EPMU Pads Books With Pike River funds

NBR Online:

The dodgy accounting practices of the EPMU have been looked at by the NBR, in particular the accounting for donations for the Pike River miners families:

The EPMU is defending delays in establishing a trust for Pike River mine disaster families after questions were raised about its accounts.

The country’s largest private sector union was one of many organisations to take donations after the November 2010 disaster, in which 29 men were killed.

EPMU communications director Neale Jones told NBR ONLINE it had raised $750,926 by the end of last year, and money is still trickling in.

Payments totalling $344,745 were made to the Grey District Council’s fund early last year, but the balance of $406,181 is still on its accounts to December 31, 2011, published on the Societies and Trusts Online website this month.

That money had been earmarked for an educational fund for the killed miner’s families.

Questions were raised on the Whale Oil blog about the union’s lack of transparency and, at worst, whether the EPMU was using the money to boost its accounts.

Mr Jones says the union has applied to the Charities Commission to register the EPMU Pike River Family Education Trust.

Money should be dispersed within a few months, he says – likely before the two-year anniversary of the disaster.

Why has it taken this long?

“It’s quite a complex process having to work out how that’s all distributed and then seeing who’s eligible,” Mr Jones says.

While left-wingers are ranting at finance company directors let us have a look at the union who it appears are cooking their own books.

Even Rod Petricevic didn’t use funds donated for dead workers to make himself look better on paper than he was.

Has the Union borrowed money from thrid parties based on these padded accounts?

Mr Jones says the union is holding the Pike River money in a separate bank account and the interest is going back into the fund. The union’s auditors insisted if the money was being held it had to appear on its accounts.

“It’s a transparent process and our accounts are public.”

And a good thing too the accounts are public, because we can see that the EPMU is basically presenting dodgy accounts.

The fund was started prior to 2010 balance date so if the unions auditors insisted on the fund showing on the balance sheet then they should have corrected the 2010 accounts as well and not show the net balance in 2011. Maybe the prior period error of $1m is part of it?

But the bottom line is this, the treatment of the fund is wrong. The auditors can insist on showing on their books all they like but why haven’t they shown the liability for the payment out which would reduce the balance sheet. It is known as a contingent liability. To not show this is materially affecting the position shown in the accounts.

There can be only one reason to show only one side of the ledger in properly accounting for those funds and that is to make the accounts look better than they really are.

  • Adolf Fiinkensein

    Make sure you look at the 2012 accounts when they become available and see if there was any borrowing during the year.

  • Sarrs

    I am dying to know the date of their application to the charities commission…before or after WO pointed out the irregularities?

    • Dion

      Nothing an OIA request can’t take care of :)

  • Notrotsky

    Neale spends most of his days posting under various pseudonyms at the stranded – died in the wool pinko liar.

    • Oldaccountant

       amazing – how do you know this stuff?

  • Badmac

    I don’t think it’s a contingent liability, that’s for liabilities whereby you are making allowance in case some event (that you know about) happens, ie a law suit that you may lose and have to pay, the liability is contingent on losing.

    In this case he money is not theirs, it’s being held in trust awaiting payment. It could be shown as held in trust (within a dedicated trust account), and can be reflected into the accounts as “under management” or off balance sheet. You would not show it as an asset of the union, because it is not theirs.

    But I am not an accountant so may be corrected by somebody with deeper knowledge.

    • Sarrs

      You’re right about contingent liabilities…this just simply isn’t their money and they should have put it into a trust as soon as they got it. 

  • Butts_McButts

    Ugh, it doesn’t take long to set up a god damn Trust. Just set up the deed to allow the Appointer to add new beneficiaries as they see fit i.e. once they’re eligible. Do that bit all in one go, sure, but there’s nothing stopping you from setting up the Trust first. 

    • Sarrs

      Exactly

  • Callum

    I will 99% guarantee it is showing as a liability, the issue is the incomplete accounts that don’t show the detail. No way the auditor would have insisted on disclosing the cash flow separately without ensuring the liability was also adequately presented at the same time.

  • Guest2

    Isn’t the issue that the union has said quote NBR we will pay out before the two year anniversary. Why not pay it out now to the Grey District Council as two years seems a long time. I note at the bottom of the NBR report that even after posting a $540k loss they realized $760k of assets to keep afloat.
    This is a no brainer pay the money over. mayor Tony is capable of managing. There definitely needs to be a liability showing the payout. This maybe elsewhere in the accounts. If you read WO previous posts he never mentioned the trust fund. It was people like me who identified the issue. Ii think NBR was fair to ask the question.
    I think BDO auditors have done the right thing and said ” will you have had 2 years to payout, you haven’t so you need to record it”. NBR are credible MSM. They do their homework before they put paper to pen. Let’s get the money to Grey District Council ASAP.

  • Oldaccountant

    I had a look at the accounts and I can’t see where it is showing as a liability. I agree it is not a “contingent” liability but none the less still a liability. I can’t understand why it has taken 2 years to set up a trust. I think BDO suggested that if the trust hadn’t been formed them EMPU must show on their accounts. As there is no reference in the 2010 accounts then BDO have once again ensured transparency.

    I guess you can thank everyone that has donated and I am sure there is a lawyer in Greymouth who could set up a Trust by lunchtime.

    I am like “Guest2″ interested in the $760,000.00 realisation of selling assets and still having a $540,000.00 loss.

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