CHAPTER 1 Home Affairs Bureau Leisure And Cultural . - Audit Commission

Executive Summary12.Need to implement the enhanced measures. A grantee which failed tosubmit the programme report and/or audited accounts after the ultimate deadline(i.e. six months after the completion of preparation programme or the sportscompetition) should be liable to refund the ASDF grant, calculated as 1% of theapproved grant amount for every month of further delay, until the grantee submits theprogramme report and audited accounts. In examining the 28 applications (seepara. 8), Audit found that for 6 applications, despite that the delay in submission ofprogramme reports and/or audited accounts was more than six months, the 1% chargehad not been imposed (paras. 2.6 and 2.17).13.Need to review the calculation of amounts to be returned. As a fundingcondition, grantees of ASDF preparation and participation funds are required to returnany unspent balances to the Government after the completion of preparationprogrammes or sports competitions. The unspent balance is the amount of approvedfunding minus the total amount of eligible expenditures. An unspent balance isrequired to be returned after HAB’s or LCSD’s verification of a grantee’s submittedaudited accounts. Among the 28 applications examined by Audit (see para. 8), otherthan ASDF funding, the grantee of 1 application had self-generated income wronglyincluded in the calculation of return of unspent balance (paras. 2.18 to 2.20).14.Need to ensure timely return of unspent balances. Audit analysed the timeelapsed before returning unspent balances by grantees to the Government in the period2014-15 to 2018-19 and found that for 6 applications, the grantees returned theunspent balances over one year after the submission of audited accounts. Audit furtherexamined the 28 applications (see para. 8) and found that apart from 1 applicationwhere the late return could be attributable to both HAB (about 9.8 months had elapsedsince receipt of audited accounts by HAB) and the grantee (about 7 months had elapsedsince the date of requesting return by HAB), the late return was mainly due to thelong time interval between the dates of receipt of audited accounts by HAB and thedates of issuing letters requesting return by HAB (paras. 2.21 to 2.23).Funding for international sports events15.Vetting of funding applications. International sports events include:(a) “M” Mark events (MMEs) which are events of world championships, world classlevel championships and intercontinental championships, and having a signature effectin Hong Kong; (b) Major Local International Events (MLIEs) which are championship—ix—

Executive Summaryand other events at a level equivalent to World, Intercontinental, Asian or majorregional championships sanctioned and certified by the related International, Asian orRegional Federations; qualifying events for non-annual major competitions; and otherinternational events in which the respective International Federations require HongKong to participate as a prerequisite for entry to world championships or equivalent;and (c) Local International Events (LIEs) which are mainly participated by Hong Kongteams (para. 3.2). Audit noted the following issues:(a)Need to follow guidelines in assessing funding applications. Auditexamined 10 international sports events, comprising 3 MMEs, 3 MLIEsand 4 LIEs, organised in 2017-18 and 2018-19. Audit noted that in oneMLIE, the application had not been properly assessed. According toHAB’s guidelines on the scoring system, one of the sub-criteria of acriterion for the assessment of an MLIE is the “timeliness in submission ofprogramme report and audited report (i.e. audited accounts) before thedeadline”, which is a mandatory requirement. An applicant’s “failure intimely submission of the required reports in the last application will notattain any score in this criterion”. In an NSA’s last application in 2016-17,there was delay (one month) in submission of the programme report andthe audited report. However, in the NSA’s 2017-18 application, instead ofnot attaining any score, a score had still been awarded to the criterion(para. 3.9);(b)Scope for improvement in performance reporting. Audit examined thesubmission of programme reports and audited accounts for MMEs, MLIEsand LIEs by grantees in the period 2014-15 to 2018-19 (para. 3.14). Auditfound that:(i)between 2015-16 and 2018-19, the percentage of events with delayin submission of programme reports and audited accounts had eitherremained the same (at 75% for MMEs) or was on the increase (from60% to 78% for MLIEs and from 6% to 10% for LIEs) (para. 3.14);(ii)there were inadequacies relating to submitted programme reportsand audited accounts. For example, while there were significantvariances between the estimated and actual amounts of expenditureor between those of income, for MMEs, grantees were not requiredto report any aforementioned variances (para. 3.16); and—x—

Executive Summary(iii)(c)of the 10 events (see (a) above), in 3 MLIEs and 4 LIEs, of a totalof 44 performance targets, 6 targets (e.g. expected number ofspectators) had not been achieved and the achievements of 29 targets(e.g. expected achievement of Hong Kong team/athletes for theevent) had not been reported. In all the 3 MLIEs and 4 LIEs, therewas no evidence indicating that LCSD had taken any follow-upactions (para. 3.18); andScope for improvement in conducting on-site inspections. According toHAB records, in 2018-19, 4 MMEs, 19 MLIEs and 95 LIEs were organisedby 55 NSAs and 1 sports organisation. HAB conducted inspections at allthe 4 MMEs, while LCSD conducted inspections at 17 MLIEs and 49 LIEs.Audit examined the on-site inspection records of HAB and LCSD for theseevents (para. 3.21) and noted that:(i)for 2 of the 17 MLIEs and 11 of the 49 LIEs inspected by LCSD,there were no inspection reports documenting the details ofinspections (para. 3.21(a));(ii)LCSD had not laid down guidelines on selection of MLIEs and LIEsfor on-site inspections. It was therefore not known as to the basison which LCSD decided that no inspections would be conducted forany of the MLIEs and LIEs organised by 11 (out of 55) NSAs and1 sports organisation (para. 3.21(b)); and(iii)for the 10 events examined by Audit (see (a) above), in 1 MLIE and1 LIE, some information (e.g. the number of spectators) wasmissing in the inspection reports. In addition, LCSD had not laiddown guidelines on the number of on-site inspections to beconducted for events that were held for a number of days. For anMLIE held for four days, the LCSD staff had only conducted aninspection in one of the four days (para. 3.22).16.Scope for improvement in returning surpluses and unspent balances bygrantees. Grantees of MMEs, MLIEs and LIEs are required to return any surpluses(for MMEs) or unspent balances (for MLIEs and LIEs) generated from the events tothe Government (para. 3.24). Audit noted the following issues:—xi—

Executive Summary(a)Audit analysed the incomes and expenditures of 4 MLIEs and 6 LIEs (theseevents had other incomes (e.g. sponsorships and ticket sales) in addition toASDF grants) organised in the period 2014-15 to 2018-19 and noted that4 MLIEs and 5 LIEs had surpluses. Despite the surpluses, contrary to thearrangement that MME grantees need to return their surpluses to theGovernment, the grantees of the 4 MLIEs and 5 LIEs are not required todo so (they are only required to return their unspent balances) (paras. 3.25and 3.26);(b)a long time had elapsed (e.g. some 10 months) before the unspent balancesof some MLIEs and LIEs organised in the period 2014-15 to 2018-19 werereturned to the Government (para. 3.28); and(c)Audit’s examination of the 4 MLIEs and 6 LIEs (see (a) above) as well astwo extreme cases in the period 2014-15 to 2018-19 (i.e. 10.8 months foran MLIE and 10.1 months for an LIE) further revealed that a major reasonfor the long lapse of time was the long time taken by LCSD to verify theamounts of unspent balances and issue request letters to grantees(para. 3.29).17.Other issues relating to international sports events. Audit noted that inthe period 2013-14 to 2017-18, on several occasions, there was room for improvementin reporting information on international sports events to the Legislative Council(LegCo) by HAB. For example, in a paper to the LegCo Panel on Home Affairsdated May 2018, HAB stated that the number of international sports events hostedlocally for the period from 1 April 2013 to 31 March 2018 was 509 with an approvedamount of 157.63 million. However, the reported figure of 509 and reported amountof 157.63 million were actually the number of fund disbursements and the amountof funds disbursed respectively (para. 3.36).Funding for football development18.Governance of Hong Kong Football Association (HKFA). ASDF providesfunding to HKFA for the development of local football through the implementationof football development plans, which comprised the Project Phoenix (in the periodNovember 2011 to October 2014 (subsequently extended to March 2015)) and theFive-Year Strategic Plan (FYSP) (in the period April 2015 to March 2020)(para. 4.2). Audit noted the following issues:—xii—

Executive Summary(a)Need to improve attendance of individual members at meetings. Auditexamined members’ attendance at meetings of HKFA’s Board, committeesand sub-committees held in the football seasons 2014/15 to 2018/19(a football season starts in July and ends in June in the ensuing year), andfound that there were some members who had attended less than half ofthe Board/committee/sub-committee meetings (paras. 4.7 and 4.8);(b)Scope for improving first-tier declarations of conflicts of interest. Auditexamined HKFA records for members’ declaration of conflicts of interestin the football seasons 2014/15 to 2018/19 and noted that no first-tierdeclarations were made by members of the Board, committees andsub-committees (para. 4.11);(c)Need to enhance the governance of the Audit Committee. Therequirements stipulated in the Audit Committee’s terms of reference(e.g. having 3 to 5 committee members), which was endorsed by the Boardin February 2014, had not been met. For example, the Committeeconsisted of one member (the Chairman) only from July 2015 onwards(para. 4.13); and(d)Need to enhance the governance of the Marketing and CommunicationsCommittee. HKFA could not provide, for Audit’s examination, most ofthe agendas and minutes of meetings of the Marketing andCommunications Committee for the period July 2014 to March 2019. InMarch 2020, HKFA further informed Audit that in the football seasons2014/15 to 2018/19, there were meetings held but the minutes, other thanthose for the meetings held in April, May and June 2019, could not belocated (para. 4.18).19.Human resource management. Audit examined HKFA’s recruitment ofstaff under the Project Phoenix and FYSP as well as HKFA’s staff turnovers(para. 4.23). Audit noted the following issues:(a)Need to enhance recruitment policies and procedures. Audit examined10 HKFA recruitment exercises conducted in the period 2014-15 to2018-19 and found that some applications were successful despite that theywere received after the application deadlines or not sent to the designatedrecipient (para. 4.24);—xiii—

Executive Summary(b)Need to improve declarations of conflicts of interest in recruitmentexercises. In examining the 10 recruitment exercises (see (a) above), Auditfound room for improvement in the declarations of conflicts of interest inrecruitment exercises. For example, in 3 of the 10 recruitment exercises,the dates of declaration forms signed by 5 recruitment panel members werelater than the dates of interviews (para. 4.28); and(c)Need to address high staff turnovers. Audit conducted an analysis of thestaff turnovers in the period 2014-15 to 2018-19. Audit found that staffturnover rates of ASDF-funded posts were on the high side (i.e. at 30% ormore) in 3 years. For some departments of HKFA (e.g. the Marketingand Communications Department), the staff turnover rates wereparticularly high in some years (i.e. more than 60%). Audit also notedthat of 17 staff who left in the period 2014-15 to 2018-19, 6 staff (35%)left for the reason of career development opportunities and 5 staff (29%)left for workload involved (paras. 4.30 and 4.31).20.Attendance of spectators and self-generated incomes. HAB expected thatHKFA should in time be able to derive income from gate receipts, sponsorship andother sources that would help it achieve steady improvements financially and inmanagement (para. 4.35). Audit noted the following issues:(a)Need to boost attendances. Audit analysed the number of spectators ofthe matches organised by HKFA in the period 2015-16 to 2018-19 andfound that the average number of spectators had decreased by 3.6% from1,403 in 2015-16 to 1,352 in 2018-19. According to the Football TaskForce (FTF), distribution of complimentary tickets can help raise thepublic interest in football and improve the attendances of matches.However, Audit analysis found that the proportion of spectators holdingcomplimentary tickets to total number of spectators of HKFA matches hadincreased from 9% in 2015-16 to 14.6% in 2018-19. In some matches,the number of spectators holding complimentary tickets was greater thanthose holding sold tickets.Furthermore, the results of usingcomplimentary tickets to improve attendances were not alwayssatisfactory. For example, of the 1,778 complimentary tickets distributedfor the Asian Football Confederation Asian Cup held in June 2017,1,158 (65%) tickets were not used (paras. 4.36 to 4.38); and—xiv—

Executive Summary(b)Need to generate more incomes. Funding from the Government andsports organisations accounted for 47% of the total incomes of HKFA inthe football season 2014/15, but the percentage rose to 73% in the footballseason 2017/18. In addition, apart from programme and registration feeincome, all other self-generated incomes were decreasing (para. 4.41).21.Performance measurement and other administrative issues. According toFYSP funding agreement between HAB and HKFA, HKFA is required to submithalf-yearly progress reports to HAB to report the achievements against performancetargets and indicators (para. 4.45). Audit noted the following issues:(a)Performance targets and indicators not achieved. Audit examined theprogress reports submitted by HKFA in the period 2015-16 to 2018-19.Audit found that in the period, the number of under-achievements againstperformance targets and indicators ranged from 2 to 11. In 2018-19, therewere under-achievements in 9 performance targets and 3 performanceindicators. The extent of individual under-achievements ranged from 1%to 50% (para. 4.46);(b)Key targets of the consultancy report not achieved. Audit examined theachievements against the key targets set in the consultancy report onfootball development issued in December 2009, and found that up to theend of September 2019, some achievements were lower than the targets andeven lower than the achievements in 2009. For example, for the “National”Team Fédération Internationale de Football Association world ranking forthe ladies, the position in December 2009 was 60. According to the targetset in the consultancy report, the position should become 40 in 2015 and“maintain top 35” in 2020. However, up to the end of September 2019,the actual position was 77, which was lower than the position (i.e. 60) in2009 (paras. 4.48 and 4.49);(c)Need to improve the accuracy of reporting achievements against theperformance targets and indicators. In respect of a performance target(namely “increase sponsorship and advertising gross revenue”) reported inthe half-yearly progress reports, there were discrepancies between theamounts reported in the half-yearly progress reports and the amountsprovided by HKFA in August 2019. In addition, in respect of aperformance indicator (namely “average attendance per HKPL (i.e. HongKong Premier League) match”), there were discrepancies between the—xv—

Executive Summaryattendances reported in the half-yearly progress reports and those publishedon HKFA website (paras. 4.53 and 4.54);(d)Need to observe procurement requirements. Audit examined 50 items ofgoods and services procured (with amounts ranging from 440 to 1 million) in the period June 2014 to September 2019 under the ProjectPhoenix and FYSP. Audit found that for 10 items (20%), HKFA did notobtain any quotations and there was no documentation on the justificationsfor not obtaining any quotations (para. 4.58); and(e)Need for HAB to release grant payments in a timely manner. An annualgrant endorsed by FTF and approved by HAB shall be allocated to HKFAby four equal quarterly instalments payable in advance at the beginning ofeach quarter of the annual grant period. Audit found that, in the period2015-16 to 2019-20, there were late disbursements (up to 163 days late) ofthe instalment of the annual grants. Audit further noted that in 2016-17,2018-19 and 2019-20, the FTF meetings to endorse the annual grantapplications were held after the beginning (i.e. 1 April) of the grant periods.(paras. 4.61 to 4.63).Funding for other sports programmes and schemes22.Need to closely monitor the implementation of the 5-year programme (seepara. 1). The 5-year programme covers the period 1 January 2018 to 31 December2022 with a committed funding of 105 million from ASDF. The programmeprovides funding to the eight team sports (i.e. (a) baseball; (b) basketball; (c) handball;(d) hockey; (e) ice hockey; (f) softball; (g) volleyball; and (h) water polo) competingin the 2018 and 2022 Asian Games, and the 2021 Asian Winter Games. Theprogramme aims at enhancing the performance of the team sports progressively andincreasing their chances of attaining elite sports status in the future. For the stages(i.e. pre-2018 and the 2018 Asian Games from 2017 to 2019, post-2018 Asian Gamesin 2019-20, pre-2022 Asian Games from 2020 to 2022, and the 2022 Asian Games).The performance targets set for the first development stage were that the finalpositions of the teams in the 2018 Asian Games should be higher than those in the2014 Asian Games. However, Audit noted that 9 of the 12 teams that participated inthe 2018 Asian Games did not achieve the performance targets (paras. 5.2, 5.3, 5.5and 5.11).—xvi—

Executive Summary23.Scope for improvement in reporting achievements by District FootballTeams (DFTs) under DFFS. ASDF provided and HAB continues to provide fundingfor DFFS (see para. 2). In the period 2014-15 to 2018-19, about 10 million wasdisbursed to 18 DFTs unde

PART 6: GOVERNANCE OF THE SPORTS COMMISSION AND ITS COMMITTEES . Arts and Sport Development Fund (ASDF — hereinafter ASDF refers only to its sports portion) is an important source of funding for sports development in Hong . provides policy direction to the Hong Kong Sports Institute Limited, and advises on