PwC’s 37 due diligence questions to BCCI members

The BCCI­appointed audit agency PricewaterhouseCoopers (PwC) has requisitioned BCCI member units to respond to 37 financial due diligence checklist questions related to the utilization of funds provided by the Board.

According to rough estimates, the BCCI has disbursed a little over Rs. 160 crore to member units each from 2005.

After its AGM, the BCCI distributes 70 per cent of its annual media rights revenue minus production costs to all member units, except the Railways Sports Promotion Board, Services Sports Control Board, All India Universities, all of which come under the union government ambit and the two founder members, Cricket Club of India, Mumbai and National Cricket Club, Kolkata.

The BCCI has held back payments to a handful of associations, either for a reason that they have been suspended — Rajasthan Cricket Association — for defying a BCCI resolution or for not having submitted audited accounts.

As part of making itself and its units transparent and accountable, because it functions as a public body and is seen to be adhering to best practices, the BCCI at its 86th AGM here on November 9, appointed PwC to scrutinise the audited accounts of its member units before it makes full disbursement of the television subvention account and IPL subsidy.

Members receive a part of the television subvention in April. For 2014­15, the BCCI has decided to pay Rs. 31 crore — Rs. 19 crore as TV subvention/IPL subsidy and Rs. 12 crore as one­off payment from the compensation money for the cancellation of Champions League Twenty20 — to those eligible from the 25 member units.

The BCCI received Rs. 617 crore as final settlement from the Champions League Twenty20 and it has decided to share half of it, on an equitable basis with 25 members.

According to a BCCI source, associations other than Rajasthan and Jammu and Kashmir have already been paid Rs. 19 crore and that the DDCA may have been paid some money to meet the expenses of the fourth Test against South Africa. “The DDCA accounts will be a real test for the PwC,” the source said.

The PwC due diligence checklist is a preliminary and tentative list and pertains to fiscal March 2014 and March 2015. “Our auditors run this due diligence and the BCCI endeavour is only a repetition and it’s like questioning the credibility of our auditor,” said an official of a BCCI founder­member association.

“Well, it’s like this: the auditors of the State association check all the documents, whereas PwC will find out if irregular and abnormal payments are made on a particular expenditure account. For example, if a cricket ball costs Rs. 5, why a payment of Rs. 25 is made? So there is a difference,” said a Secretary of a West Zone member.

Another senior official pointed out that the alleged fraud in some associations only reinforces the necessity to establish a BCCI monitoring
system to ascertain if the money is spent properly by the member units; the case in point being that of the Jammu & Kashmir Cricket

Association, Assam Cricket Association, Delhi & District Cricket Association. The same official said that a few associations keep buying land and approach the Board for advances against the subvention money

The PwC officials spent a week in Rajkot to scrutinise the accounts of the Saurashtra Cricket Association (SCA). The agency has also done the same with regard to the Maharashtra Cricket Association and Vidarbha Cricket Association. PwC is also reported to be in correspondence with the Karnataka and Tamil Nadu State Cricket Associations.

The financial due diligence checklist questions

1.	Audited financial statements along with audit report 

2.	Excel copy of the financials stated above, linked with a detailed trial balance and supporting schedules and sub schedules/groupings and notes to accounts 

3.	Break­up of the financial statements for cricket related and non­cricket related. 

4.	Cash flow/fund flow statements. 

5.	Copies of Management letters issued by the statutory auditors. 

6.	Internal audit reports. 

7.	Minutes of meetings of the Governing Body/Board of Directors for the past two years; expenses on property with a detailed schedule of facilities owned/rented by the association and for rented properties, a schedule of property­wise rental expenses incurred during, security deposits, rent escalation, period of lease and key commercial terms, rental agreements and financial summary of the expenses. 

8.	Details of the repairs and maintenance/other expenses incurred on the properties along with comparative quotes asked for while awarding the contracts along with the summary of such contracts. 

9.	Details of payments made to players including bifurcation into various grades, incentive payouts. 

10.	Details of payments including any incentive payments made to selectors, coaches, support staff, etc and agreements with respect to the same. 

11.	Employee­wise breakdown of employee cost along with number of employees specifying designation, function and grade and specifying if any of the employees/contract staff are related to the members of the associations. 

12.	Details of consumables purchased like cricket balls, cricket equipments, etc along with details of vendor, quantities, etc. 

13.	Details of expenditure incurred for stadium maintenance including details of total matches held (local, domestic and international including IPL), contractors engaged for the same, salary of groundsmen. 

14.	Details of match hosting expenses for BCCI domestic tournaments, international and IPL matches. 

15.	Actuarial valuation certificate for gratuity, superannuation, leave encashment, etc, as on March 31, 2015 and funding status of these liabilities. 

16.	Details in respect of number of contract/temporary employees (average/closing numbers) along with the related cost and underlying agreements. 

17.	Bifurcation of the other expenses (all expenses excluding employee cost) into expenses incurred for cricket and non­cricket activities. 

18.	Schedule of legal and professional fees by each consultant, including the purpose thereof and access to the related agreements. 

19.	Details of expenditure incurred for travelling of members of the association as well as players. 

20.	If association has clubs, then details of expenditure incurred for running such clubs 

21.	Details of expenditure incurred on committee member meetings along with the underlying minutes of the matters discussed on such meetings 

22.	Details of any one­off/non recurring items Balance sheet related. 

23.	Fixed assets register updated as on March 31, 2015 and duly reconciled with the books of account and other financial records — including details of capital advances and capital commitment with basis of capitalisation and components of costs such as borrowing costs, pre­ operative expenditure, exchange fluctuation, etc. 

24.	Details of assets taken on lease/ hire purchase, if any. 

25.	Details of charges or lien created against any fixed assets through guarantees or loan arrangements. 

26.	Summary of significant planned capital expenditures for the next fiscal year and in addition, provide a listing of “in­process” capital expenditures (investment to date and how much needed to complete) 

27.	Details of cost of all capital expenditure incurred during last 3 years for new stadium construction, renovation of existing stadium and other capital expenditure, details of material vendors, agreements with such vendors and component wise list of cost incurred along with the comparative quotes asked for. 

28.	Bifurcation of fixed assets as on March 31, 2015 between assets provided by BCCI to the association and those which are procured directly by the Association. 
29.	Long term and short term loans and advances: (a) party­wise schedule of Lease and other security deposits and the ageing thereof on March 31, 2015; (b) confirmation from bank for term deposits along with rate of interest earned and whether the same is liened or available to the Company as on March 31, 2015, if any; (c) party­wise break­down of aging of all other loans and advances. 

30.	Party­wise break­down of capital advances with nature of advance and expected completion period. 

31.	Details of prepaid expenses as on March 31, 2015. 

32.	List of all bank accounts, balance confirmation and reconciliation statement (where applicable) as on March 31, 2015, indicating the purpose of bank accounts and which accounts are non­operative. 

33.	Copies of bank statements for all bank accounts, (34) detailed break­up of all current liabilities (long term as well as short term) into its main components along with age analysis viz. break­up of sundry creditors into creditors for expenses, creditors for stores/consumables and creditors for capital goods as on March 31, 2015 . 

35.	Detailed schedule for duties and taxes along with nature of due and ageing for the same as on March 31, 2015. 

36.	Details of earmarked funds as on March 31, 2015 

37.	Details of loans from related parties of members of the association.