The Audit Commission (CA, from the Portuguese acronym), has released the performance audit report on the “Subsidies Granted by the Sports Fund for Sports Events”, which analyzed the work of the Sports Fund (hereinafter referred to as “the fund”) regarding the approval of subsidies and the verification work. The audit reviewed the documents relating to the granting of subsidies to 57 sports associations during the four-year period for organizing international competitions or major sports events, involving around 137 million patacas. The result showed that there were some problems in the approval of subsidies and the verification of expenses, revealing that the fund lacked standards in processing the subsidy applications, and even led to the overpayments of public funds.

The audit report noted that the Board of Directors of the fund did not formulate the guidelines for assessing and granting subsidies to sports events. Instead, the divisions formulated the related guidelines on its own as the basis for granting subsidies, but these guidelines were not approved and signed by the competent authority. Due to this deficiency in the supervision mechanism, the supervision of the fund tended to be lax, which would easily give subsidy applicants and the third parties the impression that the written guidelines were not to be taken seriously and they were flexible in the implementation.

With regard to the actual implementation of supervision, CA randomly selected 14 cases of funding sports events as examining samples, and found that there were obvious discrepancies in the per capita banquet and meal subsidies, but the justifications provided by the fund were not substantial and even contradictory. For example, the fund believed that for some events, it was necessary to arrange meals taken in hotels, so the amount of per capita subsidies was approved on the basis of the average price of a meal in hotels. However, for other events, it explained that meals could be taken at the venue of the event, so the approved subsidies were based on the average price of a lunchbox. In addition, for certain events, the fund would approve a higher per capita banquet and meal subsidies, in order to allow greater flexibility to association in determining the number of participants. This reflected that the standards adopted were different and unreasonable.

With regard to the subsidy disbursed to the secretary of sports event, differences were found in the number of people, duration of work and the amount of subsidy. In this connection, the fund stated that the workload, scale and needs of the sports events were taken into account. However, the fund was unable to provide the information regarding the daily working hour and the scope of work of each secretary. Moreover, the fund mentioned that the reason of providing subsidies for hiring the secretary of sports event was due to the heavy workload. However, this audit found that although the secretaries of association received subsidies similar to the monthly salary of a full-time secretary, they still had time to do other work at the same time.

There were cases in which the guidelines for the approval of subsidies were not implemented properly, including expenses subsidized by the fund not being included in the list of subsidized items, the subsidies for banquet and meal exceeding the upper limit, the calculation of subsidies based on an exchange rate that was significantly higher than the rate in the guidelines, and the lack of price quotation from three entities as required, reflecting that the fund did not carry out effective supervision on the irregular expenses.

With regard to the verification of expenses for subsidized projects, the fund did not regulate the execution of most of the work, leaving the discretion to the divisions. Moreover, documents submitted by associations did not correspond with the requirements set out in the guidelines, but were still accepted. Regarding the co-organized events, the fund initially stated that associations only needed to comply with the principles or some provisions of the “Application Guidelines”. However, when CA inquired specifically which provision had to be followed, the fund had different statements: at first, it replied that the Guidelines were not applicable. Later, it said that associations just did not need to comply with the requirement to submit the proof of transport, and finally it adjusted its statement again by saying that the Guidelines were not applicable to the co-organized events. Therefore, its statements were inconsistent.

With regard to the supervision mechanism for verifying expenses, the fund would pay the expenses that were inconsistent with the approved amount. For example, it allowed the quantity, price/standard to be higher than the approved amount, as long as the expenses did not exceed the limit of the subsidy; it accepted that the balance of the expenditure item could be used in another item if they had the same classification; for the co-organized events, the fund accepted to pay the expenses which were not included in the subsidized items of approval document, as long as the expenses were reasonable. In this regard, the fund stated that it was unnecessary to report to the competent authority on such changes. Under this mechanism, the actual approved subsidies deviated from the initial amount that was considered reasonable by the fund after the detailed analyses. There was case in which the amount of subsidy distributed by the fund at first was less than the amount of subsidy applied for, but after verifying expenses, the expenses were accepted in the approximate amount of subsidy association applied for. In another case, it was found that the balance of subsidy in an expenditure item was used to pay another item which was within the same classification for meal and banquet, but the fund accepted the expenses without any request for clarification.

Besides, the fund would accept the documents with inadequate information for the purposes of verifying expenses. Quite a few documents of events only showed the total amount of expenses, but failed to reflect the essential information such as the quantity, price and standard. Moreover, some events submitted staff lists or attendance records as the proofs of expenses for personnel subsidies. In fact, the fund could not perform analysis and verification work based on these types of documents, but such expenses were accepted on the ground of trust in associations.

The review found that there was obvious doubt regarding to the amount of accommodation and the duration of stay in an event, but the fund still accepted the expenses after verification without any reasonable explanation. In another case, an event had a 30% reduction in the number of participants, but since the number of rooms and meals provided by hotel was fixed and not adjustable, the expenses based on the estimated number of participants were finally accepted by the fund after verification. According to the fund, such situation in which the estimated number of participants is different from the actual number of participants is common, so it considered there had been nothing wrong in this case. There were other deficiencies in the work of verification, including the fund didn’t recognize “one receipt, double paid”, which means the expenses from two different events were paid based on the same receipt, the discrepancies between the expenses the fund verified and the expenses shown in the receipts, and the disbursement of undue expenses.

Regarding the verification of revenue, the fund generally requires associations to declare the total amount of revenue and provide supporting documents. When the revenue that generated by the event is higher than estimated, the surplus of subsidies needs to be returned. The fund stated that considering the trust in associations, it allowed them to report only the total amount of revenue without the need to provide any information about its calculation, making it impossible to verify the revenue actually generated. Regarding the work of monitoring the refund of the surplus of subsidies, it was found that in some cases, the duration between the confirmation of refund amount and the sending of refund notification was too long (up to 776 days), and the fund also did not follow up actively on cases that subsidies had not been refunded for a long time (over 935 days). This resulted in the failure to recover public funds in a timely manner, which would hinder the allocation and use of public funds afterward.

As mentioned in the general comments of the audit report, support for sports development has always been one of the priorities in the Policy Addresses of the Macao Special Administrative Region. Therefore, the fund has the responsibility to ensure that public funds are used legally and prudently, which is the fundamental principle of public administration and the crucial part in the implementation of policies. The audit results showed that the management of the fund was unscientific and irrational, and in particular, it was found that the fund did not implement the established guidelines fully, the guidelines were changed arbitrarily or implemented partially, posing a significant risk in management. As the social and economic development after the COVID-19, it is expected that many sporting events will be held in Macao, so the duty of the fund will become more important. Therefore, it is necessary for the fund to follow up the problems seriously, resolve them timely, and strengthen supervision of the use of public funds in order to prevent situations like these from occurring again.

The audit report was previously submitted to the Chief Executive, and the public can download the full text of the report from the website of CA (https://www.ca.gov.mo), while paper copies are available at its Office during office hours.