12th Finance and Governance Forum.11.10.11

12th Finance and Governance Forum11th October 2011

Welcome
John Crowther, Chair,
Finance and Governance Forum

“The quest for sustainability: the need for NGBs to become commercial”
Sir Keith Mills, Deputy Chair, LOCOG

The Last Ten Years
Until 2008 a strong economy
Public spending increases
Lottery funding growth
Olympic and Paralympic Games win
Sporting success

Where Are We Now?The Perfect Storm
Dire global economy
UK debt reduction
Real cuts in Government spending
Lottery under pressure
Post 2012 Olympic overhang
Marketing budgets under pressure

The 2012 Olympic & Paralympic GamesAn Opportunity or Threat?
Worldwide partners
Official partners
Official supporters
Official suppliers and providers
Official partner of the Paralympic Games
Aggreko, Airwave, Atkins, Boston Consulting Group, CBS Outdoor, Crystal CG, Eurostar, FreshfieldsBruckhaus Deringer LLP, G4S, GlaxoSmithKline, Gymnova, Heathrow Airport, Heineken UK, Holiday Inn, John Lewis, McCann Worldgroup, Mondo, NATURE VALLEY, Next, The Nielsen Company, Populous, Rapiscan Systems, Rio Tinto, Technogym, Thames Water, Ticketmaster, Trebor, Westfield.
Official supplier and provider of the Paralympic Games
Otto Bock

UK Sporting LandscapeComplex and Confusing
Professional
Sports
Teams
Sporting
Talent
Sports
Science
Sports
Nutrition
Sports
Events
Country
Teams
Sports
Coaching
Community
Sport
Sport
for
Development
Individual
Sports
Olympic &
Paralympic
School
Sport

NGB Current Sponsorship Model

What Have You Got to Sell?
Sport naming rights
Athlete rights
Event rights
Volunteering
Technology
Participants/Fans
Product Supply
Nutrition/Science

Commercial Return on Investment
Revenue
-
Cost
=
ROI
Employee
Attrition
Recruitment
Increased
Sales
Reduce
Costs
More
Profit
Product
Development
Not just about branding

Working CollectivelyvWorking Individually
Example
Premier League
Tottenham Hotspur Plc
TV Rights £42.6m
40% of total Club income

Be Creative
Scottish Football Association
£750,000 PA Referee Sponsorship

Conclusion
Funding for sport over the next 5 years is going to be tough
To maintain or increase funding will require a sophisticated and professional approach
Working together rather than competing makes sense
Need to be creative and demonstrate ROI

“The quest for sustainability: the need for NGBs to become commercial”
Sir Keith Mills, Deputy Chair, LOCOG

Break11:15am – 11:30am

Kelvin King
Director, Valuation Consulting and BNP Paribas Business Assets

Kelvin King, Senior DirectorBNP Paribas Business Assets Valuation Limited5 Aldermanbury Square, London, EC2V 7BPTel: +44(0)20 7338 4830 Fax: +44(0)20 7430 2628e-mail: kelvin.king@bnpparibas.comwww.valuation-consulting.co.uk

18
WHO ARE VALUATION CONSULTING
100% owned subsidiary of BNP Paribas. Valuation Consulting was purchased by BNPP in 2006 and recently re-branded.
Many years experience both from within the SV and in the accountancy profession
Members of the Society of Share and Business Valuers, authors, lecturers
RICS Registered Business Valuers
Law Society Registered Expert Witness accreditation/membership of the Expert Witness Institute
Experience in presenting testimony
Dedicated valuers – we value shares, businesses, intangibles and IPR

19
INTANGIBLES ASSETS – CURRENT BIG ISSUES IN SPORT
Image Rights, corporate and personal
Sponsorship
Merchandising
Endorsement
Licensing
Pension deficits
Infringements and Counterfeiting eg re major events

20
BIG ISSUES – FOR WHO?
Organisations
Governing Bodies
Clubs
Manufacturers
Individuals
Sponsors
Agents
Broadcasters

21
THE LICENSEE/PURCHASER & LICENSOR/VENDOR
Four Calculations or Steps – ‘can Kelvin count’
Intrinsic value of Vendor
Intrinsic value of Purchaser
PLUS
The capital values calculated are an essential step to calculate royalty rate or valuation - discuss

22
STARTING AT THE TOP AND TRYING TO BUILD DOWN
THE LAWS OF PHYSICS
AND VALUATION
SUGGEST THAT THIS IS NOT POSSIBLE

23
DEFINITION
&
IDENTIFICATION

24
INTELLECTUAL PROPERTY
Those assets whose essential characteristics are derived from the Legal System, in this case the UK
Registered Rights
Patents - UK, EP(UK) (PA 1977, EPC 2000)
Trade Marks - UK, CTM (TMA 1994)
Registered Designs - UK, CDR (RDA 1949)
Unregistered Rights
Confidential Information (equitable and contract)
Passing-off (common law)
Design Right (CDPA 1988)
Copyright (CDPA 1988 and Copyright Computer Software Amendment Act 1985)
Miscellaneous: Performance Rights, Image Rights, Moral Rights, Database Rights, Malicious Falsehood (common law), Plant Variety Rights

25
INTANGIBLE ASSETS – JUST A FEW EXAMPLES
Rights
Contracts
Relationships
Workforce
Customers
Group Intangibles
Brands
Goodwill
Characteristics of Economic Advantage
The spectrum of creative thought
Formulae, Recipes
Experience
Negative Knowledge
R&D and Information

26
ACCOUNTING STANDARDS
The US FASB has created a list of what it considers to be an intangible: nearly all of these exist in sport!
Market-related
Trademarks, trade names, service marks, trade dress, newspaper mastheads, internet domain names.
Customer-related
Customer lists, customer contracts, customer relationships, customer agreements.
Artistic related
Ballets, books, plays, articles, other literary works, musical words, opera, pictures, photographs, video and audiovisual material.

27
ACCOUNTING STANDARDS CONT…
Contract-based
Licensing agreements, advertising or service contracts, lease agreements, construction permits, operating and broadcast rights, employment contracts.
Technology-based
Patented technology, computer software, unpatented technology, databases, trade secrets, secret formulae.

28
OCCASIONS FOR VALUING IP IN SPORT
Sale and Purchase
Arrange a loan - securitisation
Tax purposes
Licensing
Balance Sheet
Joint Ventures
Pension deficits
Contract negotiations (eg Club brand vs Player brand)
Distress

29
WHY ARE WE VALUING?
Tax Valuation and Open Market Value
Fair Value
Fair Market Value
Commercial Value
Investment Value
Owner Value

30
METHODS OF VALUATION
Market based
Comparable market transactions
Caveats
Few sales
Lack of information
Separate values
Special purchasers
Different negotiating skills
Distorting effects of varying values
Assets not always comparable

31
Cost based
Historical or replacement cost
Caveats
Economic Benefits Excluded
Duration of benefit and economic life
Obsolescence difficult to quantify
Maintenance
Time value of money

32
INCOME APPROACH
Capitalisation of historical profits
DRAWBACKS
Profitability
Problems of averaging
Problems of extrapolating from past performance
Decline & other key variables
Net tangible assets not separately assessed
Multiple
No reference point for price earnings multiple
Often no regard to established marketplace
Often no reconciliation with market capitalisation

33
INCOME APPROACH: DISCOUNTED CASHFLOW MODELS
Modern valuation analysis is effectively DCF applied to the business enterprise under consideration
The Net Present Value (NPV) of a strategy or business is the sum of itsexpected free cash flows to a horizon (H) discounted by its cost of capital (r)NPV = Year 1 Cash Flow + Year 2 Cash Flow ... to say Year 5 Cash Flow
(1 + r) (1 + r) ² (1 + r)HPLUS
The terminal value which is the value of the business at a horizon (HV)HV = Cash Flow
(r - growth)Also discounted back to present value

34
HOW MUCH?
(CASHFLOWS)

35
TOOLS
Gross Profit Differential Method – Premium Prices/Premium Profits
Excess Profits Method
Relief from Royalty Method

36
HOW LONG FOR?
(TIME PERIODS)

37
USEFUL LIFE
Physical life
Functional life
Technological life
Economic life
Legal life

38
AT WHAT RISK?
(COST OF CAPITAL)

39
MONTE CARLO
Effectively a DCF multiplier
Numerous DCF calculations accounting for various scenarios, say of revenue, market share, costs, internationality and other risks
With just 4 scenario changes of the stated assumptions above this means 256 models!
That is 4 values for each of income, different market share, costs, international penetration i.e. 4 x 4 x 4 x 4 = 256
Real Options
Probability trees = snakes and ladders, develops the Monte Carlo analysis
Develops terminations (snakes) if a route identifies problems to suggest failure

40
THE LICENSEE/PURCHASER & LICENSOR/VENDOR
Four Calculations or Steps – ‘can Kelvin count’
PLUS
The capital values calculated are an essential step to calculate a royalty rate or valuation – discuss
JG

Kelvin King
Director, Valuation Consulting and BNP Paribas Business Assets

Sponsorship- an update for rights holders and event organisers
Ian Lynam, Partner, Charles Russell
11 October 2011

What is sponsorship?
“An investment by way of cash or VIK in an activity, club, event or individual (the “Property”) in exchange for the ability to exploit commercial and marketing potential connected with that Property”
Hugely valuable industry (World Cup 2010 sponsorship value: $1.6 billion)
A key revenue stream for rights holders and event organisers
Future? Impact of global recession, social media
Need for sponsors to reach target markets, exploit their brand and gain exposure

Who can benefit from sponsorship?
International and Continental Governing Bodies and Associations (e.g. FIFA, UEFA, ICC, IOC)
National Associations and Governing Bodies (e.g. FA, British Gymnastics, English Netball)
Clubs/Teams (e.g. Manchester United FC, Mercedes GP Petronas)
Venue Owners (e.g. Wembley, the O2, Dorney Lake)
Players

The FA’s Sponsorship Portfolio
1. National Teams
Lead Partner: Vauxhall Supporters: Umbro and Mars Suppliers: Carlsberg, Lucozade, Nivea and Marks and Spencer2. The FA Cup Lead Partner: Budweiser Supporter: Umbro3. Development Areas Men’s Football Partner: Carlsberg Small-sided Football Partner: Umbro Community Partner: McDonald’s Adult Football Partner: Mars FA Skills Partner: Tesco

Types of sponsorship
Venue sponsorship
long term association
crosses events and activities
e.g. Reebok Stadium, O2 Arena
Event sponsorship
sponsor an event or a title
Barclays Premier League, RBS Six Nations

Types of sponsorship (continued)
Secondary sponsorship
ancillary events and projects
Official supplier
provider of products/services
Broadcast sponsorship
sponsor of the broadcast rather than the actual event
contract between sponsor and broadcaster
Player sponsorship

Risks
Negative association
Financial risk
Brand damage/dilution
Ambush marketing

Rights Holders Checklist
Authority
does each party have the right to enter the contract?
who owns the relevant intellectual property for exploitation?
Grant of rights, wide range of sponsorship package:
naming rights
official supplier rights
advertising and branding rights
Obligations of the Sponsor
provision of equipment/services
financial contribution
assistance with promotion
compliance with legislation
non-compete

Rights Holders Checklist (continued)
Obligations of the Rights Holder
Territory
Exclusivity
Conflicting Rights
Fee structuring

Rights Holders Checklist (continued)
Fee Structure
flat fees
performance-based
timing of payments
bonuses
Intellectual property
Termination and renewal
agree duration (minimum versus maximum)
break clause
morality clause
option to renew
Limitation of liability
Public announcements
Governing law and jurisdiction

Conclusion
Benefit of sponsorship can be hugely positive BUT
Identify requirements
Understand each party’s intention
Criteria to measure success

Ian Lynam
Partner, Sports Law
Charles Russell LLP
Tel: + 44 (0) 20 7203 5030
Email: ian.lynam@charlesrussell.co.uk

Sponsorship- an update for rights holders and event organisers
Ian Lynam, Partner, Charles Russell
11 October 2011

News Update
Sport England
Hilary Milne,
Head of Audit, Risk and Governance

‘Where we were, were we are, where we are going’

Governance – one year on

On-site audit
Drawing out the nuance – how is your governance, finance and control framework operating?
Increased clarity -
e.g. amber /green overall but
in areas X, Y, Z you are amber/red
Thematic reporting - where do you sit in the governance landscape?
Continuous improvement - Feeding back to Moore Stephens and SE/UKS on the audit process

Self-assurance

Self-assurance
Completion to 2011 deadline – thank you
Reports back - November
Feedback on 2011 process, December/January
2012 process – early April to end September

Governance support
Things to Think About - 13,737 hits (1 Feb – 30 Sept 2011) http://www.sportengland.org/support__advice/governance,_finance__control.aspx
Supporting Good Governance workshops (SE/UKS/SRA)
Thematic reporting

Governance – where next?
Investment principle 2013 -17
Key governance requirements
Continuing to raise the bar
Continuing to work with you
Continuing to work together

News Update
UK Sport
Amanda Bennett
Acting Head of Governance

Basic Assurance
Introduction of 20 UK Sport funded bodies to assurance process
Enables reflection and reinforcement of good practice
Assists planning for improved governance and controls
First step towards Self Assurance 2012
Contributes to annual review of sports against Key Governance Indicators

2013-17 Governance Investment Principle
UK Sport will seek to invest in sports bodies which demonstrate the required standards of leadership, governance, financial management and administration
Why?
Clarity around required standards
Seek commitment to continuous improvement
Recognise improvement in governance as an activity in its own right

2013-17 Governance Investment Principle
Work with partners to ensure support is available
Focus on leadership - NGB boards are accountable for the standards of leadership and governance
More effective use of compliance tools – tailoring and proportionality

News Update
Sport and Recreation Alliance
Joy Tottman
Governance & Compliance Officer

Governance Initiatives
Voluntary Code of Good Governance for the Sport and Recreation sector
Support: Smart Sport, Videos and Toolkit
Board Recruitment

Logo and Certificate

Organisations that have already signed-up
Army Sport Control Board

Support Videos
Second Principle
Third Principle
Craig Hunter, BOA
Mary Tetley, BSAC
David Hemery
Steve Nelson, West of England Sport Trust
First Principle
Seventh Principle
Fourth Principle
Sixth Principle
Fifth Principle
Baroness Sue Campbell, UK Sport
Lisa Wainwright, Volleyball
Seb Coe, LOCOG
Richard Lewis, RFL
Dame Tanni Grey-Thomspon
Jane Nickerson, ASA
Sir Stuart Etherington, NCVO
Adrian Christy, Badminton
Timothy Dutton QC
Peter King, British Cycling

How do you assess if an organisation has good standards, systems and controls?
Timothy Dutton, QC

Smart Sport Resource Bank

Request an example policy

Board Skills for Sport
Tailored course for current and prospective board members in sport
Understand the role of a board member in the context of the sports sector
Marketed to blue chip companies as part of CSR programme
Build a database of ‘Board Members for Sport’ where organisations can go to find new independent board members that will have a base level understanding of the sector

Board Skills for Sport
Consultation to be launched before Christmas
What skills you want your board members to be provided with on the course?
What skills you want newcomers to sport to be provided with on the course?
What information you would like to know about people listed on the Board Members for Sport database?

Questions?
Joy Tottman
Governance and Compliance Officer
jtottman@sportandrecreation.org.uk

News Update
Sport England
UK Sport

Bribery Act Lunch1pm – 1:30pm

How to make a partnership between an NGB and a PLC work
Morag Taylor, British Gas
Chris Denny, British Swimming

“How to make a partnership between an NGB and a PLC work”
Chris Denny, Director of Marketing and Communications, British Swimming
Morag Taylor, Sponsorship Manager,
British Gas
From Sponsorship to Partnership

From the Sport’s Perspective...
Opportunity to bring in additional commercial expertise and approaches
Huge pressure on resources
A true partnership can enhance existing initiatives and develop new opportunities
British Swimming and British Gas go above and beyond a traditional sponsorship

Swimming’s Aim
World’s Best Swimming Nation

Swimming’s Objectives
Learn
Talent
Take Part
Win

Why British Gas and swimming?
Drive brand affinity among customer
Create positive customer experiences
Swimming – biggest participation sport in UK
Important to our customers
Only sport on National Curriculum
Integral part of local community

Consumer
Increase the likeability of the British Gas brand to build brand affinity
and brand commitment
Business
Build new business from swimming / leisure centres - showcase British Gas product and service offering
Employees
Improve BG’s employees positivity towards the company, making them feel proud to work for the company
British
Swimming
Increasing swimming participation by 270k (2013)
BG objectives of the sponsorship

There are 4 key platforms to our sponsorship…
2. Support grass roots swimming
1. Drive swimming participation events
4. Leverage increased interest in British Team
3. Build on popularity of Great Swim Series

‘3 Free Swims’ has been a massive success
110,000 customers and their families signed up, over 1m free swims
27% of our employees took part
16.8% of respondents who said it was something they never / rarely did now swim more frequently

Raising the profile of our stars

Beyond a traditional sponsorship
Jointly owned projects
Internal Engagement – Swim Heroes
Founding Partner Panel
BG marketing manager seconded to BS
Joint agency resource
Energy solutions for the industry

Successes...
30,000 kids taught to swim through Pools 4 Schools
1 million free swims to customers
Highest ever interest in British Swimming - 21%
36% awareness of the BS/BG partnership
75% of employees feel
proud to work for BG
Customers – 50% more committed to British Gas
Multiple awards – Hollis Awards Best Sponsorship

Key Learning
Early understanding of mutual AND separate goals
Work across all areas of the sport
Give yourself time
More than cash and VIK – people, expertise, reach
Value honest feedback

How to make a partnership between an NGB and a PLC work
Morag Taylor, British Gas
Chris Denny, British Swimming

Legal Panel: UK Bribery Act
Kitty Turner, Farrer & Co
Janice Shardlow, BEF

Legal Panel
Compliance with the Bribery Act 2010
11 October 2011
Kitty Turner, Farrer & Co LLP
Janice Shardlow, British Equestrian Federation

Introduction
Overview of the 4 offences and sanctions
Practical steps to help reduce the risks
Case studies
Questions
Agenda

Introduction
Bribery Act 2010: In force (since 1 July 2011).
It is aimed at organisations involved in corruption – not at legitimate business dealings.
Useful Ministry of Justice Guidance available at: http://www.justice.gov.uk/guidance/making-and-reviewing-the-law/bribery.htm
See also S&RA notes.

The offences and sanctions
Offences
Active bribery
Passive bribery
Bribery of a foreign public official
The corporate offence
Sanctions
Individuals: Maximum 10 years’ imprisonment, unlimited fines
Organisations: Unlimited fines
Plus reputational damage

The elements of the offences
Each of these offences involve giving/receiving a financial or other advantage to another person with:
In the case of active/passive bribery, the intention of inducing or rewarding improper performance of a relevant function.
In the case of bribery of a foreign official, the intention of obtaining or retaining a business advantage (no requirement of impropriety but the offence will not be committed if the action is permitted by written law).

The elements of the offences (cont.)
The offences are widely defined:
offering, promising, agreeing to receive (the financial/other advantage) are enough – no need to actually give/accept it;
any financial or other advantage – includes, potentially, corporate hospitality;
inducing or rewarding – ie before or after the conduct in question; and
covering almost any business decision – eg certainly the award of a tender/sponsorship deal.

The elements of the offences (cont.)
BUT:
As we have seen, the Act is aimed at organisations involved in corruption – not at legitimate business dealings.
There is no offence of active/passive bribery if a reasonable person in the UK would not consider that the gift, hospitality etc was intended to breach an expectation of good faith.
Precise line where this will have arisen remains unclear but see MoJ Guidance and case studies.

The Corporate Offence
Failure of a commercial organisation to prevent active bribery by an associate to obtain an advantage for that commercial organisation.
Does not apply to passive bribery – but reputational damage likely.
“Associate” is widely defined. It includes:
Employees
Trustees/governors
Agents
Trading subsidiaries
BUT: Defence if “adequate procedures” were in place.

Adequate Procedures
Government guidance acknowledges that what is adequate will depend on the size, sector, resources and degree of risk each organisation faces.
The Government guidance sets out 6 principles to be followed:
Proportionality of procedures
Top level commitment
Risk assessment
Due diligence
Communication
Monitoring and review
See S&RA note and MoJ Guidance for details.

Key risk areas
Provision of gifts and corporate hospitality
Awarding or applying for contracts or funding
As a recipient of gifts and corporate hospitality
See case studies for examples

Practical steps
Carry out a risk assessment of bribery risk at your organisation.
Check existing policies/put in place a sensible anti-bribery policy. (See S&RA Toolkit.)
Maintain a gifts register (covering items received and given).
Appoint an anti-bribery officer responsible for overseeing compliance and carrying out regular reviews.
Communicate policy internally (and externally). Provide regular training.
Carry out due diligence on contracting parties.
Include an anti-bribery clause in contracts where relevant.

Case Study 1
A staff member of an NGB is asked to identify potential companies who may wish to sponsor a tour of their national team around Italy.
A representative from one potential sponsor tells her that if she exerts her influence on the sponsorship panel to accept his company as the sponsor, but at a lower fee than the current asking price, she and her family will be sent on an all expenses paid trip to Italy with tickets to the final.
Has the potential sponsor breached the Bribery Act?
Has the NGB staff member breached the Bribery Act?
Has the NGB breached the Bribery Act?

Case Study 2
A staff member of an NGB is asked to identify potential companies who may wish to sponsor a tour of their national team around Italy.
A potentially suitable sponsor is identified and the NGB suggests taking the CEO of the sponsor to a site visit of the venue of the tour final and arranges (and pays for) the CEO’s hotel and takes the CEO for dinner after the site visit.
Has the NGB staff member breached the Bribery Act? Has the NGB breached the Bribery Act?
Has the potential sponsor breached the Bribery Act?
Would it be different if the CEO was based near the venue of the site visit and/or the NGB also paid for his/her family to come and stay there?

Case Study 3
A staff member of an IT company wants to win the tender of an NGB and early conversations are underway with the NGB.
The IT company has several ideas for helping to improve its chances of success – which of these could result in a Bribery Act risk for the IT company (and the NGB if accepted)?
Sending the CEO of the NGB and his family on a city break to Edinburgh?
Inviting the CEO to Edinburgh for a demonstration of the company’s IT products and taking him out to lunch afterwards?
Sending the CEO one of the latest Apple iPhones?
Sending the CEO a sample of the IT company’s new tablet?

Case Study 4
An NGB gives one of its current sponsors a VIP ticket to the final of the season’s championship as a thank you for support given to the NGB’s grass roots programme. As a result, the existing sponsorship agreement is renewed 3 months later for a further 3 years.
Has the sponsor breached the Bribery Act?
Would it be different if it was a prospective sponsor?

Case Study 5
The agent for an NGB is negotiating a deal with a leading drinks company for sponsorship of the NGB’s U18 women’s team. The NGB is trying to obtain an above market deal to contribute towards the cost of upgrading the women’s changing rooms. The agent takes the CEO of the company to one side and says that if the company will accept the deal, he will recommend a below market value sponsorship deal with the company to another of the agent’s clients.
Has the agent breached the Bribery Act?
Has the company breached the Bribery Act?

Any questions?
Kitty Turner, Associate
Farrer & Co LLP
kitty.turner@farrer.co.uk
0203 375 7110

The BEF: Putting the Principles of the Bribery Act into Practice
Janice Shardlow

1. Top Level Commitment
Report to Board – summary note
Commercial Director allocated lead responsibility/Head of Governance and Legal = responsible officer

2. Risk Assessment
Key Risks for sporting organisations:
The provision of gifts and corporate hospitality
The receipt of a payment or other advantage from a bidder for a major contract or funding arrangement
The receipt of gifts and corporate hospitality

Risk Brainstorm
NB emphasised benefits etc both given by us and received by us
Pins
Clothing
Tickets/Hospitality
Services e.g. Physio, advice
International deals
International hospitality
Services to our member bodies

3. Procedures
Gifts, hospitality and benefits provided
Gifts, hospitality and benefits received
Key elements:
Principles
minimum levels
register

4. Due Diligence
Bribery policies in place
?

5. Communications
Staff note on bribery
Briefing

6. Monitoring and review
Annual board approval
Responsible officer review

ANY MORE IDEAS ?

Legal Panel: UK Bribery Act
Kitty Turner, Farrer & Co
Janice Shardlow, BEF

Break2:30pm – 2:45pm

Finance Workshop: Financial Policies and Reporting
Stuart Wetherly & Jake Wilson
Deloitte LLP

Financial policies and reportingStuart Wetherly
October 2011

Internal Financial Reporting

Pillars of Financial Management
127

Financial planning
128

Controls and policies
129

Reporting
130

Less can be more
Reduced review time
Reporting - best practice
Automation – minimised re-keying leading to reduced errors
Standardisation – increased control and better information received in a standard format
Practice makes perfect – quarterly closes used to prepare for year end
Increased forecasting accuracy – used to reduce the time spent on variance analysis
Reporting volumes minimised – identify the non-essential
Exception based reports
Increased control over circulation of information
Understand the timetable and what is needed from who:
Who – Role clarity round who owns what numbers and who reviews
Where – Where in the organisation each activity occurs
When – Timing is understood and mapped
Interrelation and dependencies between activities clearly understood – e.g. impact of changing profit on tax
Key judgements and new technical treatments are made and agreed in advance of year end
Review process not started too early

Scorecard:
Mark an X where you think your organisation currently ranks for each of the below themes
LeadingPerformers
Measure of Performance
LaggingPerformers
Right first time
Several resubmissions
No errors
Annual Reporting Process
2
3
1
4
5
2
3
1
4
5
Efficient process
Delays financial close
Data produced quickly and on time
Reduced overall volume ofreporting
Large volumes of reports produced and not utilised
Report production minimised, all reports utilised
2
3
1
4
5
2
3
1
4
5
Certainty over activities, strongly managed
Lack of clarity and direction
Strong project management
2
3
1
4
5
Reduced review cycle time
Many reviews
Single review
Close not important
Insufficient or inappropriately skilled staff
High performing culture & capabilities
Pride in a fast close
Capabilities aligned with fast close requ’t
2
3
1
4
5

Scorecard:
Mark an X where you think your organisation should be
LeadingPerformers
Measure of Performance
LaggingPerformers
Right first time
Several resubmissions
No errors
Annual Reporting Process
2
3
1
4
5
2
3
1
4
5
Efficient process
Delays financial close
Data produced quickly and on time
Reduced overall volume ofreporting
Large volumes of reports produced and not utilised
Report production minimised, all reports utilised
2
3
1
4
5
2
3
1
4
5
Certainty over activities, strongly managed
Lack of clarity and direction
Strong project management
2
3
1
4
5
Reduced review cycle time
Many reviews
Single review
Close not important
Insufficient or inappropriately skilled staff
High performing culture & capabilities
Pride in a fast close
Capabilities aligned with fast close requ’t
2
3
1
4
5

External reporting and governance update

UK Financial ReportingUK currently has a three-tier model
135
1990s
UK FRS – applied to all UK entities
1997
FRSSE – optional for small companies
2005
IFRS – mandatory for listed groups

The ASB’s 2009 vision for the futureA three-tier model
Ability to choose higher ‘GAAP’
Tier 1
IFRSs as adopted by EU
Publicly accountable entities (EU listed and other ‘quoted’ (consolidated + parent), banks and insurance entities)
Tier 2
IFRSs for SMEs
All non-publicly accountable UK entities (large, medium, subsidiaries of listed groups)
Tier 3
Financial Reporting Standard for Smaller Entities (FRSSE)
Small entities (as defined in law)
136

The ASB’s 2010 vision for the futureA three tier model with two sub-tiers for reduced disclosure
Tier 1
Ability to choose ‘higher’ GAAP
IFRSs as adopted by EU
Publicly accountable entities (EU listed and other ‘quoted’ (consolidated + parent), banks and insurance entities)
Tier 1S
IFRSs as adopted by EU – group policies but reduced disclosure
Qualifying subsidiaries of Tier 1 entities
Tier 2
FRSME
Non-publicly accountable entities and small, prudentially regulated publicly accountable entities
Tier 2S
FRSME – group policies but reduced disclosure
Qualifying subsidiaries of Tier 2 entities
Tier 3
Financial Reporting Standard for Smaller Entities (FRSSE)
Entities currently able to use the FRSSE
= IFRS
= UK GAAP

The ASB’s 2011 vision for the futureFurther review
138
September 2011 ASB announce they will issue a new Financial Reporting Exposure Draft (FRED).

139
The UK government will continue to push for simplified accounting rules for the smallest companies or “micro companies”. No effective date or method has been set.
Company law and corporate governance update
Budget 2011: Accounting Impact
Following the 2011 March Budget announcement, changes have been proposed for accounting requirements within The Plan for Growth document. Key points from the proposal for simplified accounting are:
UK government will press the European Commission to remove the mandatory audit requirement for medium-sized companies.
UK audit exemptions to be brought in line with EU law. No date for implementation but likely to see the benefits in 2012.
Subsidiaries of any size would be exempt from producing audited accounts, provided their debts are secured by the parent company. Legislation expected 2012.

Useful links:Financial Management on Sport England website http://www.sportengland.org/support__advice/governance_framework_tool/3_financial_management.aspxPolicies on Sport England website http://www.sportengland.org/support__advice/governance,_finance__control/financial_management/7_financial_policies/supporting_outcome_71.aspxContact details:Stuart Wetherly – swetherly@deloitte.co.uk

Wrap Up and Close
John Crowther, Chair,
Finance and Governance Forum

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12th Finance and Governance Forum.11.10.11

by JoyTottman on Oct 12, 2011

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12th Finance and Governance Forum.11.10.11 Presentation Transcript