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Irish governing body's liabilities soar after accounts restated

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By Reuters
Irish governing body's liabilities soar after accounts restated
FILE PHOTO: Football - Republic of Ireland - FAI Headquarters, National Sports Campus, Abbotstown, Ireland - 8/4/08 The logo for the Football Association of Ireland Mandatory Credit: Action Images / Henry Browne Livepic - MT1ACI4926391/File Photo   -   Copyright  Action Images(Reuters)
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By Padraic Halpin

DUBLIN (Reuters) – The Football Association of Ireland’s (FAI) auditors were unable to guarantee the governing body can continue as a going concern after an ordered restatement of its accounts reported on Friday increased its overall liability to 55 million euros ($60.62 million).

The FAI has been hit by a series of scandals since it acknowledged earlier this year that it had broken state funding rules by failing to tell authorities about a 100,000 euro short-term loan made to it by former chief executive John Delaney to deal with cash flow issues in 2017.

As part of the legal proceedings that Ireland’s state corporate watchdog began against the association in May following the disclosure of the loan, the FAI was ordered to restate and refile its financial statements.

On Friday, the FAI reported that this had led to large adjustments with an original profit of 2.3 million euros for 2016 marked down to 66,000 euros and 2017’s previously reported 2.8 million euro profit restated to a 2.9 million euro loss. The association made a loss of 8.9 million euros in 2018.

Previously undeclared transactions included pension and bonus payments to then CEO Delaney, underpaid employment taxes and VAT, a clawback agreement that a sponsor triggered this year and 3.5 million euros in professional fees.

Further unrecorded liabilities may arise as a result of current and future investigations, auditors Deloitte said.

Deloitte, which in April reported that the 98-year old association’s accounts were not being properly kept, contravening two sections of Irish company law, noted in the 2018 accounts that it was unable to form an opinion on the truth and fairness of the financial statements. 

“While the company has received some advanced funding from (European soccer’s governing body) UEFA during 2019 to enable it to meet some of its current liabilities there is not sufficient audit evidence that the company will be able to meet its liabilities as they fall due,” the auditors’ report said.

“Therefore we are unable to obtain sufficient audit evidence to support the assumption that the company will continue as a going concern.”

In its original accounts, the FAI’s net current liabilities – a company’s short-term financial obligations – stood at 21 million euros at the end of 2017 and Delaney forecast that it would be debt free within three years.

Bank loans of 33 million euros were subsequently added to the liabilities due to technical covenant breaches.

Delaney, who remains a member of UEFA’s executive committee, left the FAI completely in September after being on gardening leave for months. The accounts showed he received a 462,000 euro severance package.

The payout, which the FAI said could have amounted to over 2 million euros under the terms of Delaney’s contract, was “chicken feed” compared to the association’s other financial problems, Professor Niamh Brennan, head of University College Dublin’s Centre for Corporate Governance, said.

“Its (the FAI’s) very existence is hanging by a thread, as I can see it. It is in dire financial straits,” Brennan told national broadcaster RTE.

($1 = 0.9073 euros)

(Reporting by Padraic Halpin; Editing by Ken Ferris)