Let’s get back to the sensitive question of IOF financials. In January I hoped that there might be some meaningful information shared after the IOF Joint meeting where finances was a surprise topic. Unfortunately, the slides of the strategy/finance presentation of the joint meeting were not published by the IOF despite some very positive vibes coming from that meeting. Only the formal minutes related to the meeting were published here and here.
The 2017 audited financial reports are probably already prepared, but we may have to wait for a long time before we see reliable numbers. Last year the audited accounts were not shared with member federations for 3 months. They were sent to members only after the Presidents’ Conference, maybe to avoid inconvenient questions on the conference.
In the meantime, there were bits and pieces of information shared by the IOF clearly with the intention to prop up confidence about the state of finances:
- The January Council meeting minutes (#187) stated that the IOF had a “a cash position of 157 TEUR at the end of year 2017” under Point 10.2
- In the same minutes under the same point it was stated that “preliminary financials showed a final result of approximately 16 TEUR”
- The message of the non-public January meeting was that “the IOF’s financial situation is stable and balanced” as reported for example by the German Federation’s web page based on the report of German delegates.
In this post I would like to show you why one has to take these pieces of seemingly positive information cautiously, especially when they come from an organisation with stretched financials. That’s why I referred to these as “smoke and mirrors” in the title. They give the feeling of an intention is to strengthen confidence, they sound good to people not familiar with the ins and outs of financial reports, but they give no guarantee that the actual financial performance was good or not.
I hope this discussion may also help some Council members (many of whom read this blog) to have a more meaningful discussion next weekend on the Council meeting in Belgium.
A “cash position of 157 TEUR at the end of year 2017″ must be good news, mustn’t it? Yes, it is definitely better to have some cash on the bank account, but there is not much more one can say. In an earlier post I wrote about how the amount of cash in hand does not correlate with financial stability. One less familiar with finances may want to read that post first.
Here I will show the balance sheet development of the IOF over the past couple of years to illustrate the same point with hard data.
The above chart shows a simplified picture of the IOF balance sheet. Before we start to analyse it, I would like to explain the basics of accounting for the majority of readers less familiar with the black magic of financial reports.