In 2010, the Commission of Audit (CA) conducted a performance audit on the social benefits and the management of business trips made by the personnel of TDM - Television of Macau , S.A. (hereafter abbreviated as TDM) with the aim to, by analyzing the management and the regime of these benefits, verify whether the spending of the financial resources followed the principles of public money management, i.e. prudence, economy and expenditure not exceeding revenue, and to give out opinions and to make suggestions.
1.1 Audit findings and opinions
1.1.1 Scope of the medical care of the Chief Executive Officer not clearly defined
The regulations on medical care of TDM’s personnel lay out clearly the terms regarding the scope and conditions of access to medical care provided by the Health Department and associated subsidies. At the same time, the “Terms of Engagement” regarding the CEO establish that any medical care expenses incurred by the CEO or his family’s members are fully covered by TDM, therefore the former rules don’t apply to the CEO.
In the years of 2007 and 2009, the CEO received two treatments abroad, each in one of those years. The expenses of these two treatments totaled, respectively, €18 049,13 (203 161,01 patacas at the exchange rate of the day) and $230 719,00 Hong Kong dollars (238 102,00 patacas at the exchange rate of the days). Even that the insurance company did cover 170 thousand patacas, TDM still has to cover the rest, which totaled 270 thousand patacas. CA is of the opinion that TDM should not assume liabilities without being able to set the upper limits and possessing no mechanism to control.
1.1.2 TDM should be more prudent and observe the balance between income and expenses when planning its participation in conferences organized by media held abroad.
The annual expenses with business trips abroad for taking part in conferences exceeded 50% of the total expenses on all business trips abroad, reaching 70% in 2007. The expenses with trips abroad have been reducing in the last two years, but trips for conferences are still the champions among all trips abroad.
TDM has been spending over half a million patacas every year for business trips abroad, and those for taking part in conferences organized by media organizations represent more that 50%. Taking into account that TDM’s financial stability has been achieved and sustained because of Government’s injection of capital, CA believes that TDM should be more prudent and pay due attention to the balance between income and expenses when planning participation in conferences of media organizations held outside Macau.
1.1.3 No standardized procedures for buying airline tickets and other hospitality services
The CEO’s office has been exempted from the compliance with the normal procedure of price quotations, by writing, whenever the CEO was the passenger or among the passengers. The exemption has been justified by the need to raise the efficiency and enhancing the reaction capability to urgent business trips. This exemption is clearly unreasonable.
1.1.4 Annual leave taken together with business trips
Examination on documents relating to trips occurred between 2007 and 2009 revealed the CEO adjoined holidays, in Portugal, immediately before or after four trips to take part in conferences. From the good management point of view, the conduct is likely to create a negative image of mixing public service with private life, especially when the involved person is the highest administrator of the company. On the other hand, the CEO is already entitled with a holiday allowance, paid yearly by TDM, so there’s no need the CEO uses business trips to get extra holiday opportunities.
1.1.5 No mechanism to control the entertainment expenses
During the years between 2007 and 2009, the CEO claimed reimbursement of entertainment expenses regarding meals; however, the billing documents presented no reference regarding the reason of the expense, the number and the names of the guests. It should be underlined that TDM doesn’t apply an upper limit on meals or any standardized procedure for claiming reimbursement of entertainment expenses that requires the indication of the guests’ number and names. The situation prevents TDM getting basic information to verify and exercise control on entertainment expenses.
1.1.6 Rule on presentation of trip report ignored
During all the years, the rule on presenting a report within 30 days following a trip abroad has never been enforced. The report should narrate the facts and situations occurred during the trip and it should be presented to the hierarchical head of the person who made the trip, with copy to the Executive Committee. The effective failure in observing the rule is detrimental to the general management the company.
1.1.7 The barter trade should be thoroughly analyzed and discussed in the General Assembly and in the Board of Directors
TDM has been barter trading advertising time for goods or services provided by participating companies, whose conditions and terms are fixed in a contract signed by both sides. Publicity sales are an important source of income for TDM and the barter trade affects the company’s cash income, which adds pressure on its cash flows. At the same time, it has been verified that TDM has no uniformed criteria or standardized policies managing the barter trade agreements, which, by themselves, are already hardly transparent.
1.1.8 TDM should be prudent in awarding some fringe benefits
TDM has been rewarding, annually, its full-time employees with moon cakes, subsidized monthly fees for mobile phones and lai si by Chinese New Year. Moon cakes and lai si are also given out to part-time employees. Goods (e.g. moon cakes) and services (e.g. subsidized monthly fees for mobile phones) are subject to limitations such as period of validity and usage conditions, therefore they are not comparable to cash, which is universal and flexible. From another angle, the barter trade could be viewed as a way to get around the established procurement procedures, which harms the interests of TDM as well as the impartiality and justice those procedures are meant to assure. CA is of the opinion that TDM should evaluate its financial situation prudently when proceeds to award certain fringe benefits, and takes effort in cutting or reducing those expenses that are not imperative to the company’s operations.
1.2 Audit suggestions
1.2.1 TDM should make the CEO’s “Terms of Engagement” clearer and detailer and also including him into the medical care provided by the Health Department so that the medical care expenses could be globally planned and controlled.
1.2.2 TDM should be more prudent and always take into account the balance between revenue and expenditure when planning its participation in conferences organized by media organizations and held outside Macau. TDM should use the preparation of its annual work programme to better plan its outbound trips to take part in regular and periodic conferences and of other nature.
1.2.3 TDM should strictly observe the procedures for written prices quotation laid down in the Work Order no. 2/2006. Quotations for foreseeable trips should be made as early as possible, in order to reduce the situations in which the normal quotation procedure is exempted by reasons of urgency.
1.2.4 Holidays and business trips should be clearly and rigorously separated.
1.2.5 Rigorous rules and mechanisms should be defined and established for overseeing entertainment expenses in order to avoid abuses.
1.2.6 Internal regulations and instructions should be updated timely and according to the real needs and outdated provisions should be revoked in order to avoid failure of compliance with current regulations and instructions.
1.2.7 TDM should make a thorough review of its business strategy, be more prudent with barter trade and lay down uniformed policies and criteria for its application, and adopt cash payment in the cooperation relations with its publicity clients.
1.2.8 TDM should pay attention to its revenue and expenditure and observe the balance between revenue and expenditure to prioritize the allocation of its financial
