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Accountancy

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3 months 1 week ago #1 by Per
Accountancy was created by Per
Violation of basic accountancy principles
It stands out like the administration do not seem have basic knowledge of accountancy!

After creating a spreadsheet with the information of the cost and income accounts provided with in the Minutes from the annual community meetings ("Actas"), then it shows that the Administrator is not consistent in how the accounts are being used.

The Administrator obviously use Double-entry bookkeeping for the the Income account since the income of community fees (account 7000000000) - what the property owners should have paid - is the same in between the years.

7000000000 - Cuotas Ordinarias
2018: 395,617.32 EUR
2019: 395,617.32 EUR
2020: 395,617.32 EUR

But the Administrator seems to treat the Cost accounts differently and only book the costs when payments are being made, like it is done in Single-entry bookkeeping. One has to be consequent. Either one use Single-entry bookkeeping or Double-entry bookkeeping!

The cost for changing to LED-lights (account 678000001) is an example where it looks like they only book the cost when a payment has been made, not when the cost occur.

678000001 – Renovacion Luminarias
2018: 16,852.22 EUR
2019:   6,612.72 EUR
2020:   6,612.72 EUR

The cost for “Renovacion Luminnarias” should be booked when the cost occurs, not when payments are made.

When it comes to investment in e.g. machinery then the cost could be distributed over a certain time period, according to its depreciation.

In accountancy, depreciation refers to two aspects of the same concept: first, the actual decrease of fair value of an asset, such as the decrease in value of factory equipment each year as it is used and wear, and second, the allocation in accounting statements of the original cost of the assets to periods in which the assets are used (depreciation with the matching principle).

en.wikipedia.org/wiki/Depreciation

If the cost for “Renovacion Luminnarias” would have been treated as depriciation then there would not have been a huge difference between the booked costs year 2018 and 2019. Furthermore, there would have been a depreciation plan that should have been included in the Annual Financial statements. The remaining value of the investment should also be show in in the Balance sheet, which the Administrator omit to present in the Financial statements.

It looks like the Administrator is applying Single-entry bookkeeping for the investment in “Renovacion Luminnarias”, which is completely wrong and violate the basic ideas of accountancy!

It is also a big problem that the Administrator do not include the Balance sheet in the Annual Financial statement! As a consequence one cannot follow the debts of the defaulters ("Morosos"). Neither can one follow any of the debts the community might have accumulated.

By avoiding to present the Balance sheet it opens up a possibility for the Administrator to let the debts of certain property owners to "disappear" without being paid!

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2 months 4 weeks ago - 2 months 4 weeks ago #2 by Editor
Replied by Editor on topic Accountancy
Accountancy and Financial statements

The purpose of accountancy is to give a fair view of the economical performance of the organisation.Double-entry bookkeeping is the norm to be used. Very small business with very limited turn/over can use Single-entry bookkeeping, which is like a cash book, but then it gets more difficult to keep order among the invoices since they're only booked when payments have been made or received.

Read more . . . terrazas-del-rodeo.com/en/facts/accountancy-and-financial-statements

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