The PSOE hid its “real” assets with “fictitious” provisions in one of the years of its alleged illegal financing. According to an audit report prepared by the Court of Accounts, Pedro Sánchez’s party presented an accounting balance in which Its net worth and the result for the 2020 financial year were “undervalued” by 5.1 million euros as a result of several provisions that the supervisory body itself considers “do not fit” to the provisions of the regulations of the Accounting Plan Adapted to Political Formations (PCAFP).
The Court of Accounts details that the socialist formation recorded provisions for future obligations that it considered “inappropriate” and that this caused both the result for the year and the net equity presented do not correspond to the “true image” of the party’s economic situation.
Most of these 5.1 million euros of undervaluation, the Court says, are adjusted to a provision of 3.6 million euros for possible labor costs – linked to the special forced leaves of party workers.
The PSOE recorded this amount in the accounting of its Federal Executive Commission (CEF) under the concept of “other social expenses” and through a “provision for other obligations”, but the Court of Auditors argues that, “after analyzing the documentation that proves the quantification carried out by the training, according to a criterion of prudence”, The recording of this provision “would have required the existence of an implicit or tacit obligation as a consequence of a past event and its assessment of the application of the criteria defined in the aforementioned standard”.
Thus, he concludes, emphatically, that “These provisions cannot be recorded”even more so taking into account that it is an accounting practice that had already been the subject of observations in previous audits.
Does this mean that the party maneuvered with the provisions to ‘hide’ its real assets? Different economists consulted by LA RAZÓN explain that, indeed, “if a provision is made for a future expense without justification that it will occur, the value of your asset and the company’s own funds are undervalued.”
That is, the principle of prudence does not allow accounting for any future expenses that an organization considers possible. «In this case, there has not yet been the appearance of the risk that would lead to having to meet these obligations and, therefore, it is a «fictitious risk»they argue.
Although these sources detail that this provision does not, in itself, represent an effective outflow of money and should not allow other expenses to be “masked”, they do warn that the PSOE could have made this to “justify future payments that did not correspond to real obligations” or to “create an accounting margin that could be reversed, that is, a hidden reserve.” «Of course, the amount of that exercise is very large. “It gives rise to suspicion.”they add.
The Court also identifies another provision of one million euros for future obligations, the registration of which did not comply with accounting requirements, and another of 420,000 euros linked to salary increases related to electoral results, also “inappropriate.”
But they are not the only irregularities detected. In that same report, and as reported by El Economista, the organization detected that the PSOE had up to 295 bank accounts not recorded in its accounting – whose balances amounted to more than 300,000 euros – and another 110 accounts with a balance of 400,183 euros for which neither the banking entities nor the party had sent information or the corresponding bank reconciliations.
This accounting exercise is among those that are being investigated in a separate piece of the “Koldo case”, which is being investigated by National Court judge Ismael Moreno on the alleged illegal financing of the party.
The instructor investigates all the cash payments made between 2017 and 2024 – after the words of businessman Víctor de Aldama who places an alleged delivery of 1.8 million euros in cash to the PSOE – and the donations that Sánchez’s candidacy received in the primaries in which he won as General Secretary. Both the Civil Guard and Anticorruption suspect that Sánchez may have used illicit funds to finance his campaign.