Name of subsidiary] is a related party because it is under common control. Both [name of subsidiary] and [entity name] are owned by [insert name of parent company or individual]. The amounts outstanding are unsecured and will be settled in cash. No guarantees have been given or received. No provisions have been made for doubtful debts in respect of the amounts owed by related parties. Companies of which [insert name of Director] is a Director, were invoiced [US$100] for [insert description of services] during the year. [Insert name of Director] is an Executive Direct of [name of entity]. During the year, the entity purchase from Company A, an associated company, [US$100] (20YY - US$200) of merchandise at normal trade price. At the financial year end, [US$10] (2002 - [US$20]) was due to Company A in respect of finished goods. This amount is included within creditors due within one year.
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(c) provisions for doubtful debts related to the amount of outstanding balances; and (d) the expense recognized during the period in respect of bad or doubtful debts due from related parties. As good practice, disclosures should also include any other elements of any related party transactions that are necessary for an understanding of the financial statements. The following are examples of transactions that are disclosed if they are with a related party: (a) purchases or sales of goods; (b) purchases or sales of property and other assets; (c) rendering or receiving of services; (d) leases; (e) transfers under licence agreements; (f) transfers under finance arrangements (including loans and equity contributions in cash or in kind); (g) provision of guarantees or collateral; and (h) settlement of liabilities on behalf of the entity by another party or by the entity on behalf of another party.
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an estimate of its financial effect; an indication of the uncertainties relating to the amount or timing of any outflow; and the possibility of any reimbursement.
Examples of contingent liabilities include: amounts that may become payable to other parties, in respect of player registrations; guarantees to Banks in respect of related parties; or amounts that are subject to litigation.
This listing is not all-inclusive. 15. Controlling party When the reporting entity is controlled by another party, there shall be disclosure of the related party relationship and the name of that party and, if different, that of the ultimate controlling party. If the controlling party or ultimate controlling party of the reporting entity is not known, that fact shall be disclosed. This information shall be disclosed irrespective of whether any transactions have taken place between the controlling parties and the reporting entity. 16. Events after the balance sheet date It is considered good practice to disclose material non-adjusting events after the balance sheet date. Disclose the nature of the event and an estimate of its financial effect, or a statement that such an estimate cannot be made. Examples of events or conditions which would fall into this category include:
Fixed term borrowing approaching maturity without realistic prospects of renewal or repayment; Substantial operating losses; Discovery of material fraud or errors that show the financial statements are incorrect; Management determines that it intends to liquidate the entity or to cease trading, or that it has no realistic alternative but to so do; Player transactions where the amounts paid or received are significant; Transactions relating to property for example, in relation to the clubs stadium.
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ii. the indirect method, whereby net profit or loss is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past of future operating cash receipts or payments, and items of income and expense associated with investing or financing cash flows. The amount of cash flows arising from operating activities is a key indicator of the extent to which the operations of the entity have generated sufficient cash flows to repay loans, maintain the operating capability of the entity, pay dividends and make new investments without recourse to external sources of financing. Information about the specific components of historical operating cash flows is useful, in conjunction with other information, in forecasting future operating cash flows. Cash flows from operating activities are primarily derived from the principal revenue-producing activities of the entity. Therefore, they generally result from the transactions and other events that enter into the determination of net profit or loss. Examples of cash flows from operating activities of a football club are shown opposite (in a direct method format). Licence Applicants are encouraged to report cash flows from operating activities using the direct method. The direct method provides information which may be useful in estimating future cash flows and which is not available under the indirect method.
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Notes
Operating profit Depreciation and amortization Profit on sale of tangible fixed assets Increase in inventories Decrease in debtors Increase in creditors Decrease in provisions Other [describe] Net cash inflow from operating activities Cash flows from investing activities Cash receipts from sale of property, plant and equipment Cash payments to acquire property, plant and equipment Cash receipts from sale of player registrations Cash payments to acquire player registrations Cash receipts from sale of other long term assets Cash payments to acquire other long term assets Cash receipts from sale of financial investments Cash payments to acquire new financial investments Cash receipts in relation to receipts of loans from non-financial institutions Cash payments in relation to repayment of loans to non-financial institutions Cash inflow/outflow from investing activities Cash flows from financing activities Cash receipts from issuing short or long-term borrowings Cash payments in relation to repayment of amounts borrowed Cash receipts from an increase in capital Cash payments to acquire or redeem the entitys shares Cash inflow/outflow from financing activities Net increase/decrease in cash
______________ ______________
______________ ______________
______________ ______________
______________ ______________
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Notes
Operating profit Depreciation and amortization Profit on sale of tangible fixed assets Increase in inventories Decrease in debtors Increase in creditors Decrease in provisions Other [describe] Net cash inflow from operating activities Cash flows from investing activities Cash receipts from sale of property, plant and equipment Cash payments to acquire property, plant and equipment Cash receipts from sale of player registrations Cash payments to acquire player registrations Cash receipts from sale of other long term assets Cash payments to acquire other long term assets Cash receipts from sale of financial investments Cash payments to acquire new financial investments Cash receipts in relation to receipts of loans from non-financial institutions Cash payments in relation to repayment of loans to non-financial institutions Cash inflow/outflow from investing activities Cash flows from financing activities Cash receipts from issuing short or long-term borrowings Cash payments in relation to repayment of amounts borrowed Cash receipts from an increase in capital Cash payments to acquire or redeem the entitys shares Cash inflow/outflow from financing activities Net increase/decrease in cash
______________ ______________
______________ ______________
______________ ______________
______________ ______________
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Appendix IV:
Refer to section 6.2.4.10 for the requirements in relation to the player identification table. The player identification table must be provided to the auditor. However, the player identification table does not need to be disclosed within the annual financial statements, nor does it have to be submitted to the Licensor. An illustration of a player identification table is set out below. The illustration of the player identification table includes examples of amounts capitalized in respect of a club that has incurred acquisition costs (at some point in time in the period or prior periods) in respect of four players and assumes the Licence Applicants statutory closing date is 31 December 2009.
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[Name] Licence Applicant Player identification table Year ended 30 June 2009
Player details
Name (and d.o.b.) Start date of contract End date of contract
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Accumulated amortization
Amortisation in current period Impairment in current period Disposals As at end of period
Carrying amount
Broughtforward from previous period (i)=(a)-(d) As at end of period
Other
Sales proceeds Profit/(loss) on disposal of player registration (l)
(b)
(c) = (a)+(b)
(e)
(f)
(g)
(h)=(d)+(e)+(f)-(g)
(j)=(c)-(h)
(k)
Acquired players Player 1 Player 2 Player 3 Player 4 Loaned players [name] [name] [name] 30.01.2009 30.08.2008 30.01.2009 30.06.2008 30.06.2011 30.06.2011 30.06.2011 30.06.2010 0 0 0 240 200 300 320 0 200 300 320 240 0 0 0 0 33 88 55 120 0 0 0 0 0 0 0 0 33 88 55 120 0 0 0 240 167 212 265 120 n/a n/a n/a n/a n/a n/a n/a n/a
Total
(e)
(f)
(j)
(l)
Aggregate figure must agree to Amortisation of players registrations as disclosed in Profit & Loss Account and/or Balance Sheet in the annual financial statements Aggregate figure must agree to Impairment of players registration as disclosed in Profit & Loss Account and/or Balance Sheet in the annual financial statements Aggregate figure must agree to carrying value of intangible assets (players registrations) as disclosed in the Balance Sheet in the annual financial statements Aggregate figure must agree to profit or loss from disposal of players registrations as disclosed in the annual financial statements
Confirmed on behalf of Licence Applicant that the information in the table above is accurately compiled and completed.
[date]
Appendix V:
As described in section 6.2, if the minimum requirements for the content of the annual financial information and accounting principles are not met in the annual financial statements, then the Licence Applicant will be required to prepare supplementary information in order to meet the minimum requirements. The content and presentation of the supplementary information, if required at all, will vary between Licence Applicants depending on the amount of information already disclosed in the separate annual financial statements. The supplementary information must be prepared on a basis of accounting, and accounting policies, consistent with the annual financial statements. Financial information must be extracted from sources consistent with those used for the preparation of the financial statements. Where appropriate, disclosures in the supplementary information must agree, or reconcile, to the relevant disclosures in the financial statements. International Standard on Related Services (ISRS) 4400, Engagements to Perform Agreed-upon Procedures Regarding Financial Information provides further guidance on the auditors professional responsibilities when an engagement to perform agreed-upon procedures is undertaken and on the form and content of the report that the auditor issues in connection with such an engagement. The Licensor may wish to develop a standard form of agreed-upon procedures, appropriate for its national legislation and practice, through consultation with the national institute of chartered accountants (or similar body) in the country. Some guidance is provided in this appendix about agreed-upon procedures work and an illustrative factual findings report is provided. Objective of agreed-upon procedures work The objective of an agreed-upon procedures engagement is for the auditor to carry out procedures of an audit nature, to which the auditor and the entity and any appropriate third parties have agreed, and to report on factual findings. As the auditor simply provides a report of the factual findings of agreed-upon procedures, no assurance is expressed. Instead, users of the report assess for themselves the procedures and findings reported by the auditor and draw their own conclusions from the auditors work. The auditors report is restricted to those parties that have agreed to the procedures to be performed since others, unaware of the reasons for the procedures, may misinterpret the results. Procedures The auditor should carry out the procedures agreed-upon and use the evidence obtained as the basis for the report of factual findings. The procedures applied in an engagement to perform agreed-upon procedures may include the following:
Inquiry and analysis; Re-computation, comparison and other clerical accuracy checks; Observation; Inspection; and Obtaining confirmations.
Illustrative contents of a report of factual findings for an agreed-upon procedures engagement The report of factual findings should contain:
Addressee (the Licence Applicant who engaged the auditor to perform the agreed-upon procedures); Identification of specific financial or non-financial information to which the agreed-upon procedures have been applied (ie. in this illustration, the supplementary information);
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A statement that the procedures performed were those agreed upon with the recipient; Identification of the purpose for which the agreed-upon procedures were performed; A listing of the specific procedures performed; A description of the auditors factual findings including sufficient details of errors and exceptions found; Statement that the procedures performed do not constitute either an audit or a review and, as such, no assurance is expressed; A statement that had the auditor performed additional procedures, an audit or a review, other matters might have come to light that would have been reported; A statement that the report is restricted to those parties that have agreed to the procedures to be performed; A statement (when applicable) that the report relates only to the matters specified and that it does not extend to the entitys financial statements taken as a whole; Date of the report; and Auditors address and signature.
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With respect to item 1, we found the amounts compared to be in agreement. With respect to item 2, we found the addition to be correct and the total(s) to be in agreement. With respect to item 3, we found the amounts compared to be in agreement or reconciled. With respect to item 4, we found the representations to be consistent with the supplementary information we have inspected.
[Detail any exceptions] Our work was restricted to the procedures set out above and was not directed to the discovery of errors or misstatements which we consider to be immaterial. The procedures we performed did not constitute an audit or a review of any kind. Had we performed additional procedures or had we performed an audit or review of the supplementary information, other matters might have come to our attention that would have been reported to you. This report relates only to the supplementary information of the Club and does not extend to any financial statements of the Club, taken as a whole. We do not accept any responsibility for any reports previously given on any financial information used in the preparation of this report (including any audit reports on the financial statements or tax advice provided) beyond that owed to those to whom those reports were addressed by us at the date of their issue. This provision shall also apply to any reports (including audit reports and tax advice) issued in future. (Signature) Auditor [Date of report]
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Appendix VI:
Annual Financial Reporting: Commentary Regarding Audit Reports Contents and Different Forms of Opinion
Introduction These are guidance notes to assist the readers understanding of the basic elements of the auditors report and the different types of audit opinion that can be provided in respect of the annual financial statements. International Standard on Auditing (ISA) 700 (Revised), The Independent Auditors Report on a Complete Set of General Purpose Financial Statements and ISA 701, Modifications to the Independent Auditors Report, provide further guidance. However, national legislation and practice may differ. The auditor should review and assess the conclusions drawn from the audit evidence obtained as the basis for the expression of an opinion on the financial statements. The auditors report should contain a clear written expression of opinion on the financial statements taken as a whole. The objective of an audit of financial statements is to enable the auditor to express an opinion whether the financial statements are prepared, in all material respects, in accordance with the applicable financial reporting framework. Basic elements of the auditors report The auditors report includes the following basic elements, ordinarily in the following layout: (a) Title; (b) Addressee; (c) Introductory paragraph, including: (i) Identification of the entity whose financial statements have been audited; (ii) Identification of the title of each of the financial statements that comprise the complete set of financial statements, reference to the summary of significant accounting policies and other explanatory notes and the date and period covered; (d) Managements responsibility for the financial statements; (e) Auditors responsibility, including: (i) A reference to the International Standards on Auditing or the relevant national standards/practices; (ii) A description of the work the auditor performed; (f) Auditors opinion; (g) Other reporting responsibilities (if applicable); (h) Auditors signature; (i) Date of the auditors report; and (j) Auditors address. Opinion paragraph The opinion paragraph of the auditors report should clearly indicate the financial reporting framework used to prepare the financial statements (including identifying the country of origin of the financial reporting framework when the framework used is not IFRS) and state the auditors opinion as to whether the financial statements give a true and fair view (or are presented fairly, in all material respects) in accordance with that financial reporting framework and, where appropriate, whether the financial statements comply with relevant statutory requirements. 128
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The terms used to express the auditors opinion are give a true and fair view or present fairly, in all material respects and are equivalent. Both terms indicate, amongst other things, that the auditor considers only those matters that are material to the financial statements. The auditors report The diagram in Appendix IV summarizes the different types of audit opinion and the implications of each for the Licensors decision making. Unqualified opinion An unqualified opinion (or clean opinion) should be expressed when the auditor concludes that the financial statements give a true and fair view (or are presented fairly in all material respects) in accordance with the identified financial reporting framework. An unqualified opinion also indicates implicitly that any changes in accounting principles or in the method of their application, and the effects thereof, have been properly determined and disclosed in the financial statements. The following is an illustration of an expression of an unqualified opinion: In our opinion, the financial statements give a true and fair view of (or present fairly, in all material respects), the financial position of [reporting entity] as of [date] 20XX, and of the results of its operations and its cash flows for the year then ended in accordance with International Financial Reporting Standards (or [title of financial reporting framework with reference to the country of origin]) (and comply with [relevant statutes of law]). Modified reports An auditors report is considered to be modified in the following situations. (a) Matters that do not affect the auditors opinion (and hence the auditors opinion is still classed as unqualified): (i) Emphasis of matter (b) Matters that do affect the auditors opinion: (i) Qualified opinion, (ii) Disclaimer of opinion, or (iii) Adverse opinion. (a) Matters that do not affect the auditors opinion In certain circumstances, an auditors report may be modified by adding an emphasis of matter paragraph to highlight a matter affecting the financial statements which is included in a note to the financial statements that more extensively discusses the matter. The addition of such an emphasis of matter paragraph does not affect the auditors opinion. The paragraph would preferable be included after the opinion paragraph and would ordinarily refer to the fact that the auditors opinion is not qualified in this respect. The auditor should modify the auditors report by adding a paragraph to highlight a material matter regarding a going concern problem. The auditor should consider modifying the auditors report by adding a paragraph if there is a significant uncertainty (other than a going concern problem), the resolution of which is dependent upon future events and which may affect the financial statements. An uncertainty is a matter whose outcome depends on future actions or events not under the direct control of the entity but that may affect the financial statements. If adequate disclosure is made in the financial statements, the auditor should express an unqualified opinion but modify the auditors report by adding an emphasis of matter paragraph that highlights the existence of a material uncertainty relating to the event or condition that may cast significant doubt on the entitys ability to continue as a going concern. The following is an example of such a paragraph:
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Without qualifying our opinion, we draw attention to Note X in the financial statements which indicates that the Company incurred a net loss of [amount] during the year ended [date] 20XX and, as of that date, the Companys current liabilities exceeded its total assets by [amount]. These conditions, along with other matters as set forth in Note X, indicate the existence of a material uncertainty which may cast significant doubt about the Companys ability to continue as a going concern. (b) Matters that do affect the auditors opinion An auditor may not be able to express an unqualified opinion when either of the following circumstances exists and, in the auditors judgement, the effect of the matter is or may be material to the financial statements: (i) There is a limitation on the scope of the auditors work; or (ii) There is a disagreement with management regarding the acceptability of the accounting policies selected, the method of their application or the adequacy of financial statement disclosures. The circumstances described in (I) could lead to a qualified opinion or a disclaimer of opinion. The circumstances described in (II) could lead to a qualified opinion or an adverse opinion. Circumstances that may result in other than an unqualified opinion (i) A limitation on the scope of the auditors work may sometimes be imposed by the entity. A scope limitation may be imposed by circumstances (for example, when the timing of the auditors appointment is such that the auditor is unable to observe the counting of physical inventories). It may also arise when, in the opinion of the auditor, the entitys accounting records are inadequate or when the auditor is unable to carry out an audit procedure believed to be desirable. In these circumstances, the auditor would attempt to carry out reasonable alternative procedures to obtain sufficient appropriate audit evidence to support an unqualified opinion. When there is a limitation on the scope of the auditors work that requires expression of a qualified opinion or a disclaimer of opinion, the auditors report should describe the limitation and indicate the possible adjustments to the financial statements that might have been determined to be necessary had the limitation not existed. (ii) The auditor may disagree with management about matters such as the acceptability of accounting policies selected, the method of their application, or the adequacy of disclosures in the financial statements. If such disagreements are material to the financial statements, the auditor should express a qualified or an adverse opinion. Matters affecting auditors opinion type of opinion (i) A qualified opinion should be expressed when the auditor concludes that an unqualified opinion cannot be expressed but that the effect of any disagreement with management, or limitation on scope is not so material and pervasive as to require an adverse opinion or a disclaimer of opinion. A qualified opinion should be expressed as being except for the effects of the matter to which the qualification relates. (ii) A disclaimer of opinion should be expressed when the possible effect of a limitation on scope is so material and pervasive that the auditor has not been able to obtain sufficient appropriate audit evidence and accordingly is unable to express an opinion on the financial statements. (iii) An adverse opinion should be expressed when the effect of a disagreement is so material and pervasive to the financial statements that the auditor concludes that a qualification of the report is not adequate to disclose the misleading or incomplete nature of the financial statements. Whenever the auditor expresses an opinion that is other than unqualified, a clear description of all the substantive reasons should be included in the report and, unless impracticable, a quantification of the possible effect(s) on the financial statements. Ordinarily, this information would be set out in a separate paragraph preceding the opinion or disclaimer of opinion and may include a reference to a more extensive discussion, if any, in a note to the financial statements.
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Appendix VII:
Annual Financial Reporting: Diagrammatic Summary of Implications on the Licensing Decision of Different Modifications to the Auditors Report
LICENSING DECISION (6.2.6)
D. Refusal unless subsequent audit opinion for the same financial year (with no going concern uncertainty)
Audit opinion
AUDIT OPINION ON ANNUAL FINANCIAL STATEMENTS
ADVERSE
D. Refusal unless subsequent audit opinion for the same financial year (with no going concern uncertainty)
F. Consider whether matter has implications for club licensing. This may lead to refusal unless additional satisfactory documentary evidence provided.
AUDIT OPINION UNCERTAINTY ABOUT SOME OTHER MATTER EMPHASIS OF MATTER UNQUALIFIED OPINION CLEAN OPINION GOING CONCERN UNCERTAINTY
E*. Refusal unless: i. Subsequent audit opinion for the same financial year with no going-concern uncertainty or qualification, or ii. Additional satisfactory documentary evidence provided to, and assessed by, the Licensor.
F. Consider whether matter has implications for club licensing. This may lead to refusal, unless additional satisfactory documentary evidence provided.
E*. Refusal unless: i. Subsequent audit opinion for the same financial year with no going-concern uncertainty or qualification, or ii. Additional satisfactory documentary evidence provided to, and assessed by, the Licensor
E* = If the auditors report in respect of the annual financial statements includes an emphasis of matter or a qualified except for opinion in respect of going concern, then the Licence Applicant/Licensee shall be in breach of indicator IND.01 (as set out in section 6.7.5). As a result, the Licensor must undertake more extensive assessment procedures in respect of criterion F.06 (Future financial information) and, if granted a licence, the Licensee must also comply with criterion F.08 (Duty to update future financial information).
Other matters
MATTER
ANNUAL FINANCIAL STATEMENTS NOT SUBMITTED ANNUAL FINANCIAL STATEMENTS DO NOT MEET MINIMUM REQUIREMENTS ERRORS AND/OR EXCEPTIONS IN AUP REPORTING
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Appendix VIII:
As described in section 10.1 of the AFC Club Licensing Regulations, historic financial information may continue to be prepared on the basis of national accounting practice requirements. Notwithstanding that the manual does not prescribe the basis for the recognition and measurement of transactions and other events in interim financial statements, this appendix provides some guidance based on International Accounting Standard 34 Interim Financial Reporting (IAS 34). For further information and guidance, refer to relevant national accounting practice or the full version of IAS 34. For football clubs with a summer financial year end (for example, 30 June), interim reporting will occur in mid-season, most frequently between November and January. In particular, this presents the issue of how to treat, in interim financial statements, revenues and costs which are:
Received or paid for the season as a whole; or Contingent on performance (and which is not certain at the interim stage).
In deciding how to recognize, measure, classify, or disclose an item for interim financial reporting purposes, materiality should be assessed in relation to the interim period financial data. In making assessments of materiality, it should be recognized that interim measurements may rely on estimates to a greater extent than measurements of annual financial data at the statutory closing date. This appendix has been written in general terms and therefore cannot be relied on to cover specific situations; application of the principles set out will depend upon the particular circumstances. Revenues Revenues that are received seasonally, cyclically, or occasionally within a financial year should not be either anticipated or deferred as of an interim date if that anticipation of deferral would not be appropriate if the same circumstances existed at the end of the Licence Applicants full financial year. The illustrative application of this principle to certain key revenue streams for football clubs is summarized below: Gate receipts Revenue from match day gate receipts and corporate sales should be recognized as it is earned as individual matches are played. Season ticket sales should be recognized with respect to the proportion of games that have been played at the interim financial reporting date. Sponsorship and advertising Basic receipts should be recognized in line with the clubs revenue recognition accounting policy. Where contracted amounts are paid annually, revenue may be recognized with reference to the proportion of the season or year that has been completed. Broadcasting rights Basic receipts should be recognized with respect to the proportion of the contract fulfilled at the interim financial reporting date (eg. if there are 34 league matches in a season and 20 have been completed by the interim date, recognize 20/34ths of the amount for the season). Performance related awards should not be anticipated. AFC competition revenue should be recognized as an appropriate proportion of the minimum amount that the club is contractually obliged to receive (performance should not be anticipated). If a club has been eliminated from an AFC competition prior to its interim reporting balance sheet date, all revenue that the club is contractually obliged to receive from that competition should be recognized in the interim reporting period. If a club has not been eliminated from an AFC competition by its interim reporting balance sheet date, only an appropriate proportion of the minimum amount that the club is contractually obliged to receive should be recognized. 132
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Commercial Revenue for specific events or matches should be recognized as the event or match takes place. Revenue receipts relating to the whole season should be recognized on the basis of the proportion of matches completed at the interim date. Merchandising sales should be recognized on an earned basis. Costs Costs that are incurred unevenly during a Licence Applicants financial year should be anticipated (accrued) or deferred (prepaid or carried forward) for interim reporting purposes if, and only if, it would also appropriate to anticipate or defer that type of cost at the end of the financial year. Players basic wages, non-contingent bonuses (that effectively accrue over time), match day expenses and other staff salaries should be recognized on the basis of when they are incurred. Signing on fees to players should be charged evenly to the Profit and Loss Account over the period of the players contract, not on a cash accounting basis. If these are paid annually in advance there will be a prepayment at the interim date. Loyalty bonuses should be recognized on a proportional basis if they are not contingent. If the loyalty bonuses are contingent they should not be anticipated. Contingent bonuses (eg. bonuses for an AFC competition qualification) should not be anticipated unless the contingency has already been met. If the contingency has been met then the entire amount should be expensed.
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Appendix IX:
In addition to the minimum information requirements set out in section 6.3.4, as good practice, a reporting entity should include the following information in the notes to its interim financial statements, if material and if not disclosed elsewhere in the interim financial report. Events or transactions that are material to an understanding of the current interim period may include:
explanatory comments about the seasonality or cyclicality of interim operations; the nature and amount of items affecting assets, liabilities, equity, net income, or cash flows that are unusual because of their nature, size, or incidence; the nature and amount of changes in estimates of amounts reported in prior interim periods of the current financial year or changes in estimates of amounts reported in prior financial years, if those changes have a material effect in the current interim period; issuances, repurchases, and repayments of debt and equity securities; dividends paid (aggregate or per share) separately for ordinary shares and other shares; material events subsequent to the end of the interim period that have not been reflected in the financial statements for the interim period; the effect of changes in the composition of the entity during the interim period, including business combinations, acquisition or disposal of subsidiaries and long-term investments, restructurings, and discontinued operations; and changes in contingent liabilities or contingent assets since the last annual balance sheet date.
Examples of the kinds of disclosures that are good practice are set out below: recognition of a loss from the impairment of player registrations, property, plant, and equipment, or other assets, and the reversal of such an impairment loss; the reversal of any provisions for the costs of restructuring; acquisitions and disposals of items of property, plant, and equipment; commitments for the purchase of property, plant, and equipment; the write-down of inventories to net realizable value and the reversal of such a write-down; material litigation settlements; corrections of prior period errors such as fundamental errors in previously reported financial data; any loan debt default or any breach of a loan agreement debt covenant that has not been remedied on or before the balance sheet date; and a note as to whether it has been corrected subsequently; and related party transactions.
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Appendix X:
Interim Financial Reporting: Illustrative Form of Review Report that may be Issued From an Engagement to Review Interim Financial Statements
The procedures required to conduct a review of the interim financial statements should be determined by the auditor having regard to, either: (i) the requirements of International Standard on Review Engagements 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity; or (ii) relevant national standards or practices for review of interim financial information where these comply with, as a minimum, the requirements of ISRE 2410. If an auditor is engaged to perform a review of interim financial information, and who is not the auditor of the entity, then the review should be conducted in accordance with ISRE 2400, Engagements to Review Financial Statements. It is recommended that, in the course of developing the national club licensing manual, each Licensor should seek to agree, with its national institute of chartered accountants (or similar body), a form of review report in relation to interim financial statements. Below is provided an illustrative example of a form of unqualified (or clean) review report that will need to be adjusted for the circumstances in each territory.
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(Signature) Auditor
136
Appendix XI:
Interim Financial Reporting: Diagrammatic Summary of Implications on the Licensing Decision of Different Modifications to the Auditors Review Report
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Appendix XII:
Refer to section 6.4.4.2 for the requirements in relation to the transfer payables table. The transfer payables table must be provided to the Licensor, unless the information is already disclosed to the Licensor under existing national transfer requirements. An illustration of a transfer payables table is set out below. The illustration of the transfer payables table below includes examples of amounts payable by a club in respect of four players and has been prepared as at 31 December 2009.
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As at 31 December 2009
Player details Direct costs of acquiring the registration Amount paid
Total amount paid by 31 December 2009
Name or number
From (club)
Training compensation
To football club
Due date(s)
To other parties
(a)
(c)
(d)
(e)=(a)+(b)+(c)+(d)
(f)
(h)
(i)
Acquired players Player 1 Player 2 30.01.2009 30.08.2008 Club X FC Club Y FC 200 200 100 200 300 100 100 100 200 100 30.01.2010 30.08.2009 Not overdue at 31/12/09 Overdue at 31/12/09; but paid in full by 31/03/10 Not overdue at 31/12/09 10 50 Not overdue at 31/12/09 Overdue at 31/12/09. Not paid/settled deferred in dispute as at 31/03/10. Payable overdue.
100
Player 3 Player 4
30.01.2009 30.06.2008
200 240
100 -
10
10 -
320 240
210 140
110 100
Total
(g)
(h)
Aggregate figure must agree to relevant balance sheet disclosure for Accounts payable relating to player transfers. Disclose the amount payable to a club and the associated due date. If the amount is payable in more than one instalment, disclose the amount of each instalment and associated due date. In effect, this is the amount(s) that criterion F.03 is addressing Under the terms of contracts with other football clubs in respect of player transfers, additional amounts will become payable if certain conditions are met.
Confirmed on behalf of Licence Applicant that the information in the table above is accurately compiled and completed.
139
[Signature]
[date]
Appendix XIII:
As set out in section 6.4, it is recommended that Licence Applicants be required to prepare and submit information about receivables arising from the transfer of player registrations to other clubs. However, this is not a mandatory requirement. An illustration of a transfer receivables table is set out below. The illustration of the transfer receivables table includes examples of amounts receivable by a club in respect of two players and has been prepared as at 31 December 2009.
140
Total received
Total amount received by 31 December 2009 (e) Total amount receivable at 31 December 2009 (f)=(d)-(e)
Transferred players Player 5 Player 6 30.08.2009 30.08.2009 Club A FC Club B FC 200 200 0 100 10 0 210 300 100 100 110 30.08.2010 30.11.2009 30.08.2010 0 0
{ 100
100
Player loans [name or number] [name or number] [name or number] [name or number]
Total
(f)
Aggregate figure must agree to relevant balance sheet disclosure for Accounts receivable from player transfers Disclose the amount receivable from the football club and the associated due date. If the amount is receivable in more than one instalment, disclose the amount of each instalment and associated due date Under the terms of contracts with other football clubs in respect of player transfers, additional amounts will become receivable if certain conditions are met
Confirmed on behalf of Licence Applicant that the information in the table above is accurately compiled and completed.
[date]
141
Appendix XIV:
As described in section 6.4, unless the information is already disclosed to the Licensor under existing national transfer regulations, the Licence Applicant must disclose certain player transfer activities information as at 31 December preceding the season to be licensed in a transfer payables table. The Licensor may decide to require independent auditors to carry out some of the assessment procedures in relation to the transfer payables information. The transfer payables table must contain a separate entry in respect of each player acquisition (including loans) for which there is outstanding payables at 31 December. The following information as described in section 6.4.4.2 of the manual and in the illustrative example in Appendix XII must be given as a minimum: i) player (identification by name or number);
ii) date of the transfer/loan agreement; iii) the name of the football club that formerly held the registration; iv) transfer (or loan) fee paid and/or payable (including training compensation); v) other direct costs of acquiring the registration paid and/or payable; vi) amount settled/paid; and vii) the balance in respect of each player acquisition payable at 31 December, detailed by due date(s) for each unpaid element of the transfer payables. In addition, the Licence Applicant must reconcile the total liability per the transfer payables table with the figure in the balance sheet (if applicable) for Accounts payable relating to player transfers. The Licence Applicant is required to report in the transfer payables table all overdue payables even if payment has not been requested by the creditor. For the purpose of criterion F.03, payables are those amounts due only to football clubs arising from the direct costs of acquiring a players registration. International Standard on Related Services (ISRS) 4400 Engagements to Perform Agreed-upon Procedures Regarding Financial Information provides some further guidance on the auditors professional responsibilities when an engagement to perform agreed-upon procedures is undertaken and on the form and content of the report that the auditor issues in connection with such an engagement. The Licensor may wish to develop a standard form of agreed-upon procedures, appropriate for its national legislation and practice, through consultation with the national institute of chartered accounts (or similar body) in the relevant country. Some guidance is provided in this appendix about agreed-upon procedures work and an illustrative factual findings report is also provided. The illustrative report will need to be adjusted for the circumstances in each territory. Objective of agreed-upon procedures work The objective of an agreed-upon procedures engagement is for the auditor to carry out procedures of an audit nature, to which the auditor and the entity and any appropriate third parties have agreed, and to report on factual findings. As the auditor simply provides a report of the factual findings of agreed-upon procedures, no assurance is expressed. Instead, users of the report assess for themselves the procedures and findings reported by the auditor and draw their own conclusions from the auditors work. The auditors report is restricted to those parties that have agreed to the procedures to be performed since others, unaware of the reasons for the procedures, may misinterpret the results.
142
Procedures The auditor should carry out the procedures agreed upon and use the evidence obtained as the basis for the report of factual findings. The procedures applied in an engagement to perform agreed-upon procedures may include the following:-
Inquiry and analysis; Re-computation, comparison and other clerical accuracy checks; Observation; Inspection; and Obtaining confirmations.
Illustrative contents of a report of factual findings for an agreed-upon procedures engagement The report of factual findings should contain:
Addressee (the Licence Applicant who engaged the auditor to perform the agreed-upon procedures); Identification of specific financial or non-financial information to which the agreed-upon procedures have been applied (ie. in this illustration, the transfer payables table); A statement that the procedures performed were those agreed upon with the recipient (ie. the Licence Applicant); Identification of the purpose for which the agreed-upon procedures were performed; A listing of the specific procedures performed; A description of the auditors factual findings including sufficient details of errors and exceptions found; Statement that the procedures performed do not constitute either an audit or a review and, as such, no assurance is expressed; A statement that had the auditor performed additional procedures, an audit or a review, other matters might have come to light that would have been reported; A statement that the report is restricted to those parties that have agreed to the procedures to be performed; A statement (when applicable) that the report relates only to the matters specified and that it does not extend to the entitys financial statements taken as a whole; Date of the report; and Auditors address and signature.
143
Our work was restricted to the procedures set out above and was not directed to the discovery of errors or misstatements which we consider to be immaterial. The procedures we performed did not constitute an audit or a review of any kind. Had we performed additional procedures or had we performed an audit or review of the transfer payables table, other matters might have come to our attention that would have been reported to you. This report relates only to the transfer payables table and does not extend to any financial statements of the Club, taken as a whole. We do not accept any responsibility for any reports previously given on any financial information used in the preparation of this report (including any audit reports on the financial statements or tax advice provided) beyond that owed to those to whom those reports were addressed by us at the date of their issue. This provision shall also apply to any reports (including audit reports and tax advice) issued in future.
(Signature) Auditor
[Date of report]
*delete as appropriate
145
Appendix XV:
As described in section 6.5, the Licence Applicant must disclose certain information about payables due to certain employees and social/tax authorities as at 31 December preceding the season to be licensed. The Licensor may decide to require independent auditors to carry out some of the assessment procedures in relation payables towards employees and/or the social/tax authorities. As set out in section 6.5, the Licence Applicant shall prepare a schedule showing all employees who were employed at any time during the year to 31 December preceding the season to be licensed; ie. not just those who remain at year end. The schedule shall be submitted to the Licensor. If the auditor is required to perform agreed-upon procedures, the auditor shall obtain this schedule and supporting evidence. In section 6.5.4, the licensing manual describes the employees which the criterion F.04 covers. The following information must be given, as in minimum, in respect of each employee: i) Name of the employee;
ii) Position of the employee; iii) Start date; iv) Termination date (if applicable); and v) Any overdue payable as at 31 December, together with explanatory comment. International Standard on Related Services (ISRS) 4400 Engagements to Perform Agreed-upon Procedures provides further guidance on the auditors professional responsibilities when an engagement to perform agreed-upon procedures is undertaken and on the form and content of the report that the auditor issues in connection with such an engagement. The Licensor may wish to develop a standard form of agreed-upon procedures, appropriate for its national legislation and practice, through consultation with the national institute of chartered accountants (or similar body) in the relevant country. Some guidance is provided in this appendix about agreed-upon procedures work and an illustrative factual findings report is also provided. The objective of agreed-upon procedures work, the types of procedures and the illustrative contents of a report of factual findings for an agreed-upon procedures engagement of this nature are described in Appendix XV. The procedures may include obtaining and inspecting employee confirmation letters. An illustration of a confirmation letter is in Appendix XVI. The arrangements to obtain such confirmation letters should be made on a timely basis within the club licensing timetable.
146
147
Scope of work [in respect of payables towards social/tax authorities] Our work consisted of the following procedures: 1. Agreeing the recorded balance of payroll taxes as at 31 December 20XX to the payroll records of the Club. 2. Obtaining representations from the directors of the Club that either: (i) the balance that was due to have been paid by 31 December 20XX has been fully paid as of the date of our examination [or by 31 March 20YY if the date of examination is later]; [or*] (ii) an agreement has been reached for payment on deferred terms; [or*] (iii) a dispute has arisen and is subject to resolution by [name of competent national or international body]. 3. Examination of the bank statements, in support of the representations under 2(i) above. 4. Examination of documents, including agreements with the taxation authorities and/or correspondence with the competent body, in support of the representations under 2(ii) [and/or*] 2(iii) above.
Conclusion [in respect of payables towards social/tax authorities] Based solely on the work described above, in our opinion: [either*] All the recorded payroll taxes outstanding at 31 December 20XX have according to the accounting records of the Club since that date been paid in full by 31 March 20YY; [or*] All the recorded payroll taxes outstanding at 31 December 20XX are in the course of payment under an agreement with the social/tax authorities (a copy of the agreement letter is attached) [and/or*] are in the course of a dispute that has been submitted to a competent authority (a copy of the correspondence with the competent authority is attached). [or*] [Detail any exceptions] Our work was restricted to the procedures set out above and was not directed to the discovery of errors or misstatements which we consider to be immaterial. The procedures we performed did not constitute an audit or a review of any kind. Had we performed additional procedures or had we performed an audit or review of the payables due towards employees and/or social/tax authorities, other matters might have come to our attention that would have been reported to you. This report relates only to the payables due towards employees and/or social/tax authorities and does not extend to any financial statements of the Club, taken as a whole. We do not accept any responsibility for any reports previously given on any financial information used in the preparation of this report (including any audit reports on the financial statements or tax advice provided) beyond that owed to those to whom those reports were addressed by us at the date of their issue. This provision shall also apply to any reports (including audit reports and tax advice) issued in future. (Signature) Auditor
148
Appendix XVI:
Name of employee Address of employee Place, Date
In connection with the granting of a license for the 20YY/ZZ season, we request you to confirm to our auditors that we as your employer have paid you all contractual obligations due as agreed in your contract/s as of 31 December 20XX by the date of this letter [or, if date of letter is later than 31 March, by 31 March 20YY] at the latest. If you are not in agreement with this, please inform our auditors of the amounts outstanding as per the contractual agreement, and the associated contract/s. Sign the slip attached and return it in the enclosed envelope directly to: [Name of auditor of the Licence Applicant] For the attention of Mr/Ms . Address Please return the slip at the latest by [date] to our auditors at the address indicated above. Yours sincerely,
[Name, position] On behalf of [Licence Applicant] ------------------------------------------------------------------------------------------------------------------------------------------------------------Re: Confirmation of payments by [License Applicant] in due time I confirm that [name of the License Applicant] has paid all its obligations arising from contractual agreements as of 31 December 20XX. I cannot confirm that the License Applicant has paid all his obligations arising from contractual agreements as at 31 December 20XX by the date of this letter. The following obligations arising from contractual agreements have not been paid in due time:
Contract description
Contract date
Amount [currency]
Appendix XVII:
Section 6.6 of this Manual sets out the requirement for each Licence Applicant to submit written representations prior to the licensing decision. Below is an illustration of a management representation letter in respect of the requirements for criterion F.05.
In connection with our application to be licensed for the 20YY/ZZ season, we confirm to the best of our knowledge and belief that, since the balance sheet date of the preceding audited annual financial statements [or reviewed interim financial statements, if such interim financial statements have been submitted] being [give date of relevant balance sheet]: [either*] There have been no events or conditions of major economic importance. [or*] Other than as described below, there have been no events or conditions of major economic importance.
[Description of the nature of the event or condition and an estimate of its financial effect, or a statement, with reasons why, that such an estimate cannot be made.]
.. (Signature)
*delete as appropriate
150
Appendix XVIII:
Financial Information Extracts: Illustration of Agreement or Reconciliation Between Different Types of Information Supplied by Licence Applicants
Set out below are illustrative extracts from examples of specimen historic, future and updated future financial information, which might be supplied by Licence Applicants, and demonstrating how certain figures should agree from one type of financial information to another. Where two figures should be equal, they have been allocated the same letter of the alphabet in the illustrative financial information extracts. For example, the figure for Intangible assets players at the balance sheet date (and shown in the illustrative balance sheet extracted from Appendix III) has been allocated the letter A. This figure must equal the total in the relevant column of the player registrations reporting (shown in the Player Identification table extracted from Appendix IV) which has also been allocated the letter A in the illustration. In relation to historic financial information, there must be consistency between the relevant figures which are reported in the audited annual financial statements and figures which are reported in the:
Player identification table, in respect of criterion F.01 (as set out in Appendix IV); Transfer payables table, in respect of criterion F.03 (as set out in Appendix XII); and Intangible fixed assets note, in respect of criterion F.01 (as set out in Appendix III).
In this appendix, consistency between figures on the face of the balance sheet, profit and loss account and cash flow statement and the supporting notes to the financial statements is assumed and is therefore not demonstrated. In relation to future financial information:
The comparative figures included in the budgeted profit and loss account and cash flow statement must agree to the audited annual financial statements (as set out in Appendix XX).
For updated future financial information: The comparative figures included in the updated future financial information must agree to the original budgeted future financial information (as set out in Appendix XXIII).
Assumptions for this illustration For the purpose of the illustration, it is assumed that the Licence Applicant has a statutory closing date of 30 June 2009; that the interim financial statements are prepared for the six months ended 31 December 2009; that the Licensor has a submission deadline of 31 March 2010 in respect of the 2010/11 licensing season; and that the period covered for future financial information is the period from 1 January 2010 to 30 June 2011 (with the interval dates being 30 June 2010 and 31 December 2010).
151
Copy of illustrative balance sheet as at 30 June 2009 from audited annual financial statements (from Appendix III)
As at 30 June 2009 [currency] As at 30 June 2009 [currency]
Current assets Cash and cash equivalents Accounts receivable from player transfers Accounts receivable from group entities and other related parties Accounts receivable other Inventories Non current assets Tangible fixed assets Intangible assets players Intangible assets - others Investments Total assets Current liabilities Bank overdrafts and loans Accounts payable relating to player transfers Accounts payable to group entities and other related parties Accounts payable other Tax liabilities Short term provisions Non current liabilities Bank and other loans Other long term liabilities Tax liabilities Long term provisions Total liabilities Net assets/(liabilities) Equity Treasury shares (own shares) Issued capital and reserves Total equity
Notes
______________ ______________
______________ ______________
B*
______________ ______________
______________ ______________
_____________ _____________
_____________ _____________
* For clubs with a statutory closing date of 31 December, the figure for Accounts payable relating to player transfers in the balance sheet of the audited annual financial statements shall equal, or reconcile to, the figure in the Transfer Payables table (from Appendix XII). For clubs with a statutory closing date other than 31 December, these two figures will not agree.
152
Copy of illustrative profit and loss account from audited annual financial statements (from Appendix III)
Notes Year ended 30 June 2009 [currency] F Year ended 30 June 2009 [currency]
Revenue Gate receipts Sponsorship and advertising Broadcasting rights Commercial Other operating income Expenses Cost of sales/materials Employee benefits expense Depreciation and amortisation Impairment of fixed assets Other operating expenses Operating profit/(loss) Profit/loss on disposal of fixed assets Finance costs Tax expense Profit or loss after taxation
_____________ _____________
_____________ _____________
_____________ _____________
_____________ _____________
** Both amortization and impairment of player registrations must be separately disclosed in the annual financial statements. *** Profit or loss from disposal of player registrations and profit or loss from disposal of other tangible fixed assets must be separately disclosed in the annual financial statements.
153
Copy of illustrative cash flow statement from audited annual financial statements (from Appendix III)
Notes Cash flows from operating activities Cash receipts from gate receipts Cash receipts from sponsorship and advertising Cash receipts from broadcasting rights Cash receipts from commercial activities Cash receipts from other operating activities Cash payments to suppliers for goods and services Cash payments to and on behalf of employees Cash payments in relation to other operating expenses Year ended 30 June 2009 [currency] G Year ended 30 June 2009 [currency]
______________ ______________
______________ ______________
Cash inflow/outflow from operating activities Taxation Cash flows from investing activities Cash receipts from sale of property, plant and equipment Cash receipts to acquire property, plant and equipment Cash receipts from sale of player registrations Cash payments to acquire player registrations Cash receipts from sale of other long term assets Cash payments to acquire other long term assets Cash receipts from sale of financial investments Cash payments to acquire new financial investments Cash receipts in relation to receipts of loans from non-financial institutions Cash payments in relation to repayment of loans to non-financial institutions Cash inflow/outflow from investing activities Cash flows from financing activities Cash receipts from issuing short or long-term borrowings Cash payments in relation to repayment of amounts borrowed Cash receipts from an increase in capital Cash payments to acquire or redeem the entitys shares Cash inflow/outflow from financing activities Net increase/decrease in cash
______________ ______________
______________ ______________
154
Extract from illustrative annual financial statements Note 8 Intangible Fixed Assets (from Appendix III)
Notes Cost Brought forward from previous period Additions Disposals Carried forward at end of period Amortisation Brought forward from previous period Amortisation charge for the period Disposals Impairment Carried forward at end of period Carrying amount At end of period: 30 June 2009 At beginning of period: 1 July 2008 Player Registrations [currency]
Other [currency]
Total [currency]
H I I ______________ J ______________
______________ ______________
______________ ______________
C K D ______________ ______________
______________ ______________
______________ ______________
A ______________ ______________
______________ ______________
______________ ______________
155
Copy of Player identification table in respect of criterion F.01 (from Appendix IV)
Name] Licence Applicant Player identification table As at 31 June 2009
Player details
Name (and d.o.b.) Start date of contract End date of contract
156
AFC CLUB LICENSING MANUAL
Accumulated amortization
Broughtforward from previous period (d) Amortisation in current period Impairment in current period Disposals As at end of period
Carrying amount
Broughtforward from previous period (i)=(a)-(d) As at end of period
Other
Sales proceeds Profit/(loss) on disposal of player registration (l)
(b)
(e)
(f)
(g)
(h)=(d)+(e)+(f)-(g)
(i)=(c)-(h)
(k)
Acquired players Player 1 Player 2 Player 3 Player 4 Loaned players [name] [name] [name] 30.01.2009 30.08.2008 30.01.2009 30.06.2008 30.06.2011 30.06.2011 30.06.2011 30.06.2010 0 0 0 240 200 300 320 0 200 300 320 240 0 0 0 0 33 88 55 120 0 0 0 0 0 0 0 0 33 88 55 120 0 0 0 240 167 212 265 120 n/a n/a n/a n/a n/a n/a n/a n/a
(e) C
(f) D
(j) A
(l) E
Aggregate figure must agree to Amortisation of players registrations as disclosed in Profit & Loss Account and/or Balance Sheet in the annual financial statements Aggregate figure must agree to Impairment of players registrations as disclosed in Profit & Loss Account and/or Balance Sheet in the annual financial statements Aggregate figure must agree to carrying value of intangible assets (players registrations) as disclosed in the Balance Sheet in the annual financial statements Aggregate figure must agree to profit or loss from disposal of players registrations as disclosed in the annual financial statements
Confirmed on behalf of Licence Applicant that the information in the table above is accurately compiled and completed.
[date]
Copy of Transfer payables table in respect of criterion F.03 (from Appendix XII)
[Name] Licence Applicant Transfer payables table As at 31 December 2009
Player details
Name or number Date of transfer/ loan agreement From (club)
Amount paid
Total amount paid by 31 December 2009 (f)
(c)
(d)
(e)=(a)+(b)+(c)+(d)
(h)
(i)
Acquired players Player 1 Player 2 30.01.2009 30.08.2008 Club X FC Club Y FC 200 200 100 200 300 100 100 100 200 100 30.01.2010 30.08.2009 30.01.2010 30.06.2010 30.06.2009 10 50 Not overdue at 31/12/09 Overdue at 31/12/09; but paid in full by 31/03/10 Not overdue at 31/12/09 Not overdue at 31/12/09 Overdue at 31/12/09. Not paid/settled/ deferred in dispute as at 31/03/10. Payable overdue.
Player 3 Player 4
30.01.2009 30.06.2008
200 240
100 -
10
10 -
320 240
210 140
110 100
Total
(g) B
(h)
Aggregate figure must agree to relevant balance sheet disclosure for Accounts payable relating to player transfers Disclose the amount payable to a club and the associated due date. If the amount is payable in more than one instalment, disclose the amount of each instalment and associated due date. In effect, this is the amount(s) that criterion F.03 is addressing Under the terms of contracts with other football clubs in respect of player transfers, additional amounts will become payable if certain conditions are met
Confirmed on behalf of Licence Applicant that the information in the table above is accurately compiled and completed The illustrations of the Player identification table and the Transfer payables table above also include examples for amounts payable in respect of players 1 to 4.
157
Copy of illustrative budgeted profit and loss account in respect of criterion F.06 (from Appendix XX)
[Illustrative] Budgeted profit and loss account For the 18 months ended 30 June 2011
Budget 12m 01/07/09 to 30/06/10 Actual 6m 01/07/09 to 31/12/09 Budget 6m 01/01/10 to 30/06/10 L Total 12m 01/07/09 to 30/06/10
Budget 12m 01/07/10 to 30/06/11 Budget 6m 01/07/10 to 31/12/10 Budget 6m 01/01/11 to 30/06/11 Total 12m 01/07/10 to 30/06/11
Revenue
Gate receipts Sponsorship and advertising Broadcasting rights Commercial Other operating income
Expenses
Cost of sales/materials Employee benefits expense Depreciation and amortization Impairment of fixed assets Other operating expenses Operating profit/(loss) Profit/loss on disposal of fixed assets Finance costs Tax expense Profit or loss after taxation Total equity brought forward Total equity carried forward
158
Copy of illustrative budgeted cash flow statement in respect of criterion F.06 (from Appendix XX)
[Illustrative] Budgeted cash flow statement For the 18 months ended 30 June 2011
Budget 12m 01/07/09 to 30/06/10 Actual 6m 01/07/09 to 31/12/09 Budget 6m 01/01/10 to 30/06/10 Total 12m 01/07/09 to 30/06/10
Budget 12m 01/07/10 to 30/06/11 Budget 6m 01/07/10 to 31/12/10 Budget 6m 01/01/11 to 30/06/11 Total 12m 01/07/10 to 30/06/11
Cash flows from operating activities Cash receipts Cash receipts from gate receipts Cash receipts from sponsorship and advertising Cash receipts from broadcasting rights Cash receipts from commercial activities Cash receipts from other operating activities Cash payments to suppliers for goods and services Cash payments to and on behalf of employees Cash payments in relation to other operating expenses Cash inflow/outflow from operating expenses Taxation Cash flows from investing activities Cash receipts from sale of property, plant and equipment Cash payments to acquire property, plant and equipment Cash receipts from sale of player registrations Cash payments to acquire player registrations Cash receipts from sale of other long term assets Cash payments to acquire other long term assets Cash receipts from sale of financial investments Cash payments to acquire new financial investments Cash receipts in relation to receipts of loans from non-financial institutions Cash payments in relation to repayment of loans to non-financial institutions Cash inflow/outflow from investing activities Cash flows from financing activities Cash receipts from issuing short or long-term borrowings Cash payments in relation to repayment of amounts borrowed Cash receipts from an increase in capital Cash payments to acquire or redeem the entitys shares Cash inflow/outflow from financing activities Net increase/decrease in cash
159
Copy of updated future financial information in respect of criterion F.08 (from Appendix XXIII)
For the purpose of this illustration, the individual line items in the budgeted profit and loss account and cash flow statement are not listed. As at 30/06/10
Summary of differences Actual 6m 01/01/10 to 30/06/10 Profit and Loss Account (list detail) Cash Flow Statement (list detail) Original budget 6m 01/01/10 to 30/06/10 L M Difference Explanation of significant differences Updated budget 12m 01/07/10 to 30/06/11 Updated budget 6m 01/07/10 to 31/12/10 Updated budget 6m 01/01/11 to 30/06/11 Updated budget Total 12m 01/07/10 to 30/06/11
160
Appendix XIX:
This appendix provides additional commentary about the underlying principles for the preparation and presentation of future financial information (FFI). In general, the management of clubs (and businesses in general) are less familiar with the preparation and presentation of FFI compared to historic financial information. There is relatively little guidance available to preparers of future financial information, compared to the preparation of historic financial information. By its very nature, FFI is forward-looking and is based on judgement and assumptions. Purpose of FFI Future financial information can be broadly categorized as serving two main purposes: internal and external. Internally, future financial information assists management to translate plans and aspirations into information that supports decision making, that can be readily understood by people within the business and that services as a management tool against which subsequent results are measured. Externally, future financial information also provides a means of assisting the Licensor to understand the financial consequences of the entitys plans. Principles of useful FFI In order to be useful, FFI should be:
For FFI to be understandable, the user will need sufficient information to be able to make judgments about the uncertainties attached to it. Thus, disclosure will need to deal with: Sources of uncertainty; Assumptions made relating to future events and other uncertainties; Determining factors that will affect whether assumptions will be borne out in practice; Alternative outcomes, being the consequences of assumptions not being borne out.
For FFI to be relevant, it should: Have the ability to influence the decisions of the licensor; and Have predictive value or, by helping to confirm or correct past evaluations or assessments, it should have confirmatory value.
For FFI to be reliable it should faithfully represent factually-based strategies, plans and risk analysis. Information is reliable if it:
Can be relied upon by the Licensor as a faithful representation of what it is either supposed to represent or could reasonably be expected to represent; Is neutral, because it is free from deliberate or systematic bias intended to influence a decision or judgement to achieve a predetermined result; Is free from material error;
161
Is complete in all material aspects (eg. significant plans, risks and strategies); and Is prudent in that a degree a caution is applied in making assumptions and judgements under conditions of uncertainty.
It is not a necessary quality of FFI, in order to meet the above principles, that only one outcome can be envisaged. Alternatives are acceptable as a basis for a faithful representation of FFI relating to a Licence Applicant. Reflecting the business analysis in a way that is free from material error means that it reflects the analysis (and risks and uncertainties) accurately, not that the actual outcome will be materially the same as the business analysis contained in the FFI. More specifically, to say that a forecast is free from material error does not mean that it will be achieved. For FFI to be comparable, it should be capable of subsequent validation by comparison with outcomes in the form of historical financial information after the actual experiences of the budgeted period. Financial information is comparable if it:
Can be compared with similar information for other periods so that similarities and differences can be identified; Reflects consistency of preparation and presentation (albeit improvements in practice should be reflected); and Is supported by disclosure of the accounting policies used in its preparation.
Principles for the preparation of FFI It is the responsibility of the Licence Applicants management to prepare and approve FFI. Management should establish a formal process for preparing the FFI, including a plan, timetable and schedule of responsibilities. The formal process should address the specific scope and content of the proposed FFI and be designed to ensure that the appropriate information is drawn together for inclusion in the FFI. Those involved should understand the requirements of the proposed FFI and understand the principles applicable to its preparation and issue. Minimum contents of FFI The minimum contents of FFI for the purpose of club licensing are set out in section 6.7.4 and are consistent with the line items required under the minimum information requirements for the historic part of the chapter, as set out in section 6.2.4. FFI shall be prepared using the same accounting policies as used for annual audited financial statements, unless there has been a change in accounting policies since the annual audited financial statements were published. Any such changes shall be reported by exception as part of the submission of FFI to the Licensor. Explanatory notes and a list of all assumptions and risks shall be provided where these are necessary to understand the FFI.
162
Appendix XX:
Introduction
This illustration of future financial information sets out typical disclosures that each Licence Applicant must meet to comply with criterion F.06. This is an illustration only. For the purpose of this illustration, it is assumed that the Licence Applicant has an annual accounting period that ends on 30 June 2009; that the interim financial statements are prepared for the six months ended 31 December 2009; that the Licensor has a submission deadline of 31 March 2010 in respect of the 2010/11 licensing season; and that the period covered for future financial information is the period from 1 January 2010 to 30 June 2011 (with the interval dates being 30 June 2010 and 31 December 2010). In this illustration, no figures have been included in the financial schedules. Accounting policies The same accounting policies shall be applied for the future financial information as are applied in the annual financial statements, except for accounting policy changes which have been made after the date of the most recent annual financial statements and which are to be reflected in the next annual financial statements. In such a case, details of the changes shall be disclosed. Cash flow The cash flow statement illustrates typical disclosures using the direct method for a Licence Applicant. The cash flow statement may also be presented using the indirect method. Additional line items, headings and subtotals shall be presented on the face of the cash flow statement when such presentation is relevant to an understanding of the Licence Applicants performance. When cash inflows and outflows are material, their nature and amount shall be disclosed separately. Assumptions A list of the key assumptions made by management in preparing the future financial information shall be included. The illustrative future financial information includes some examples. The list is not exhaustive and additional assumptions made by management shall be provided if they provide clarification or if their omission would make the future financial information misleading.
163
[Name of Licence Applicant] Future financial information covering the 18 month period ending 30 June 2011 for [name of Licence Applicant], [prepared on a consolidated basis to include subsidiary entities] Representations by management The directors acknowledge their responsibility for the future financial information. The future financial information included in this document has been prepared on a basis consistent with the audited annual financial statements of [Licence Applicant] for the year ended 30 June 2009. The directors confirm that the budgeted profit and loss account and cash flow statement have been prepared in accordance with the assumptions outline in this document and after due and careful consideration. In respect of the future financial information, the directors confirm that they are not aware of any relevant factor which has not been taken into account therein and that, in their opinion, the assumptions are not unreasonable. The directors believe the budgeted profit and loss result and cash flow are achievable, although their achievement may be favourably or unfavourably affected by unforeseeable and uncontrollable events. The directors are not aware of any material unrecognized contingencies which should be taken into account or disclosed in the future financial information.
. (Executive Officer)
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Revenue Gate receipts Sponsorship and advertising Broadcasting rights Commercial Other operating income Expenses Cost of sales/materials Employee benefits expense Depreciation and amortization Impairment of fixed assets Other operating expenses Operating profit/(loss) Profit/loss on disposal of fixed assets Finance costs Tax expense Profit or loss after taxation Total equity brought forward Total equity carried forward
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AFC CLUB LICENSING MANUAL
Illustrative assumptions in relation to the budget for the period to 30 June 2011
Note: The table below provides a selection of typical assumptions that the Licence Applicant may provide to the Licensor, as prescribed by criterion F.06. A sample of the assumptions has been further illustrated, by narrative and numerical description, in the list below. The table below is not intended to be a comprehensive checklist. Illustrations are not given below for all typical assumptions, nor does a Licence Applicant need to disclose all the assumptions listed below. A Licence Applicant should disclose all assumptions which are relevant to a proper understanding of the future financial information which it submits, whether listed below or shown as examples in this appendix or not.
Actual 12m 01/07/08 to 30/06/09 On-pitch performance League finishing position Progress in domestic Cup 1 (number of home/ away matches) 5th
Budget 12m 01/07/10 to 30/06/11 8th Progress to quarter final 1 home match and 2 away matches
Progress to semi-final Progress to quarter 2 home matches and 2 final 1 home match away matches and 2 away matches
Progress in domestic Cup 2 (number of home/ away matches) Progress in AFC competition (number of home/away matches) Revenue Season tickets (volume and average yield) 5,000 season tickets sold at an average price of US$250 2,500 attendees/ match-day tickets at an average price of US$10 5,500 season tickets 6,000 season tickets sold at an average price sold at an average price of US$260 of US$275 3,000 attendees/ 3,000 attendees/ match-day tickets at an match-day tickets at an average price of US$11 average price of US$12
Home match attendances League Home match attendances Cup 1 and 2 Home match attendance AFC competition Corporate hospitality sales amount per match Food and beverage - amount per match Broadcasting income number of televised League matches and rate per match Broadcasting income number of televised Cup matches and rate per match Merchandise sales number of replica shirts sold
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Illustrative assumptions in relation to the budget for the period to 30 June 2011 (continued)
Actual 12m 01/07/08 to 30/06/09 Revenue (continued) Commercial revenue sponsorship and other Receipts from football bodies amounts and timing Other revenue streams Expenses Employee benefits expense players, other employees, associated tax/social costs Total wages & salaries for the year of US$10 million Wages & salaries costs increased by 5% compared to prior year; other expenses increased by 3% Total wages & salaries for the year of US$12 million Wages & salaries costs to increase by 3% compared to prior year; other expenses to increase by 3% Total wages & salaries for the year of US$14 million Wages & salaries costs to increase by 3% compared to prior year; other expenses to increase by 2% Budget 12m 01/07/09 to 30/06/10 Budget 12m 01/07/10 to 30/06/11
Depreciation rates Amortisation of intangible fixed assets Interest expenses Player trading New player acquisitions amount and timing of payments 3 players acquired for total fees of US$2 million (50% paid by 30/06/09; balance payable by 31/01/10) 2 players acquired No player acquisitions for total fees of US$ million (50% payable by 30/06/10; balance payable by 31/01/11)
Player sales amount and timing of receipts Transfer payables amount and timing Working capital Creditors timing of payments Debtors timing of receipts Capital expenditure Property, plant and equipment expenditure amount and timing Total capital expenditure in the year of US$1 million Total capital expenditure in the year of US$1 million No budgeted capital expenditure Average creditors days of 45 Average creditors days of 45 Average creditors days of 45
Financing Loan repayments amount and timing New funding source, amount and timing
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Appendix XXI:
This appendix sets out some examples to help demonstrates when indicator IND.03 has or has not been breached. For the purpose of this illustration, it is assumed that the Licence Applicant has a statutory closing date of 31 December 2009. Example 1 The illustrative balance sheet (below example 1) sets out an applicants balance sheet extracted from the audited annual financial statements. The balance sheet demonstrates a situation where the Licence Applicant had net assets at the preceding statutory closing date (ie. 31 December 2008), but net liabilities at the current financial year end (31 December 2009). Therefore the net liabilities position has deteriorated and IND.03 has been breached. Illustrative balance sheet at 31 December 2009
31 December 2009 [currency] 0 50 40 10 100 90 60 0 0 150 Total assets Current liabilities Bank overdrafts and loans Accounts payable relating to player transfers Accounts payable to group entities and other related parties Accounts payable - other Tax liabilities Short term provisions 250 (20) (50) 0 (110) (20) 0 (200) Non current liabilities Bank and other loans Other long term liabilities Tax liabilities Long term provisions (10) (20) (30) (40) (100) Tax liabilities Net assets/(liabilities) Equity Treasury shares (own shares) Issued capital and reserves Total equity (300) (50) 0 (50) (50) 31 December 2008 [currency] 0 70 60 20 150 100 100 0 0 200 350 (10) (40) 0 (80) (20) 0 (150) 0 (20) (20) (10) (50) (200) 150 0 150 150
Current assets Cash and cash equivalents Accounts receivable from player transfers Accounts receivable from group entities and other related parties Accounts receivable other Inventories Non current assets Tangible fixed assets Intangible assets - players Intangible assets - others Investments
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Example 2 Extract from balance sheet as at 31 December 2009 31 December 2009 [currency] Net assets/(liabilities) Equity Treasury shares (own shares) Issued capital and reserves Total equity (150) 0 (150) (150) 31 December 2008 [currency] (100) 0 (100) (100)
In example 2, the Licence Applicant has net liabilities at both the current and comparative statutory closing date. Given that net liabilities have deteriorated at 30 June 2009 relative to 30 June 2008, the indicator IND.03 has been breached. Example 3 Extract from balance sheet as at 31 December 2009 31 December 2009 [currency] Net assets/(liabilities) Equity Treasury shares (own shares) Issued capital and reserves Total equity (50) 0 (50) (50) 31 December 2008 [currency] (100) 0 (100) (100)
In example 3, the Licence Applicant has net liabilities at both the current and comparative statutory closing date. However, given that net liabilities have improved at 31 December 2009 relative to 31 December 2008, the indicator IND.03 has not been breached.
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Appendix XXII:
Possible additional assessment procedures in respect of future financial information (criterion F.06) In section 6.7.5, the minimum assessment procedures to be performed by the Licensor or an independent auditor in respect of future financial information are described. Whilst the manual does not prescribe the use of an independent auditor, if an independent auditor is to perform the assessment procedures, this scope of work does not require the auditor to consider the completeness or reasonableness of the assumptions or the identified risk factors. Whilst not a minimum requirement, the Licensor may wish the independent auditor to carry out such further procedures, over and above those described in section 6.7.5. If the Licence Applicant is required to have an independent auditor carry out additional examination procedures, some additional procedures may include:
Extensive procedures to be able to report that, based on the examination of the evidence supporting the assumptions, nothing has come to the auditors attention which causes the auditor to believe that the assumptions do not provide a reasonable basis for the future financial information (negative assurance); and Confirmation of the bank and other borrowing facilities available to the Licence Applicant.
The Licensor may wish to develop a standard form of procedures, appropriate for its national legislation and practice, through consultation with the national institute of chartered accountants (or similar body) in its territory. International Standard on Assurance Engagements (ISAE) 3400, The Examination of Prospective Financial Information provides some guidance on engagements to examine and report on future financial information, including assessment procedures, and on the form and content of the report that the auditor issues in connection with such and engagement. The independent auditor will carry out certain assessment procedures, such that it may be possible for the auditor to report by way of negative assurance that the assumptions on which the future financial information is based are not unreasonable. The work by the independent auditor will not be an audit, review or verification of the future financial information. In these circumstances, the Licence Applicant must submit to the Licensor a copy of the future financial information approved by management and a copy of the auditors report. Assessment procedures in respect of updated future financial information (criterion F.08) The Licensor may carry out the assessment procedures itself in respect of criterion F.08. Alternatively, the Licensor may request the licensee to have independent auditors carry out some of the assessment procedures. If the licensee is required to have an independent auditor carry out certain assessment procedures, the independent auditor selected should be the same as the auditor selected to carry out the audit of the annual financial statements and/ or review of the interim financial statements and the agreed-upon procedures work in respect of the previous version of the future financial information (in accordance with criterion F.06). The updated future financial information shall be assessed by the Licensor or independent auditor in the licensing cycle following that for which the Licence Applicant became obligated to meet the requirements of F.06, ie. during the season for which the licence has been already granted. If some of the assessment procedures are performed by an independent auditor, he will provide a report of factual findings. The work by the independent auditor will not be an audit, review or verification of the future financial information. The work by the independent auditor may include the following procedures:
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Make enquiries of management regarding the compilation of the updated future financial information and the sixmonth historic financial information; Obtain a list of the risks identified by management and the assumptions made by management in compiling the future financial information; Confirm whether the future financial information is arithmetically accurate; Through discussion with management and review of the future financial information, determine whether the future financial information has been prepared using the disclosed assumptions; Confirm that the opening balances contained within the future financial information are consistent with the balance sheet shown in the last audited annual financial statements or underlying accounting records (as appropriate); and Check that the future financial information has been formally approved by the executive body of the entity.
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Appendix XXIII:
Updated Future Financial Information: Summary of Information to be Provided as Part of the Updated Future Financial Information
In section 6.9.4, the information to be prepared by the Licence Applicant in accordance with criterion F.08 is described. Set out below is an illustrative summary of information to be provided as part of the updated future financial information. For the purpose of the illustration, it is assumed that the Licence Applicant has an annual accounting period that ends on 30 June 2009; that the interim financial statements are prepared for the six months ended 31 December 2009; that the Licensor has a submission deadline of 31 March 2010 in respect of the 2010/11 licensing season; and that the period covered for future financial information is the period from 1 January 2010 to 30 June 2011 (with the interval dates being 30 June 2010 and 31 December 2010). As at 30/06/10 updated budgeted profit and loss account to June 2011
Summary of differences Actual 6m 01/01/10 to 30/06/10 Revenue Gate receipts Sponsorship and advertising Broadcasting rights Commercial Other operating income Original budget 6m 01/01/10 to 30/06/10 Difference Explanation of significant differences Updated budget 6m 01/07/10 to 31/12/10 Updated budget 12m 01/07/10 to 30/06/11 Updated budget 6m 01/01/11 to 30/06/11 Updated budget Total 01/07/10 to 30/06/11
Expenses Cost of sales/materials Employee benefits expense Depreciation and amortization Impairment of fixed assets Other operating expenses Operating profit/(loss) Profit/(loss) on disposal of fixed assets Finance costs Tax expense Profit or loss after taxation
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Cash flows from operating activities Cash receipts from gate receipts Cash receipts from sponsorship and advertising Cash receipts from broadcasting rights Cash receipts from commercial activities Cash receipts from other operating activities Cash payments to suppliers for goods and services Cash payments to and on behalf of employees Cash payments in relation to other operating expenses Cash inflow/outflow from operating activities Taxation Cash flows from investing activities Cash receipts from sale of property, plant and equipment Cash payments to acquire property, plant and equipment Cash receipts from sale of player registrations Cash payments to acquire player registrations Cash receipts from sale of other long term assets Cash payments to acquire other long term assets Cash receipts from sale of financial investments Cash payments to acquire new financial investments Cash receipts in relation to receipts of loans from non-financial institutions Cash payments in relation to repayment of loans to non-financial institutions Cash inflow/outflow from investing activities Cash flow from financing activities Cash receipts from issuing short or long term borrowings Cash payments in relation to repayment of amounts borrowed Cash receipts from an increase in capital Cash payments to acquire or redeem the entitys shares Cash inflow/outflow from financing activities Net increase/decrease in cash
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Revenue Gate receipts Sponsorship and advertising Broadcasting rights Commercial Other operating income
Expenses Cost of sales/materials Employee benefits expense Depreciation and amortization Impairm ent of fixed assets Other operating expenses
Operating profit/(loss) Profit/(loss) on disposal of fixed assets Finance costs Tax expense Profit or loss after taxation
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Cash flows from operating activities Cash receipts from gate receipts Cash receipts from sponsorship and advertising Cash receipts from broadcasting rights Cash receipts from commercial activities Cash receipts from other operating activities
Cash payments to suppliers for goods and services Cash payments to and on behalf of employees Cash payments in relation to other operating expenses
Cash inflow/outflow from operating activities Taxation Cash flows from investing activities Cash receipts from sale of property, plant and equipment Cash payments to acquire property, plant and equipment Cash receipts from sale of player registrations Cash payments to acquire player registrations Cash receipts from sale of other long term assets Cash payments to acquire other long term assets Cash receipts from sale of financial investments Cash payments to acquire new financial investments Cash receipts in relation to receipts of loans from nonfinancial institutions Cash payments in relation to repayment of loans to nonfinancial institutions Cash inflow/outflow from investing activities Cash flow from financing activities Cash receipts from issuing short or long term borrowings Cash payments in relation to repayment of amounts borrowed Cash receipts from an increase in capital Cash payments to acquire or redeem the entitys shares Cash inflow/outflow from financing activities
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Appendix XXIV:
This appendix provides some guidance about dealing with promoted Licence Applicants. Promoted Licence Applicants are those clubs which, following promotion to the top division, are required by their Licensor to undergo the club licensing system for the first time. The submission deadline shall be determined by the Licensor. If required to undergo the club licensing system, all of the criteria F.01 to F.08 shall apply to the promoted applicants, although some of the disclosure requirements may be relaxed. Disclosure requirements may be relaxed because, if a Licence Applicant was previously outside the top division, it may not have been subject to club licensing requirements and may not have prepared historic financial information adequate for club licensing purposes. For promoted applicants, unless otherwise required by national law/practice, the following disclosure requirements may be relaxed: In respect of F.01, no comparatives are required to be disclosed in the audited annual financial statements; In respect of F.02, no comparatives are required to be disclosed for the comparable interim period; and In respect of criterion F.06, there is no requirement to disclose comparable financial year or interim period information.
If, at the end of the first season in the top division, the promoted applicant has not been relegated, it is no longer classed as a promoted applicant. After the end of its first season in the top division, the Licence Applicant is then subject to the usual licensing procedures, without any relaxation of disclosure requirements.
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