The report of the Auditor General (AG) on the Accounts of Sri Lanka Rugby (SLR) for the year ended December 31, 2017, which was released dated 3rd July, bearing reference SAS/A/SLR, is a damning portrayal of financial affairs. The AG has presented a qualified opinion on the Accounts because of the deficiencies in accounting. The [...]


Auditor General sin-bins SL Rugby for questionable ‘Accountability’


Sri Lanka has no 15s rugby for 2018, but the island nation is fully focused on the 7s circuit while SLR is running through trouble times - File pic by Amila Gamage

The report of the Auditor General (AG) on the Accounts of Sri Lanka Rugby (SLR) for the year ended December 31, 2017, which was released dated 3rd July, bearing reference SAS/A/SLR, is a damning portrayal of financial affairs. The AG has presented a qualified opinion on the Accounts because of the deficiencies in accounting. The deficiencies are material and, if and when adjusted, will present a different aspect of the Financial state of affairs. The Accounts have been signed by SLR President Asanga Seneviratne and Treasurer Ray Abeywaredena, on behalf of the Management Committee (MC) which is responsible for the preparation and presentation of Accounts. Accounting lapses will be discussed later.

The deficit for the year on the Income statement is Rs 14.4 million and needs to be adjusted by approximately, another Rs 15.2 million, as per the opinion of the AG, pushing the overall deficit to around Rs 30 million.

The cash from operating activities is a minus Rs 11.3 million, despite which, there is an investment of Rs 1.2 million for office equipment etc. Needing to borrow Rs 4.5 million, of which Rs 1.6 m is a short term borrowing. There was nothing in 2016.

Administrative Expenses have increased to Rs 25 million, from Rs 10 million in 2016. The major item in Expenses is Salaries which is Rs 17 million, up from Rs 10 million in 2016,

The accumulated fund has dropped in 2017 to Rs 9 million, from Rs 24 million in 2016, but needs to be adjusted to read as (-)Rs 7 million (approx). The Rs 26 million shown as other Creditors, including the fine payable to World Rugby (WR) finances, the Assets are not in a healthy situation. It seems both Rugby and Finances have taken their toll. The Rs 26 million other payables include payments for National team events and members as well as Referees. The Deficit of the funds means that Financing is from borrowing or, not paying Creditors.

At last the fine imposed by WR has been disclosed and it is Rs 10 million has been charged to the Income & Expenditure account. The foot note reads, “WR imposed a fine of £ 50,000 for violation of WR regulation 8, by fielding ineligible players in the Sri Lanka National Team. It also goes onto say that, WR has agreed for SLR to accept payments in instalments of £ 5,000 each, and to be deducted from the Rugby Investment grant. This means from the Development money. The question is who is responsible, and whether it happened in 2017, as it appears there was no mention of the date. I wonder whether this comes under the provisions of the new Audit Bill which allows the AG to effect a surcharge. On the other hand, before the axe falls on their heads, will the new Council ask those responsible to go?

A new Council is to be elected and will take over the reins, but the task with a not-so-good financial structure, calls for cutting the cloth to suit the purse, and have more financial discipline. The ST learns that many of the top eaters have opted to leave. It is necessary to review the last sentence of the report of the AG written in Sinhala, “My report will be tabled in Parliament in due course”. This opens the Accounts to be debated and is a public document. Does it also mean that it can come under public property. If so, responsibility shifts fairly heavily on the shoulders of those who matter. The need to show value for money becomes a focal issue. If, according to the Referees Society, the Ministry of Sports released money to buy communication equipment and it has not been done, and the funds are used for another purpose, even for a shorter time, does it become a case of misuse of public funds?

On the other hand, how will Parliament and, if applicable, COPE, look at the expenditure for sending a National team to play in a Boys group, and blow the trumpet that we have won and are ready for the Asian Games. SLR, which is in preparation for the Asian Games, descended on Paris, as part of exposure and preparation. It appears that Sri Lanka has taken Paris by surprise, when elsewhere the French were celebrating entry into the Football World Cup final.

SLR Rugby wrote on its website that a Sri Lanka side was playing in one of the biggest events in France. The post-tournament writeup took a different turn and reported that the Sri Lanka Lions were unbeaten at the Paris World Games concluded a short while ago. A 7s competition in France, according to publicity, is a good sign in preparation for the Asian Games. In Paris it is good to even win playing among boys. “This is match practise and exposure to 7s Rugby” is what is said by the mandarins who guide Rugby.

The responsibility for preparation of the Accounts lies with the MC, and the fact is accepted by the statement signed by the SLR President and the Treasurer. The MC is also responsible for ensuring the statements are accurate and necessary internal controls are in place. While the MC is responsible, they are not full-timers and depend on the staff led by an Executive Director and a CEO. Reading through the deficiencies noted that led to the qualification and inaccuracies stated, it may be time for the incoming Council, particularly the Secretary and the Treasurer, to exercise more vigilance.

The Reasons for the Qualification are:

1.   Out of an amount of Rs 9 million outstanding from the penalty imposed by World Rugby, Rs 8 million, which should be shown as a long term debt, is shown under short term liabilities.

2.   Rs 11,318,090 provided for Air Tickets to the Sports Development Dept (SDD) is not in the Income & Expenditure account.

3.   A sum of Rs 5,294,445 which could have been reimbursed by the SDD, has not been accounted for.

4.   Advances provided to Provincial Unions, Rs 1,358,962 in 2016 and Rs 1,750,000 in 2017 for Rugby Development, has not been settled and therefore, not accounted as Expenses.

5.   Incorrect accounting treatment of Rs 596,085, being exchange loss on the grant of £ 40,000 provided by WR in 2016.

6.   A sum of Rs 17,492,313 is shown as due from the Sri Lanka Schools Rugby Football Association and accounted as expenses for participating in an international tournament. As there is no evidence of the Schools section accepting that they do not owe this money nor, is there any written agreement with the Schools section, the collection of this amount being doubtful, a provision should have been made, but such provision has not been made.

It has also been noted that there is no confirmation from Creditors of Rs 3,107,747, and there are no records of verification of Closing Stocks valued at Rs 4,229,913. The details of the Closing Stock does not suggest a saleable value, and probably needs to be added to expenses.

This makes the task of the incoming Committee more difficult, and the Secretary and Treasurer have the task of putting systems and procedures in place, and have Financial discipline which may require rethinking of some of the strategies. Reading the AG’s report and the certification of the SLR President and Treasurer, the responsibility for proper Accounting and Management lies with the MC. The MC is neither full time nor paid, and in attendance to streamline operations, there was an Executive Director and a CEO. Some of these lapses have been periodically highlighted in this column, as Council members have a greater responsibility and more so ever that the SLR is being directed to be a public entity, as the Accounts are also to be tabled in Parliament .

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