Education

Making BCCI accountable

MOHAN R. LAVI | Updated on November 21, 2017

The BCCI can silence its critics if it publishes its audited accounts on its Web site.   -  PTI

Financial statements of BCCI would provide information on how the income from match-days, sponsorship, and distribution rights has been earned and how it has been spent.

Probably expecting the momentum generated by the Jan Lokpal Bill to continue, a Sports Development Bill was tabled with the specific objective of cleaning up all sports federations in the country. Though all sports federations have had their share of negative publicity, the debate surrounding the withdrawal of the Bill in Parliament centred round the Right to Information (RTI) Act and the ostensibly furtive functioning of the Board of Control for Cricket in India (BCCI). BCCI is registered as a society under the Societies Registration Act – an Act whose origins can be traced to the British days.

BCCI

The Web site of the BCCI has been designed almost on similar lines as the England and Wales Cricket Board (ECB). The similarity stops at the Annual Report section. While the ECB site gives us an Annual Report, the BCCI site nonchalantly says “coming soon”. This contradicts the statement of a member of the BCCI that all the financial statements of the BCCI are in public domain.

The financial statements of ECB have been prepared in accordance with Financial Reporting Standards (FRS) of the United Kingdom, and have been audited by a leading firm of auditors. The ECB is neither as cash-rich nor as profitable as its Indian counterpart, having incurred a loss of £569,000 for the year ended December 2010.

The Commonwealth Games have shown us what can go wrong when major sports events are conducted. The Indian Premier League (IPL) has had its share of controversies, all of which seem to have been settled out of the books. Some time ago, a Public Interest Litigation requesting that the accounts of the BCCI be audited by the Comptroller and Auditor General of India (CAG) was turned down by the Supreme Court.

ACCOUNTING CONCERNS

Though accounting standards in India have evolved in the course of time and we have a separate set of Accounting Standards (AS) as per International Financial Reporting Standards (IFRS), application of these standards are primarily focused on public and private companies, and not entities such as the BCCI, that are registered under the Societies Registration Act.

Unlike the International Accounting Standards Board, India has not yet drafted accounting standards for small and medium enterprises.

Applicability of accounting standards is split into three levels with a graded system of applicability. All major accounting standards apply to all entities, with relaxations in disclosure norms for some entities.

It is well-known that BCCI makes lots of money and does not have to shell out a third of it in taxes, thereby leaving it with a much larger surplus than a company with a similar turnover would report. Capital expenditure would be minimal, since most grounds are owned by the Government and are rented out. Investments would be the largest item on the assets side of the BCCI Balance-Sheet.

Though it would be futile to expect application of the standard on financial instruments to BCCI, as they are yet to be applied to companies itself, the market value of investments would be a key value. The financial statements of BCCI would provide information on how the income, from match-days, sponsorship, distribution rights etc, has been earned and how it has been spent. In addition, information on tangible and intangible assets would be reported.

ANNUAL REPORTS

Another important reporting requirement that would provide insight into the working of the BCCI would be Related Party Transactions. Some information on the complex web of franchisee and other agreements that comprise the IPL would be forthcoming if transactions with related parties are disclosed.

The Government should consider mandating accounting standards to all entities, irrespective of their form, based on pre-defined benchmarks of turnover or asset-size.

Sketchy and minor amendments to historical acts such as the Societies Registration Act enable entities, such as the BCCI, to keep their accounts private.

If the BCCI is as clean as snow as has been projected, there is no harm in publishing the annual report.

The Sports Development Bill proposes a mandatory furnishing of the financial statements and a penalty for not doing so. For a country that loves its cricket, this is the least that the BCCI can do. BCCI can afford the best of auditing firms, if it does not already have one.

The only way it can silence its critics would be to publish its audited accounts on its Web site.

Only then will the tag ‘Board for Controversies and Compromises in India' be removed. “If there isn't anything to hide, why hide?”

(The author is a Bangalore-based chartered accountant.)

Published on September 08, 2011

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