CTC AGM Resolution 4

[Simon L6]

I'd ask members to think carefully about this resolution. I've no view either way on the competence of the Chantry Vellacot, but, sadly, the CTC has used the same auditors for over twenty years, and those of you who know anything about this kind of thing will appreciate that this is bad practice.

We will be asked at the 2010 AGM to vote for a transfer to charitable status. I think it's imperative that we decide on the basis of properly audited accounts, particularly when the CTC is effectively becoming a contractor with only one customer, entering in to a raft of deals far removed from our core activities which may or may not be making money. I'm concerned that the membership will be lumbered with losses incurred by the contracting side, but the only way to establish whether this is or is not the case, is to have accounts that we can have confidence in. And that, in my view, we don't.

[Karen Sutton]

I agree. Not good practice to stick with the same Auditors. After such a long time doing the job there is likely to be complacency. Time for a change.

[manybikes]

I have been present at least twice when you have raised this and last time they promised to seriously consider it. No doubt like their other reviews everything in the garden is rosy. I am with you.

[Jimmy The Hand]

I'd ask members to think carefully about this resolution. I've no view either way on the competence of the Chantry Vellacot, but, sadly, the CTC has used the same auditors for over twenty years, and those of you who know anything about this kind of thing will appreciate that this is bad practice.

I sent a copy of Simons post to my auditor, with names removed, and asked for his comments.

Re. the comment about XXXXX using the same auditor for over twenty years, this in itself is not a problem although it the writer is sensibly considering whether the use of one auditor long is the best thing. It is not necessarily bad practice, as suggested, however.
Large listed companies have to rotate the audit partner every 7 years and so there is a built in safety-net here whereby someone fresh comes in at least every 7 years. For smaller audits it is left to the auditor to decide how they can avoid any conflicts of interest that may arise from the a long involvement with a particular client. We, for example, will perform internal second partner control reviews on larger audit clients where the partner has been involved for a long time based on a risk assessment that we carry out on our clients. There is also often a more regular turnover of audit managers etc.

The other side of this is the knowledge of a client that an auditor builds up over the years. There is a lot of set up time "getting to know the client" and any incoming auditor is likely to build this into the fees so the cost would be passed on. The knowledge is also invaluable and should help the auditor recognise potential problems. Clients are sometimes reluctant to change auditors because of these things.

There is therefore no reason why someone should not have the same auditor for 20 years+. It is probably more important that, depending on the size and risk of the client, the situation is managed correctly to ensure no conflicts of interest arise, particularly if the auditor also provide other services to the client.

I will say that I have used the same auditors for over 15 years.

One other point, Simon you say

......is to have accounts that we can have confidence in. And that, in my view, we don't.

To my mind if you don't have confidence in something that means you think something is badly wrong. So are you saying that the audits have not been done correctly?

[Simon L6]

I'm sorry, but having the same auditor for twenty years is bad practice, and that's that. And the inference you draw is eccentric - I started by saying I don't have any reason to believe that CV are anything less than competent.

What the accounts don't show is the profit or loss of contracting activities. I'm not convinced that the CTC is making money from contracting.

[Jimmy The Hand]

I'm sorry, but having the same auditor for twenty years is bad practice, and that's that.

The mighty Simon L6 has spoken and anyone who disagrees is wrong and that's that!

[Simon L6]

I'll think of myself as mighty all day...

The accounts are published in the latest edition of the mag. If anybody can glean from those published accounts how enterprises like the Cycling Champions is doing, then please let us know......

[Jimmy The Hand]

I'll think of myself as mighty all day...

You would

The accounts are published in the latest edition of the mag. If anybody can glean from those published accounts how enterprises like the Cycling Champions is doing, then please let us know......

"The BIG Lottery's Wellbeing Fund aims to increase physical activity, improve mental health and get people eating more healthily. CTC has received nearly £5 million over 4 years to employ project officers in 13 locations under the title "Cycling Champions". Each of these officers support and run local cycling projects promoting cycling in cooperation with other voluntary sector organisations, local authorities and the health sector."

To my mind you won't see how the Cycling Champions are doing from the accounts, you should however be able to read about how they are doing in the Annual Report.

Perhaps you would be kind enough to explain to me, calmly and objectively, why I should vote your proposal to change the auditors.

[bikepacker]

At the risk of having my post removed which seems to happen everytime I endulge in anything to do with HQ. I would like to add my view.

The previous stated idea of changing auditors every 7 years is one that should be adopted. My practice was to change auditors every 5 years and accountants every 10 years. As the CTC have used the same company for 20 years it has to be time for a change.

Also as you are aware Simon: I have had accounts sent to me by HQ that raised more questions than answers (I am trying to put it in a nice way), so my support would alway go to having the highest level of scrutiny, in order to fully protect members interests.

[Simon L6]

Jimmy, the question is - is the Cycling Champions project making money? The answer is that the accounts don't tell us, and they should. In fact I doubt if anybody can tell us.

I know I'm repeating myself, but this is really a simple matter - the members join for a limited range of services, and because they support the campaigns. The CTC Trust, which received, if I read the accounts correctly, £140,000 from subscription income, is engaging by the Government as a contractor. Now, are those contracts making money? Are we, in becoming a charity, going to be able to ensure that contracting activities aren't subsidised by subscriptions?

The question of the identity of the auditors is slightly different. The CTC and the auditors have known each other too long. The risk is that a cosy relationship has grown up, and that things are let by. Are the accounts of the contracting operations fully up to date, and are payments received in good time? I'd be happy to return to CV after one year with somebody else, and I appreciate that CV offer a good deal, but, since Governance is The Big Thing in the CTC I'd expect that the Management Committee would seek to follow best practice.

Alan - when I wrote twenty years, I meant upwards of twenty years. It might be twenty five. I'm not sure that anybody knows.

[Jimmy The Hand]

The previous stated idea of changing auditors every 7 years is one that should be adopted. My practice was to change auditors every 5 years and accountants every 10 years. As the CTC have used the same company for 20 years it has to be time for a change.

I think you are talking about a previous post of mine, unless it has been mentioned elswhere, and I think you may have Misinterpreted what was said:

Large listed companies have to rotate the audit partner every 7 years and so there is a built in safety-net here whereby someone fresh comes in at least every 7 years.

It wasn't the auditors per se but the partner within the auditors that need to change every 7 years.

[Jimmy The Hand]

Thank you Simon, I see now where you are coming from

[Karen Sutton]

Jimmy, the question is - is the Cycling Champions project making money? The answer is that the accounts don't tell us, and they should. In fact I doubt if anybody can tell us.

I know I'm repeating myself, but this is really a simple matter - the members join for a limited range of services, and because they support the campaigns. The CTC Trust, which received, if I read the accounts correctly, £140,000 from subscription income, is engaging by the Government as a contractor. Now, are those contracts making money? Are we, in becoming a charity, going to be able to ensure that contracting activities aren't subsidised by subscriptions?

I can't imagine that the funding for Cycling Champions was given with an expectation of the scheme making money. It is surely a way to get more people cycling, with all the benefits that would bring? However I know there is a concern from some National Councillors that it seems apparent that the scheme will not produce an increase in CTC membership. Many would say that this is a side issue and not something we should be concerned about. After all, we are a charity aren't we? Soon the subscriptions will be thrown into the melting pot with all the charity Income if Resolution 9 is passed. (Some think they already are). Resolution 9 is probably the most important Motion which should demand our attention. I believe that the carrying of this motion will be the final nail in the coffin of "This Great Club of Ours". Can anybody convince me otherwise, and tell me why I should vote in favour of this resolution?

[bikepacker]

Here. here, Karen.

[Simon L6]

Well, to be fair, resolution 9 is nothing other than an enabling resolution. It makes no commitment to a change in status. My concern is that if the accounts aren't in tip-top condition then we'll not be able to make an informed choice.

At the moment my gut instinct is that the Charity offers little to the members, and that the mixing of the two puts the funds and services at some risk - but I'm prepared to be persuaded otherwise. I'm just not prepared to be persuaded on the basis of the information at hand.