Financial irregularities of NOCSL exposed in Audit
By Anjana Kaluarachchi
Auditor General's reports regarding the Financial Accounts for 2010-2012 of the National Olympic Committee (NOCSL) which was received by a few members of the so called office bearers raised several eye brows as it was full with observation and comments by Auditor General which speaks volumes of financial irregularities that would have happened during the last tenure of NOCSL. NOCSL accounts haven't been audited for years and audited reports from 2013 to 2016 are still pending.
Even after the audited report was furnished with many puzzling questions arising, NOCSL took another action violating the constitution again and held an office bearers meeting on Thursday (18 Jan.) where five office bearers refused to participate.
As per the "Olympic Charter" and the NOCSL Constitution, these annually-audited accounts should have been submitted before the Annual General Meetings that should have been held in 2011, 2012 and 2013. There is nothing in the constitution regarding presenting audited report before the office bearers for approval.
The Auditor General's report regarding those years revealed a great deal of accounting deficiencies, financial irregularities,
operational and management deficiencies and lack of accountability and governance. Some of the highlights are as follows:
Accounting Deficiencies and Financial Improprieties such as wrong accounting, distribution of funds amounting to over Rs 3.5 million only among two Sports Federations, namely Golf, (Rs 1 M) and Tennis (Rs 2.5 M), whilst not considering other Sports Federations.
Nearly Rs 4 million was spent on an Australian Coaches Fees without a proper written agreement being made available for audit.
Lack of Evidence for Audits covering over Rs 23 million in expenditures, Non Compliance with Treasury Circulars and Non provision of Procurement Plans.
Tender procedures not being followed, such as Tender Board, Formal Agreements with suppliers and Goods received Notes and Stocks registers not being maintained in respect of expenditures amounting to a total of nearly Rs 52 million. Awarding of a contract for a Fitness Training Centre at the NOCSL without calling for tenders and without the approval of the Executive Committee, allowing the occupation of the Fitness Centre to the Company for a period of 7 months without any written agreement.
Further, no turnover figures for the Centre were made available for audit and the NOCSL has not considered the expected turnover when calculating the monthly rental of only Rs 150,000 for approximately 3,000 square feet of Space in the Colombo 7 area. That also included Fitness Equipment worth over Rs 20 million and a car park and security services. The maintenance costs including depreciation of which would amount to over 3-4 times the income of only Rs 150,000- as monthly rentals. These details show that this agreement adversely affected the financial position of the NOCSL and the transparency of this transaction is highly questionable in audit.
Management Deficiencies of a major nature included making arrangements to send 21 participants for the Asian Games held in China (Guangzhou Asian Games), without obtaining approval of the Secretary, Ministry of Sports, payments of a sum of Rs 149,300 to the Sri Lanka Hockey federation as a grant by crossing cancelled cheques.
It has been revealed in audit that the Hockey Federation had not received this amount up to 31 December 2010.
Two Credit Cards (maximum limit of Rs 100,000 and Rs 350,000) had been continuously operated without getting proper approval.
No action has been taken to recover expenses amounting to Rs 760,339 spent for Ministry Officials who had attended the Commonwealth Games in 2010.
A sum of Rs 1,266,434 had been spent by the NOC during the year as Petty Cash,without determining a limit, or a petty cash register or payments and settlements register..
Uneconomic transactions included the supply of 1,650 Tee shirts and 530 Track Kits without calling for tenders or without entering into any agreement and a sum of Rs 15,553,000 has been paid in 4 instalments as advance payments to the supplier, violating the maximum limit of 20 per cent of total contract value in terms of Section 5.5.4 of the Procurement Guidelines 2006.
Human Resources Management. In respect of Cadre Positions pertaining to 18 employees, no documents such as letters of appointments, Educational qualifications, salary increment letters, lists of duties, promotions and resignation letters were not available.
Land to the extent of 1 Rood and 20 Perches which had been vested by a Cabinet Decision since 2005 for the Construction of the NOCSL "Olympic House" has not been valued and brought to account even as at 31 December 2011, although this was also mentioned in the 2010 Audit report.
No proper evidence has been made available in respect of the following income and expenditures amounting to over Rs 10 Million. They comprised the following;
lNo detailed bills for Rs 520,046 as Accommodation Expenses.
lNo Journal Vouchers for amount receivable from the Ministry of Sports, Rs 1,223,816.
lNo approvals for visa fees and other Expenses for Foreign Travel concerning Commonwealth Games, Rs 847,213.
lNo settlement vouchers for reimbursement of air fare charges, Rs 806,500.
lNo details of Tee shirts distributed for Commonwealth Youth Games, Rs 173,000
lNo Procurement Committee or Technical Evaluation Committee approvals.
lNo distribution details in respect of Tee shirts and Track Kits for South Asian Beach Tournament in Hambantota to the amount of Rs 3,523,500
lNo Estimate or procurement Committee Approvals for Vehicle Repair Expenses amounting to Rs 123,626. Settlement Advance of Rs 500, 000 for Asian Beach Games did not have any estimates or expenditure details.
lNo Technical Evaluation Committee Reports, nor, procurement Committee Approvals and Bid Opening Documents could be produced in respect of over Rs 1.5 million spent in respect of Furniture, Computers and Printers for the Museum.
Non Compliance with Laws, Rules and Regulations and Management Decisions
Article 13.3 of the NOCSL Constitution stipulates 12 Executive Committee meetings each year, but only 4 such meetings were held in 2011. No Copy of the Income and Expenditure Statement in respect of accounts concerning Overseas Funding received has been maintained by the Treasurer. Where advance payments have been limited to 20 per cent of the contracted amounts as per procurement Guidelines, advances aggregating Rs 589,500 have been exceeded in four instances. The State Accounts Circular No 431 dated 28 April 2008 has not been observed respect of air tickets amounting to Rs 1,741,876.
Transactions of a Contentious Nature
A nearly 5-years-old used Toyota Van has been purchased from a private company at a cost of Rs 2,600,000 which had been used by 3 previous owners. This purchase has been made without following section 3.2.2 (a) of the Procurement Guidelines of 2008. The purchase consideration of the van had been settled by transferring the NOC owned Caravan for Rs 1,400,000 without a professional valuers certification and the balance sum of Rs 1,200,000 has been settled by way of a finance lease, whilst NOC having sufficient funds in a Savings Account, thus resulting in a loss of Rs 455,113 to the NOC by way of interest payments on the financing lease. The NOC Restaurant Space has been rented for a period of 5 years, commencing November 2009 at a monthly rental of Rs 300,000 for the first year with Rs 30,000 annual increase thereafter, without following the Procurement Guidelines. Subsequently, by cancelling the previous agreement of 2009 prior to its expiration, a new contract has been entered into with another party for a period commencing 1 November 2011 at a monthly rental of Rs 300,000 and annual increments of only Rs 15,000 thereafter, thus resulting in an estimated loss of income for the NOC during the contract period of Rs 2,700,000.
Funds amounting to Rs 1,350,000 received from the IOC for distribution amongst sports associations have been retained by the NOCSL. Bonus payment to employees amounting to Rs 680,984 has been paid without Executive Committee approval.
Certifications were not made available in respect of Bank Account balances in Local Currencies, Rs 48,647,204 and Foreign Currencies, US $ 29,547. Accounts Receivable from Olympic Committee of Asia Rs 8,434,154 and Presidents Office Rs 4,103,478 and 97 Journal Vouchers amounting to Rs 80,203,147 where approvals and certifications were not made available for audit.
Non Compliance with Rules,
Regulations and management Decisions
Although Basic Salaries were increased by 25 per cent as from January 2012, an amount of Rs 50,260 being EPF contributions was not made whilst the Employees contribution of Rs 7,539 has not been deducted.
Although as per para 5 of the gazette notification dated 30 November 1976 had indicated that the NOCSL Constitution should be approved and certified by the Minister of Sports, no such approval or certification had been obtained.
As per two proposals submitted to the IOC by NOCSL, funds have been received on 3 April 2012 in respect of "London 2012 Athletic Mental Preparation Programme" to the amount of US $ 25,000 (Rs 3,125,989), yet this amount has not been utilized even as at 31 December 2015. A further sum of US $ 75,000 (Rs 9,319,076) received on 9 April 2012 in respect of the 75th Anniversary of the NOCSL, the project has not been carried out as per the proposal submitted to the IOC and nearly 1/3 of the funds have been utilized for administrative expenditures.
The audited report for years 2013- 2017 is yet to come. This was the time where there was no Executive committee or any other committees in operation where handpicked few of the office bearers ran the show at NOC and NOCSL members expects more irregularities during the time.
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