THE DISTRIBUTION OF LOTTERY FUNDS BY THE
ENGLISH SPORTS COUNCIL
MAKING
GRANT
PAYMENTS
25. One of the Sports Council's main controls to
safeguard the use of lottery funds is that payments are only made
on receipt of claims showing expenditure incurred. However, the
National Audit Office found that in five of twenty cases examined,
claims had been approved for payment in respect of invoices which
merited further investigation. The main criteria applied seemed
to be whether the amount claimed was within the overall level
of grant awarded.[22]
We asked the Sports Council what action they had taken to strengthen
their controls over the payment of lottery grants. The Sports
Council maintained that invoices had in fact been checked, but
that this had not been evidenced in the sense of case officers
actually signing off that the invoice had been checked. The Sports
Council told us that they had put two things in place. All case
officers and senior case officers now had to sign for the fact
that they had checked invoices against applications and that the
invoices were correct both in terms of content and amount. Secondly,
the compliance team provided an additional check to make sure
that this had been done.[23]
26. We pressed the Sports Council on the question
of invoices not being checked, by referring to case studies in
the National Audit Office report.[24]
The National Audit Office had found one case where, after the
work was said to be largely complete, a final invoice, representing
30 per cent of the total project cost, was received by the Sports
Council. This invoice gave no details of the work carried out
and brought the amount claimed exactly to the amount of the lottery
award approved by the Sports Council.[25]
We asked the Sports Council whether they were satisfied that this
did not amount to fraud. The Sports Council admitted that they
were not at all satisfied with the way they had handled this particular
project and had asked their management audit team to have a look
at it. They added that the outcome of this project was very good
and that the club was providing a very good community facility.[26]
27. The Committee also noted one case where the construction
work had been carried out by a firm owned by the secretary of
the club, which we considered was a breach of best practice and
a clear conflict of interest. We again asked the Sports Council
if this would not be close to fraud. They told us that it was
a feature of small voluntary clubs that members offered to do
things at cost price or cheaper, but that they had taken the view
that the club must go out to tender in all circumstances. They
told us that their checking of invoices had been strengthened
considerably and the checking that tendering procedures had been
followed had been built into the monitoring procedures which they
had adopted.[27]
28. Where a project comes in under budget, the amount
of grant needed by the applicant to cover the difference between
the project cost and the level of partnership funding will be
lower. Although the Sports Council can seek to recover the full
amount of any underspend, they only act where the underspend is
significant (five per cent or more). Their practice is to consider
whether the unspent grant can be used to enhance the project and,
if so, they would not seek to reduce the award. The National Audit
Office's report reviewed four cases where the underspend was greater
than five per cent and found that the Sports Council's approach
had not been entirely consistent and that much had depended on
the positions taken by the applicant and the Sports Council. In
one case, the Sports Council did not identify an underspend which
amounted to seven per cent of the approved project costs.[28]
29. We questioned the Sports Council over their attitude
to underspends and whether they should be more critical in terms
of the return of underspends. The Sports Council told us that
the presumption was that they would take the money back, though
they would look at it on a case by case basis. In some cases,
they made a conscious decision to allow the applicant to retain
the funds or to allow them to spend the money to enhance the project.
They recognised that they had a responsibility not just to the
applicant they were dealing with at that point, but to the hundreds
of others coming through the system. They said that in 49 cases,
adding up to about £800,000 where there had been such an
underspend, they had taken that money back to be recirculated
into other projects.[29]
Conclusions
30. Robust controls over the payment of lottery monies
are essential in order to safeguard lottery funds. We are thus
deeply concerned that the Sports Council have undertaken little
detailed checking of invoices before making payments and that
the main check made is that the amount claimed does not exceed
the level of lottery money awarded. In five of twenty cases examined
by the National Audit Office, the Sports Council approved claims
for payment in respect of invoices which merited further investigation.
We note the Sports Council's view that invoices are checked and
that this is just not evidenced, but consider that the cases reported
by the National Audit Office indicate that the weaknesses in control
are more fundamental than this. We recognise that the Sports Council
have since acted to strengthen their controls over the checking
of invoices. We recommend that all claims for payment of grant
be thoroughly checked against supporting documents and against
the project specifications and approved cost and that in future
this is properly evidenced on the documentation.
31. We are concerned about the Sports Council's approach
towards projects that underspend and which therefore need less
grant than originally envisaged. The Sports Council have not been
consistent in the way they handled such cases and, in one case
examined by the National Audit Office, the Sports Council had
not identified an underspend of seven per cent of the approved
project cost. We note that the Sports Council only pursue significant
underspends and, even then, first consider whether the underspent
grant can be used by the applicant to enhance the project. We
note the Sports Council's view that there is a presumption of
recovery, but that every case should be looked at individually.
We look to the Sports Council to take a more robust and consistent
line with applicants on the recovery of underspends.
22 C&AG's report (HC 617 of Session 1997-98), paras
4.5, 4.6, 4.8 Back
23
Q5 Back
24
Q60 Back
25
C&AG's report (HC 617 of Session 1997-98, para 4.8 (case
study 13) Back
26
Q60 Back
27
Qs 61-62 Back
28
C&AG's report (HC 617 of Session 1997-98), paras 4.11-4.14
(case study 17) Back
29
Qs 40-41 Back
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