Macau Foundation (FM) spends every year large sums to support private institutions and persons who carry out activities of public interest. From January 2010 to July 2011, FM granted 1,330,838,288.30 patacas to subsidize projects presented in 1,217 applications, most of which tendered by associations (92.11% of the applications and 98.93% of the involved sums). Because of the large number of subsidies granted and also because of the huge sums involved, the granting of subsidies has been a focal point of the attention of the society. The present audit focus on whether FM approved, paid and monitorized financial aids according to its own internal mechanisms and instructions.
1.1 Audit findings and opinions
1.1.1 Examination conducted by FM on the real income and expenditure of the subsidies’ recipients
1.1.1.1 Discrepancy between the income and expenditure forecasted at the time of appli¬cation for subsidy and the effective results
The examination of the beneficiaries’ activity reports, carried out during the audit on the procedures of assessment, authorization and monitoring adopted by FM, reveals that some associations, at the moment they applied for subsidy, have forecasted that the activity for which they seek financial support would not generate income; however, at the end, the activity did generate incomes. At the same time, it has also been verified that some associations didn’t declare the subsidies granted by other entities. There was a case in which the association declared in the original application form that it had requested subsidies from other entities totaling 30,000.00 patacas. Nevertheless, its income derived from other entities’ subsidies totaled in the end 6,806,435.00 patacas; also, the final expenses were 40.87% higher than the forecast.
According to relevant regulations, when an applicant for FM’s subsidy also applied for subsidies to other government departments, the same applicant should inform FM about the fact since this procedure is part of its general rights and obligations. So, by the application at FM the applicant should present all pertinent information related to its requests of subsidies with other public departments, namely the amounts and the situation in the processing. Some applicants didn’t provide with exact and up-to-date information on subsidies and sponsorships and this led to deviation between the amounts declared to FM and the definitive incomes, and to a situation in which FM can’t any longer control overspending.
1.1.1.2 Monitoring subsidized projects or activities
According to Article 18 of the “Macau Foundation’s Internal Regulations on Criteria for Examining and Granting of Subsidies” (hereinafter referred to as ‘internal rules’), the recipient of a subsidy must submit a report within a fixed term after the conclusion of the activity. This activity report should give full account on how the activity has been carried out and on its income and expenditure. Under these internal rules, FM is entitled to audit the accounts of the beneficiaries and also monitoring their projects and activities. FM sends its personnel to monitor in loco how the activities are carried out and, at the same time, will analyze the activities reports submitted by the beneficiaries. However, the available information shows that FM didn’t examine the mismatch between the recipients’ projected and definitive incomes and the underlying motives.
Effective implementation of audit on the beneficiaries’ accounts, which is laid down in the internal rules as the basic means to assess the application of the subsidy, is still under study. Currently, FM’s supervision of the subsidies’ application is limited to examining and to a superficial assessment the accounts presented by the beneficiaries, without any procedure to check whether the presented data are true. The present situation contains significant control risks.
1.1.1.3 Monitoring the submission activity reports and application of sanctions
According to Article 22, b) in conjunction with Article 18.o, Numbers 1 and 2 of the internal rules, all beneficiaries who don’t submit the activity report within the stipulated term will have the grant revoked. By revoking the subsidy, FM is entitled to demand the beneficiaries to return all the funds they have already received or adding the beneficiaries onto the list of persons and legal persons suspended from applying for FM’s subsidies for a period of two years, starting from the suspension date, according to Article 23 of the internal rules.
Nevertheless, FM hasn’t taken measures in compliance with the terms of the internal rules in order to monitor more efficiently and effectively the recipients who didn’t fulfill the obligation of submitting the activity report. Only in March 2010 did FM produce a list of the beneficiaries who failed to submit reports of their respective subsidized activities, even though FM didn’t demand them to return the paid out sums. This FM’s action produces no sanctionary or persuasive effects on those who don’t comply with the obligation intentionally or without proper justification.
1.1.2 Granting subsidies once a year at fix amounts
Articles 8 to 12 of the internal rules established various assessment principles and factors which should guide the procedures of granting subsidies. Article 9, Number 1, e), says: “Principle of no additional grants — only one subsidy shall be granted to each applicant during the year, but exceptions may be considered when in special circumstances.” At present, FM is applying this regime onto applicants from one sector of associations.
In the course of audit, it has been verified that some associations were based at same addresses and had common general assemblies’ or directors board’s chairmen. By this way, these associations have been granted with more than one subsidy during the year, which is contrary to the principle laid down in FM’s internal rules which is granting only one subsidy to one association during the year. Although 13 cases are not a significant number in the whole universe of the subsidies, FM cannot leave the situation unattended.
1.2 Audit suggestions
FM should examine the applications for subsidies according to its internal rules and take measures to effectively oversee how the granted subsidies are used, so that the public money could be applied according to the plans presented initially by the associations.
1.2.1 FM should implement adequate measures and set terms which allow the applicants to provide the relevant information correctly, so that the amount of the subsidy to be granted could be appropriately assessed.
1.2.2 Upon the receipt of the activity report, FM should analyze it carefully and thoroughly; if unusual income and expenditure are detected, due examination should be carried out.
1.2.3 FM should begin auditing the associations’ accounts as soon as possible in order to discharge its supervisory duties.
1.2.4 FM must act swiftly in relation to associations which do not observe the duty of submitting activities reports, paying special attention to verify whether the staged activities correspond to their initial plans, and apply sanctions wherever necessary according to the internal rules on subsidies.
1.2.5 In granting one-off and fixed value subsidies to the associations of the sector referred above, FM should closely monitor those with same addresses and same members in the company bodies; in case these associations get an unusual number of subsidies, FM should immediately initiate control and apply continuing monitoring measures.
