Audit findings and opinions

1. Plan management of the 4th East Asian Games Organizing Committee

1.1. During the audit on the preparatory works for the 4th East Asian Games organized by the 4th East Asian Games Organizing Committee – Macao, S.A. (hereafter referred to as MEAGOC), the Commission of Audit found that the MEAGOC’s Board of Directors never presented any plan that encompasses all the activities within the framework of the Games and even the annual plans were presented to the appreciation of the Supervisory Board in untimely manner. In the period from 2003 to 2005, MEAGOC proposed for two times increasing the company capital, involving a total of 580 million patacas. The audit findings revealed the inexistence of a “pluriannual and global activities plan” and “annual activity plans” weakened the budgetary indicators presented and made them less rigorous.”

1.2. By the budget preparation for 2002 to 2005, MEAGOC was never able to act according to the “Functional and Financial Regulation”, approved by MEAGOC itself, by which it should punctually present the proposals of budget to be examined by the Supervisory Board. The Commission of Audit is of the opinion that the budgeting was very slow and tardy and, in a management perspective, cancelled the effect of controlling and coordinating the resources in due time, which is an inherent function of budgeting. Additionally, the Board of Directors’ position according to which it’s not necessary to abide rigorously with the “Functional and Financial Regulation” it proper authored was in no way beneficial to the raising of the management quality.

1.3. In the estimation of revenues, MEAGOC took very oftenly references higher than what the real conditions permitted, resulting in serious underexecution of the main revenues sources. On other hand, in terms of expenditure, MEAGOC proceeded to various alterations to balance between the forecasted and the effective expenditures, which denotes the MEAGOC’s budgeting capacity was below of what would be acceptable and leaving the budget execution in a chaotic situation.

1.4. The audit results showed that to fulfill its supervisory function, the Supervisory Board relied very heavily on the support given by the Board of Directors. However, the performance of the Board of Directors in this aspect was never total, which made difficult the performance and the adoption of supervisory measures by the Supervisory Board. As for the problems and deficiencies detected in the Board of Directors, the Supervisory Board simply issued written opinions and not bothering to establish follow-up measures, which is against its proper attributions and duties.

1.5. Somewhere in the reply provided by the MEAGOC refers: “The paragraph 4.1.1.2., Part 4 of the Report quoted the Article 9 of the Articles of Association, but only the first part, namely, ‘the members of the Supervisory Board shall participate in the works of the General Assembly’, refers to Article …” The Commission of Audit deems necessary to clarify the quoted paragraph embodies simply the result of the integrated analysis of the Articles of Association and the audit proofs collected by the auditors (including oral briefings by MEAGOC officers and written documentation), and it doesn’t contain any comments which might confound the public judgment.

2. Selling and management of admission tickets

2.1. MEAGOC sought to attract as many spectators as possible by means of lowering the price of the tickets, but, at the same time, offered complimentary tickets in an almost uncontrolled manner, which annulled completely the attraction of the low priced tickets. The Commission of Audit is of the opinion that simultaneous offer of cheap tickets and complimentary tickets should be avoided, since they are absolutely conflicting.

2.2. MEAGOC offered for free over half the tickets for the opening and closing ceremonies, which are precisely the key events of the Games. According to audit findings, by this doing, MEAGOC wasted the opportunity the key events offered to generate considerable revenues.

2.3. The period for tickets selling for the East Asian Games was just 81 days, shorter than those for other local traditional big events, like the Macao Grand Prix, which was 111 days long. The Commission of Audit is of the opinion that the sooner and longer the period for tickets selling the more intense would be the promotion and divulgation effect and also the greater the absorption capacity of the market.

2.4. The seat of MEAGOC, in Taipa, together with the tickets sale counters located in 5 sport venues, sold tickets only for the competitions staged in their respective competitions zones, forcing the public to hop from counter to counter. This was aggravated by the fact that on-line purchasing didn’t exempt payment that must be made at sale counters. The Commission of Audit deems it necessary to improve the organization and operation of the sale counters and the supporting services for the on-line purchase.

2.5. Regarding tickets management, MEAGOC didn’t set up a register for recording the printed tickets nor for the beneficiaries and the number of tickets offered. On the other hand, the deliveries of tickets to sale counters were not properly recorded so that it was not possible knowing the exact sales revenues of each counter. The audit findings showed the admission tickets management can be improved (covering tickets printing, complimentary tickets and stock management at the sale counters).

2.6. MEAGOC invested at least 4.5 million patacas to develop a multi-functional electronic system for managing and selling tickets, but, at the end, opted for a simple selling scheme and forsook the electronic selling service. The audit findings demonstrated that it lacked an adequate planning according to which the supporting electronic equipment and system would be developed upon and after the selling model has been defined. The lack of this planning led to waste of resources.

3. Organization of the lodging service

MEAGOC had rooms reserved for guests, sport delegations and mass media organizations for the period of the Games. However, a substantial number of rooms were not occupied, which represented a waste of 8.7 million patacas. The underoccupation was due to the significative difference between the estimated and effective number of guests. In the calculation of the number of guests and people from other participating groups, MEAGOC didn’t fix a date for the representatives of the olympic committees and guests to confirm their attendance. Besides, MEAGOC simply set a uniform period of 13 days of stay for all, which inflated the number of rooms to be reserved. The Commission of Audit is of the opinion that if the preparatory works had been properly conducted (for example, fixing a confirmation deadline for the guests, a better follow-up mechanism in order to timely confirm the effective attendance of the guests and to obtain information on the demand of the journalists), besides ensuring enough rooms to satisfy protocol needs, it would have reduced the wastage of rooms.

Main suggestions of the Commission of Audit

1. An integrated and prospective activity plan should be established right at the beginning of the preparatory phase and should by reviewed and updated annually. Any proposal aiming to increase the company capital should only be presented when duly justified and prepared clearly and prudently.

2. The budget should be viable, all revenues and expenditure should be estimated using precise and actual elements and routine budgetary adjustments (alteration or reinforcement) should be avoided.

3. The supervisory body should fully discharge the functions stipulated in the articles of association. Whenever errors are detected in the operation of the executive body (board of directors in the case of MEAGOC), it should take effective and proper measures of monitoring in order to ensure the detected errors are resolved within a reasonable period.

4. The plan for sale of tickets should be prepared at an early stage and in detail. It should envisage all main aspects of the ticketing, seeking to put on sale all tickets of the key events in a network of tickets outlets that should be adequate and convenient, where the public could easily obtain information and buy the tickets it wanted. The complimentary tickets and those for sale should be different in order to avoid people doing business with the former and getting profit unduly.

5. The records of the tickets in stock and those delivered should be rigorous. It should also be established procedures for verifying and authorizing the offer of tickets, under which the quantities offered, the serial numbers of the tickets offered, and other relevant elements are recorded. On the other hand, it should be ensured that sales revenues could be calculated through the confrontation between the quantities of unsold tickets and the quantities of printed tickets.

6. The scheme for tickets sale must be defined in the first place so to provide a basis for identifying needed auxiliary means and, consequently, the information systems to be used, in order to raise the efficiency.

7. In making rooms reservation, the organizer should employ a calendarized confirmation of the initial registrations, in which deadlines are set for guests to confirm their attendance, so that actual elements could be obtained to calculate the length of stay of the guests and participants. On the other hand, the booking of rooms for journalists demands knowing their price preferences, since it’s the only way to arrange matching lodging for them and reducing losses in this way.