Good morning Métis People of BC,
Please accept this correspondence in response to the recent MNBC Financial Notes (not dated) signed by the MNBC Treasurer Bob Trumbley and posted to the MNBC website as additional information to the 2010-2011 MNBC Financial Statements. BCMF has decided to send this correspondence to illustrate further inaccuracies in the financial information being posted.
It appears MNBC is assuming the market value of the property is $6,040,000 (and one needs a vivid imagination to accept this figure) then one must, under the Generally Accepted Accounting Principles, revalue ALL the assets – not just ‘cherry-pick’ the good one. There is no documentation provided such as an independent appraisal but for now BCMF will assume this figure to illustrate our concern.
The other MNBC assets are basically immaterial (albeit most likely worthless under a revaluation). His first table should therefore read:
- Total current Market value of school property $ 6,040,000
- Current net book value of property $ 3,356,714
- Property value increase $ 2,683,286
- Add: Total assets per Audit $ 8,496,386
- Total assets using market value $ 11,179,672
- Less: Total liabilities per audit ($10,760,453)
- Surplus reflecting market value $ 419,219
This is already $483,286 less than Mr. Trumbley’s calculation although BCMF questions the validity of any MNBC statements that the property is worth $6,040,000.00. BCMF has contacted three commercial real estate agents and the range of a property is from $4 million to $6 million. Regardless due to the financial crisis a fire sale would devalue the price substantially.
Mr. Trumbley then states that the International Financial Reporting Standards would allow this type of revaluation in 2013 – however, this is two years from now and MNBC is in a financial crisis at this moment. Mr. Trumbley also criticizes the application of the auditing rules of including the mortgage under current liabilities because of the breach of the mortgage terms by not paying the property tax arrears. Well, this is the fact and MNBC has not paid the property taxes. BCMF is aware that the appeal has since been adjudicated with a minor downward adjustment, but MNBC still haven’t paid the arrears or approximately $235,000.00. MNBC has not provided any update about the property tax situation.
Accordingly, his second table should therefore read:
- Total current liabilities per audit $10,760,453
- Current assets per audit ($ 4,954,591)
- Property value increase ($ 3,356,714)
- Working Capital deficiency ($2,449,148)
In conclusion, this MNBC farfetched, and dubious, adjustment – that will only be allowed in 2013 – makes no material difference at all to MNBC’s financial position. BCMF does not understand the reason by MNBC Treasurer for offering this miscalculated statement with incorrect assumptions.
I trust Métis people will find this information helpful.
British Columbia Métis Federation