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Recipient Compliance Audit of the

Vancouver Organizing Committee for the


2010 Olympic and Paralympic Winter
Games Contribution Agreements
Office of the Chief Audit and Evaluation Executive
Audit and Assurance Services Directorate

October 2010
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© Her Majesty the Queen in Right of Canada, 2010.


Catalogue No. CH4-147/1-2010E-PDF
ISBN: 978-1-100-17535-5
Table of Contents
Executive Summary .......................................................................................................................... 1
1. Introduction............................................................................................................................. 7
1.1 Authority for the Project............................................................................................................................ 7
1.2 Background .............................................................................................................................................. 7
2. Objectives................................................................................................................................ 9
3. Audit Scope........................................................................................................................... 10
4. Approach and Methodology ................................................................................................ 11
5. Observations and Recommendations................................................................................ 13
5.1 The funds disbursed to VANOC under the terms and conditions of the various Contribution Agreements
have been used for the intended purposes; and expenses incurred for the project funded by the
Department of Canadian Heritage are properly reported, project related and eligible for the Department
of Canadian Heritage funding................................................................................................................. 13
5.2 VANOC has complied with the terms and conditions of the Contribution Agreements, including the
reporting requirements. .......................................................................................................................... 16
Appendix A – Audit Criteria............................................................................................................ 18
Appendix B-1: Summary of Reported and Audited Amounts of the Venue Development
Program (Capital Project) .................................................................................................... 22
Appendix C-1: Explanation of Unaudited Amounts of the Venue Development Program
(Capital Project) .................................................................................................................... 23
Appendix D-1: Explanation of Audit Adjustments of the Venue Development Program
(Capital Project) .................................................................................................................... 25
Appendix B-2: Summary of Reported and Audited Amounts of the Paralympic Project ........ 26
Appendix C-2: Explanation of Audit Reclassification and Adjustments of the Paralympic
Project.................................................................................................................................... 29
Appendix B-3: Summary of Reported and Audited Amounts of the Bilingual Signage Project
................................................................................................................................................ 31
Appendix C-3: Explanation of Audit Adjustment of the Bilingual Signage Project ................. 33
Appendix B-4: Summary of Reported and Audited Amounts of the Olympic and Paralympic
Torch Relays Project............................................................................................................ 34
Appendix C-4: Explanation of Audit Adjustments of the Olympic and Paralympic Torch
Relays Project ....................................................................................................................... 35
Appendix B-5: Summary of Reported and Audited Amounts for the Olympic Opening
Ceremony Project................................................................................................................. 36
Appendix C-5: Explanation of Unaudited Amounts of the Olympic Opening Ceremony Project
................................................................................................................................................ 37
Appendix D-5: Explanation of Audit Adjustments of the Olympic Opening Ceremony Project
................................................................................................................................................ 38
Appendix B-6: Summary of Reported and Audited Amounts of the Victory Ceremonies
Project.................................................................................................................................... 39
Appendix C-6: Explanation of Audit Adjustments of the Victory Ceremonies Project............ 40
Appendix B-7: Summary of Reported and Audited Amounts of the Canada CODE Project ... 41
Appendix C-7: Explanation of Audit Adjustments of the Canada CODE Project ..................... 42
Executive Summary
Introduction

The Vancouver Organizing Committee for the 2010 Olympic and Paralympic Winter
Games (VANOC) was established on September 30, 2003. VANOC's mandate is to support
and promote the development of sport in Canada by planning, organizing, financing and
staging the 2010 Olympic and Paralympic Winter Games. VANOC is guided by a 20
member board of directors nominated by the Government of Canada, the Province of
British Columbia, the City of Vancouver, the Resort Municipality of Whistler, the
Canadian Olympic Committee, the Canadian Paralympic Committee and the local First
Nations.

A primary focus of the federal investment to the 2010 Winter Games is the $290 million
contribution to the 2010 Winter Games Venue Development Program (Capital Project). The
Department of Canadian Heritage is the sole federal government contributor to the Capital
Project; this amount has been matched by the Province of British Columbia.

In addition, the Department of Canadian Heritage’s contribution to the 2010 Olympic and
Paralympic Winter Games provided to VANOC included funding for the Paralympic
Project, Bilingual Signage Project, Olympic and Paralympic Torch Relays Project, Olympic
Opening Ceremony Project, Victory Ceremony Project and the Canada CODE 1 Project.

Prior Recipient Audits

Two recipient audits of VANOC Contribution Agreements for the Capital Project were
previously conducted by the Audit and Assurance Services Directorate of the Department
of Canadian Heritage. The first audit included a review of the expenses incurred by
VANOC for the fiscal years 2003-2004, 2004-2005 and 2005-2006 for which funds were
disbursed under three separate Contribution Agreements for $3,575,000, $3,700,000, and
$32,050,000 respectively. The second audit included a review of the expenses incurred by
VANOC for the fiscal years 2006-2007, 2007-2008 and 2008-2009 for which funds were
disbursed under three separate Contribution Agreements for $106,910,000, $108,210,000
and $24,763,000 respectively.

Current Recipient Audit

The objectives of the current recipient audit are identical for each project for which the
Department of Canadian Heritage has signed a contribution agreement with VANOC, and
these are to provide the Department’s senior management with assurance on the following:

• The funds disbursed to VANOC under the terms and conditions of the Contribution
Agreements have been used for the intended purposes;
• Expenses incurred are properly reported, project related and eligible for the

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Department of Canadian Heritage funding; and
• VANOC has complied with the terms and conditions of the Contribution
Agreements, including the reporting requirements.

The scope of the audit for each of the seven projects is described below:

Number of Period Covered by the Canadian Heritage Budgeted


Contribution Contribution Agreement (s) Contribution for Period Covered
Agreements by the Current Audit
Venue Capital April 1, 2009 to September
1 $10,792,000
Project 30, 2010
Paralympics April 1, 2007 to March 31,
2 2010
$32,000,000 2
Project
Bilingual
April 1, 2009 to September
Signage 1 30, 2010
$550,000
Project
Torch Relays April 1, 2009 to March 31,
1 2010
$15,000,000
Project
Olympic
Opening April 1, 2008 to March 31,
1 2010
$20,000,000
Ceremony
Project
Victory
April 1, 2009 to March 31,
Ceremony 1 2010
$275,000
Project
Canada April 1, 2009 to March 31,
1 2010
$400,000
CODE Project

The audit field work was performed in May and June 2010 at the Department of Canadian
Heritage Headquarters and at VANOC’s premises in Vancouver, British Columbia.

Key Findings

Capital Project, Paralympic Project, Olympic and Paralympic Torch Relays Project,
Olympic Opening Ceremony Project and Canada CODE Project

The audit team confirmed that the Recipient used the totality of the funding disbursed by
the Department of Canadian Heritage under these contribution agreements. The funds
disbursed to VANOC under the terms and conditions of the Contribution Agreements
included in the scope of the audit were eligible and were used for the intended purposes.
The expenses incurred for the projects funded were properly reported, project related and
eligible for the Department of Canadian Heritage funding.

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Two Contribution Agreements with Amendments provided funding for the fiscal years of April 1, 2007 to
March 31, 2008 and April 1, 2008 to March 31, 2010, for which $32 million in contribution was budgeted
($1.442 million, $5.062 million and the unpaid balance for each respective fiscal year).

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Bilingual Signage Project

The audit team determined that, at the time of the audit fieldwork, the recipient had not
used all of the funding disbursed by the Department of Canadian Heritage under the
Contribution Agreement. However, there remain expenses to be claimed until September
30, 2010. The audit team confirmed that the total amount of eligible expenses for which
funds were disbursed to VANOC under the terms and conditions of the Contribution
Agreements included in the scope of the audit have been used for the intended purposes.
These expenses incurred for the projects were properly reported, project related and eligible
for the Department of Canadian Heritage funding.

Victory Ceremonies Project

The audit team determined that the Recipient did not use all available funding disbursed by
the Department of Canadian Heritage under the Contribution Agreement. The Department
of Canadian Heritage will be requesting a reimbursement from VANOC. The audit team
confirmed that the total amount of eligible expenses for which funds were disbursed to
VANOC under the terms and conditions of the Contribution Agreements included in the
scope of the audit have been used for the intended purposes. These expenses incurred for
the projects were properly reported, project related and eligible for the Department of
Canadian Heritage funding.

All Seven Projects

The audit team confirmed that VANOC has complied with the reporting requirements and
with other terms and conditions of the Contribution Agreements for each project audited.

Recommendations
Given that VANOC was established to plan, organize, finance and stage the 2010 Olympic
and Paralympic Games and given that the Games have occurred, VANOC’s Games’ related
activities are in wind-down mode and should be fully completed by early 2011, no
recommendations are addressed to VANOC.

The audit team did however identify areas where management practices and processes
within the Department of Canadian Heritage could be improved for future activities. It is
recommended that:

1. The Director General, Financial Management Branch should clarify the accounting,
reconciliation and reporting requirements associated with sponsorship revenues paid
using goods and services (value in kind) and specify these requirements in the
Contribution Agreement; and

2. The Director General, Financial Management Branch should encourage Programs to


use multi year agreements for similar projects that span numerous years.

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Statement of Assurance
In my professional judgment as Chief Audit and Evaluation Executive, sufficient and
appropriate audit procedures have been conducted and evidence gathered to support the
accuracy of the opinions provided and contained in this report. The opinions are based on a
comparison of the conditions, as they existed at the time, against pre-established audit
criteria that were agreed to with management. The opinions are applicable only to the entity
examined and within the scope described herein. The evidence was gathered in compliance
with Treasury Board policy, directives, and standards on internal audit and the procedures
used to meet the professional standards of the Institute of Internal Auditors. Sufficient
evidence was gathered to provide senior management with the proof of the opinion derived
from the recipient audit.

Audit Opinions
Subject: The Venue Development Program (Capital Project)

The audit team has audited the project expenses incurred by VANOC with respect to the
Contribution Agreement for the period of April 1, 2009 to April 30, 2010 to ensure
compliance with the terms and conditions of the Contribution Agreement dated September
16, 2008 and related Amendments. The preparation of project financial reports is the
responsibility of the management of VANOC. The audit’s team responsibility is to express
an opinion on these project financial reports based on our audit.

In my opinion, the audited amount of $9,642,155 presents fairly, in all material respects,
the expenses incurred and allowable for the period of April 1, 2009 to April 30, 2010 under
the financial terms and conditions of the Contribution Agreement. Supporting information
and related comments for adjustments are provided in Appendices B-1, C-1 and D-1.
VANOC has also complied with the other terms and conditions of the Contribution
Agreements, including the reporting requirements up to April 30, 2010.

Subject: The Paralympic Project

The audit team has audited the project expenses incurred by VANOC with respect to two
Contribution Agreements, one for the fiscal year April 1, 2007 to March 31, 2008 and one
for fiscal years April 1, 2008 to March 31, 2010 to ensure compliance with the terms and
conditions of the Contribution Agreements dated March 31, 2008 and September 16, 2008
respectively and related Amendments. The preparation of project financial reports is the
responsibility of the management of VANOC. The audit team responsibility is to express an
opinion on these project financial reports based on our audit.

In my opinion, the audited amount of $1,430,478 for the fiscal year April 1, 2007 to
March 31, 2008, $2,956,522 for the fiscal year April 1, 2008 to March 31, 2009 and
$142,546,036 for the fiscal year April 1, 2009 to March 31, 2010 presents fairly, in all
material respects, the expenses incurred and allowable under the financial terms and
conditions of the Contribution Agreements. Supporting information and related comments
for adjustments are provided in Appendices B-2 and C-2. VANOC has also complied with
the other terms and conditions of the Contribution Agreements, including the reporting

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requirements.

Subject: The Bilingual Signage Project

The audit team has audited the project expenses incurred by VANOC with respect to the
Contribution Agreement for the period of April 1, 2009 to April 30, 2010 to ensure
compliance with the terms and conditions of the Contribution Agreement dated March 31,
2010 and related Amendments. The preparation of project financial reports is the
responsibility of the management of VANOC. The audit team responsibility is to express an
opinion on these project financial reports based on our audit.

In my opinion, the audited amount of $376,875 presents fairly, in all material respects, the
expenses incurred and allowable for the period of April 1, 2009 to April 30, 2010 under the
financial terms and conditions of the Contribution Agreement. Supporting information and
related comments for adjustments are provided in Appendices B-3 and C-3. VANOC has
also complied with the other terms and conditions of the Contribution Agreements,
including the reporting requirements up to April 30, 2010.

Subject: The Olympic and Paralympic Torch Relays Project

The audit team has audited the project expenses incurred by VANOC with respect to the
Contribution Agreement for the fiscal year April 1, 2009 to March 31, 2010 to ensure
compliance with the terms and conditions of the Contribution Agreement dated September
9, 2009 and related Amendments. The preparation of project financial reports is the
responsibility of the management of VANOC. The audit team responsibility is to express an
opinion on these project financial reports based on our audit.

In my opinion, the audited amount of $17,710,059 presents fairly, in all material respects,
the expenses incurred and allowable for the fiscal year April 1, 2009 to March 31, 2010
under the financial terms and conditions of the Contribution Agreement. Supporting
information and related comments for adjustments are provided in Appendices B-4 and
C-4. VANOC has also complied with the other terms and conditions of the Contribution
Agreements, including the reporting requirements.

Subject: The Olympic Opening Ceremony Project

The audit team has audited the project expenses incurred by VANOC with respect to the
Contribution Agreement for the fiscal years of April 1, 2008 to March 31, 2010 to ensure
compliance with the terms and conditions of the Contribution Agreement dated March 30,
2009 and related Amendments. The preparation of project financial reports is the
responsibility of the management of VANOC. The audit team responsibility is to express an
opinion on these project financial reports based on our audit.

In my opinion, the audited amount of $42,832,544 presents fairly, in all material respects,
the expenses incurred and allowable for the fiscal years of April 1, 2008 to March 31, 2010
under the financial terms and conditions of the Contribution Agreement. Supporting
information and related comments for adjustments are provided in Appendices B-5, C-5
and D-5. VANOC has also complied with the other terms and conditions of the
Contribution Agreements, including the reporting requirements.

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Subject: The Victory Ceremonies Project

The audit team has audited the project expenses incurred by VANOC with respect to the
Contribution Agreement for the fiscal year April 1, 2009 to March 31, 2010 to ensure
compliance with the terms and conditions of the Contribution Agreement dated February 4,
2010. The preparation of project financial reports is the responsibility of the management of
VANOC. The audit team responsibility is to express an opinion on these project financial
reports based on our audit. VANOC has also complied with the other terms and conditions
of the Contribution Agreements, including the reporting requirements.

In my opinion, the audited amount of $194,502 presents fairly, in all material respects, the
expenses incurred and allowable for the fiscal year April 1, 2009 to March 31, 2010 under
the financial terms and conditions of the Contribution Agreement. Supporting information
and related comments for adjustments are provided in Appendices B-6 and C-6.

Subject: The Canada CODE Project

The audit team has audited the project expenses incurred by VANOC with respect to the
Contribution Agreement for the fiscal year April 1, 2009 to March 31, 2010 to ensure
compliance with the terms and conditions of the Contribution Agreement dated October 28,
2009 and related Amendment. The preparation of project financial reports is the
responsibility of the management of VANOC. The audit team responsibility is to express an
opinion on these project financial reports based on our audit.

In my opinion, the audited amount of $1,065,558 presents fairly, in all material respects,
the expenses incurred and allowable for the fiscal year April 1, 2009 to March 31, 2010
under the financial terms and conditions of the Contribution Agreement. Supporting
information and related comments for adjustments are provided in Appendices B-7 and
C-7. VANOC has also complied with the other terms and conditions of the Contribution
Agreements, including the reporting requirements.

__________________________________________________
Richard Willan
Chief Audit and Evaluation Executive

Audit Team Members


Claude Bélisle - Acting Director
Joëlle Huneault – Audit Project Officer
With the assistance of external resources

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1. Introduction
1.1 Authority for the Project

The authority for this recipient audit is derived from the 2010-11 to 2014-15 Risk-Based
Multi-Year Audit Plan of the Department of Canadian Heritage which was reviewed by the
Departmental Audit Committee in February 2010 and approved by the Deputy Minister.

1.2 Background

On November 14, 2002, all parties involved in the bid for the 2010 Winter Games signed a
Multi-Party Agreement outlining the parties' roles and responsibilities. These parties were
the Minister of Canadian Heritage, the Province of British Columbia, the City of
Vancouver, the Resort Municipality of Whistler, the Canadian Olympic Committee, the
Canadian Paralympic Committee and the Vancouver 2010 Bid Corporation.

On July 2, 2003, members of the International Olympic Committee at their 115th Session
in Prague selected Vancouver as the Host City of the 2010 Winter Games.

The Vancouver Organizing Committee for the 2010 Olympic and Paralympic Winter
Games (VANOC) was established on September 30, 2003. VANOC’s mandate is to
support and promote the development of sport in Canada by planning, organizing, financing
and staging the 2010 Olympic and Paralympic Winter Games.

The 2010 Olympic and Paralympic Winter Games Federal Secretariat and the Ceremonies
and Events/Vancouver 2010 Directorate are the focal points within the Department of
Canadian Heritage for the Government of Canada's participation in the 2010 Olympic and
Paralympic Winter Games in Vancouver and Whistler. They worked closely with
VANOC, and with major Games stakeholders, to provide leadership, advice and secretariat
support to the interdepartmental and intergovernmental engagement in 2010 and related
initiatives.

Prior Recipient Audits

Two recipient audits of VANOC Contribution Agreements for the Capital Project were
previously conducted by the Audit and Assurance Services Directorate of the Department
of Canadian Heritage.

The first audit included a review of the expenses incurred by VANOC for the fiscal years of
April 1st, 2003 to March 31st, 2004, April 1st, 2004 to March 31st, 2005 and April 1st, 2005
to March 31st, 2006 for which funds were disbursed under three separate Contribution
Agreements for $3,575,000, $3,700,000, and $32,050,000 respectively. The audit found
that VANOC was well managed and had implemented good management practices. It was
also found that funds provided through Contribution Agreements were used for the
intended purposes. There were minor issues with respect to supporting documentation for
eligible expenses, reporting requirements and the accounting for expenses in the proper
fiscal period.

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The second audit included a review of the expenses incurred by VANOC for the fiscal
years of April 1st, 2006 to March 31st, 2007, April 1st, 2007 to March 31st, 2008 and April
1st, 2008 to March 31st, 2009 for which funds were disbursed under three separate
Contribution Agreements for $106,910,000, $108,210,000 and $24,763,000 respectively.
All the recommendations from the first audit had been implemented and no
recommendations were made in the second audit.

Current Recipient Audit

The current recipient audit of VANOC consists of a review of expenses incurred by


VANOC for which it has received funding for the Capital Project and for six cultural and
ceremonial projects, under Contribution Agreements as follows. The Olympic Games took
place from February 12 to 28, 2010 and the Paralympic Games took place from March 12
to 21, 2010.

Venue Development Program (Capital Project)

The Government of Canada has announced a contribution of $290 million to VANOC by


way of six Contribution Agreements covering the period April 1, 2003 to September 30,
2010 in support of the Capital Project. This amount has been matched by the Province of
British Columbia.

The Paralympic Project

The Government of Canada has announced a contribution of $32 million to VANOC by


way of two Contribution Agreements covering the fiscal years April 1, 2007 to March 31,
2010 in support of the Paralympic Winter Games.

The Bilingual Signage Project

The Government of Canada has announced a contribution of $550,000 to VANOC by way


of a Contribution Agreement covering the period April 1, 2009 to September 31, 2010 in
support of the Bilingual Signage Project. The project funded the installation of bilingual
signs at games Venues.

The Olympic and Paralympic Torch Relays Project

The Government of Canada has announced a contribution of $15 million to VANOC by


way of a Contribution Agreement covering the fiscal year April 1, 2009 to March 31, 2010
in support of the Torch Relays. The Olympic Torch Relay began in Victoria on October 30,
2009 and ended in Vancouver on February 12, 2010. The Paralympics Torch Relay
occurred from March 3 to 12, 2010.

The Olympic Opening Ceremony Project

The Government of Canada has announced a contribution of $20 million to VANOC by


way of a Contribution Agreement covering the fiscal years April 1, 2008 to March 31, 2010
in support of the Olympic Opening Ceremony, held on February 12, 2010 at BC Place
Stadium in Vancouver,

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The Victory Ceremonies Project

The Government of Canada has announced a contribution of $275,000 to VANOC by way


of a Contribution Agreement covering the fiscal year April 1, 2009 to March 31, 2010 in
support of the Victory Ceremonies Project for the presentation of medals.

The Canada CODE Project

The Government of Canada has announced a contribution of $400,000 to VANOC by way


of a Contribution Agreement covering the fiscal year April 1, 2009 to March 31, 2010 for
the Canada CODE Project.

2. Objectives
The objectives of the current recipient audit are identical for each project for which the
Department of Canadian Heritage has signed a contribution agreement with VANOC, and
these are to provide the Department’s senior management with assurance on the following:

• The funds disbursed to VANOC under the terms and conditions of the Contribution
Agreements have been used for the intended purposes;
• Expenses incurred are properly reported, project related and eligible for the
Department of Canadian Heritage funding; and
• VANOC has complied with the terms and conditions of the Contribution
Agreements, including the reporting requirements.

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3. Audit Scope
The scope of the audit for each of the seven projects is described below:

Number of Period Covered by Canadian Heritage Budgeted


Contribution the Contribution Contribution for Period Covered by the
Agreements Agreement (s) Current Audit
Venue
April 1, 2009 to
Capital 1 September 30, 2010
$10,792,000
Project
Paralympics April 1, 2007 to
2 March 31, 2010
$32,000,000 3
Project
Bilingual
April 1, 2009 to
Signage 1 $550,000
September 30, 2010
Project
Torch
April 1, 2009 to
Relays 1 March 31, 2010
$15,000,000
Project
Olympic
Opening April 1, 2008 to
1 March 31, 2010
$20,000,000
Ceremony
Project
Victory
April 1, 2009 to
Ceremony 1 March 31, 2010
$275,000
Project
Canada
April 1, 2009 to
CODE 1 March 31, 2010
$400,000
Project

The audit team did not review compliance with the Official Languages requirements of the
Contribution Agreements as it was examined and reported on by the Government of
Canada’s Official Languages Commissioner.

The audit field work was performed in May and June 2010 at the Department of Canadian
Heritage Headquarters and at VANOC’s premises in Vancouver, British Columbia.

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Two Contribution Agreements with Amendments which provided funding for the fiscal years of April 1,
2007 to March 31, 2008 and April 1, 2008 to March 31, 2010, for which $32 million in contribution was
budgeted ($1.442 million, $5.062 million and the unpaid balance for each respective fiscal year).

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4. Approach and Methodology
4.1 General Audit Approach and Methodology

The recipient compliance audit of VANOC Contribution Agreements was conducted in


compliance with Treasury Board policy, directives, and standards on internal audit and the
procedures used to meet the professional standards of the Institute of Internal Auditors.

The work performed included:


• Preliminary review of the documentation provided by Program Managers and VANOC;
• Preliminary risk assessment;
• Preparation of audit documents (audit plan, questionnaires, working papers);
• Determination of the sample size for each of the activities audited by using both
judgmental and statistical approach using the detail transaction listings provided by
VANOC;
• Communication of the samples to VANOC to allow for retrieval of supporting
documentation;
• Substantive testing of expenses selected;
• Review of VANOC’s documentation to verify the eligibility of expenses;
• Gathering of audit evidence through discussions and interviews with management and
personnel and through the review of documentation and policies provided by VANOC
to examine processes, procedures and practices in place; and
• Review of minutes of meetings, risk registers and reports.

The direct costs of the different projects were mostly audited based on a statistical approach
providing a 95% confidence level. For the smaller projects, the audit sample was
determined based on a judgemental approach ensuring a minimum of 80% audit coverage
of the total project expenses.

4.2 Special Nature of the Paralympic, Olympic Opening Ceremony and Victory
Ceremonies Projects

The audit approach and methodology was adapted to the special nature of the expenses of
the following projects, mainly due to the use of third parties and allocations.

Paralympic Project:

The audit team audited the direct expenses as well as the allocation of indirect expenses.
Subsequent to the signing of the second Contribution Agreement for the Paralympic
Project, VANOC developed an allocation methodology to apportion costs incurred in the
development of the Olympic Games which would also be of use for the Paralympic Games.
These expenses were accepted by the Department of Canadian Heritage as eligible
expenses under the Contribution Agreement.

The audit of the allocation of indirect expenses focused on the allocation methodology used
by VANOC, testing the accuracy and reasonableness of calculation of the monthly

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allocation and performing high level reconciliations of the costs centers upon which the
allocation was based.

Olympic Opening Ceremony Project

The audit team audited the expenses of the third party production organization that
produced the Ceremonies for the Games.

A large portion of the Olympic Opening Ceremony activities were managed by a third party
organization which, under a competitive process, won the contract for the production of the
Ceremonies. Most of the expenses were incurred by this organization and the accounting
was performed by this organization. VANOC had an oversight committee which monitored
their activities.

The project costs incurred by the organization, for which advances were provided by
VANOC, were audited using a random statistical sample and were reconciled with the total
fund advances provided to the organization.

In addition the audit team audited the fixed management fee paid directly to the executive
production company by VANOC.

In addition, in accordance with an agreement between VANOC and the Department of


Canadian Heritage, a percentage of the total costs incurred by the organization for all
centralized ceremonies activities (Opening Ceremony, Victory Ceremonies and Closing
Ceremony) were allocated to the Opening Ceremony. In order to ensure the eligibility of
the allocated expenses, all costs incurred for all ceremonies activities were included in the
scope of our audit and were part of the random samples for the audit.

Victory Ceremonies

The Victory Ceremonies activities were performed directly by the Provinces and Territories
and not by VANOC. Funds required to support the project expenses were transferred to the
requesting Provinces and Territories by VANOC based on Ultimate Recipient Agreements.
The expenses were incurred by the Provinces and Territories and the accounting was
performed by these Provinces and Territories. The project costs incurred by the Provinces
and Territories were audited in the following manner:

- An analytical review of the final financial and activity reports provided by the
Provinces was performed to identify the nature of the expenses incurred and identify
possible ineligible expenses. Where ineligible expenses were identified, the
supporting documentation for these expenses was requested from the Provinces;

- The audit team selected a sub-sample of extracts from the General Ledgers from the
Provinces and Territories in order to obtain an overall coverage of 80%. A
judgemental audit sample was established and the project costs were audited to
ensure their eligibility, accuracy and reasonableness; and

- The total project costs incurred were reconciled with the total funds advanced to the
different Provinces and Territories to ensure that any excess funds had been

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returned to VANOC and were not included in the Victory Ceremonies’ costs
charged to the Department under the Contribution Agreement.

5. Observations and Recommendations


5.1 The funds disbursed to VANOC under the terms and conditions of the various
Contribution Agreements have been used for the intended purposes; and
expenses incurred for the project funded by the Department of Canadian
Heritage are properly reported, project related and eligible for the Department
of Canadian Heritage funding.

Based on the evidence gathered through testing, documentation review, examination,


analysis and interviews, the audit criteria were assessed by the audit team and a conclusion
for each of the audit criteria was determined. These are summarized in Appendix A.

Capital Project, Paralympic Project, Olympic and Paralympic Torch Relays Project,
Olympic Opening Ceremony Project and Canada CODE Project

The audit team confirmed that the Recipient used the totality of the funding disbursed by
the Department of Canadian Heritage under these contribution agreements. The funds
disbursed to VANOC under the terms and conditions of the Contribution Agreements
included in the scope of the audit were eligible and were used for the intended purposes.
The expenses incurred for the projects funded were properly reported, project related and
eligible for the Department of Canadian Heritage funding.

Bilingual Signage Project

The audit team determined that, at the time of the audit fieldwork, the recipient had not
used all of the funding disbursed by the Department of Canadian Heritage under the
Contribution Agreement. However, there remain expenses to be claimed until September
30, 2010. The audit team confirmed that the total amount of eligible expenses for which
funds were disbursed to VANOC under the terms and conditions of the Contribution
Agreements included in the scope of the audit have been used for the intended purposes.
These expenses incurred for the projects were properly reported, project related and eligible
for the Department of Canadian Heritage funding.

Victory Ceremonies Project

The audit team determined that the Recipient did not use all available funding disbursed by
the Department of Canadian Heritage under the Contribution Agreement. The Department
of Canadian Heritage will be requesting a reimbursement from VANOC. The audit team
confirmed that the total amount of eligible expenses for which funds were disbursed to
VANOC under the terms and conditions of the Contribution Agreements included in the
scope of the audit have been used for the intended purposes. These expenses incurred for
the projects were properly reported, project related and eligible for the Department of
Canadian Heritage funding.

13
Analysis

The audit team examined VANOC’s accounting processes and the accounting records as
they pertain to the seven projects and the Contribution Agreements between the Department
of Canadian Heritage and VANOC.

The General Ledger of each project was reconciled to the Final Financial Reports sent to
the Department of Canadian Heritage except for the Capital Project and the Bilingual
Signage Project as these two projects are scheduled to be completed by September 30, 2010
which is after the audit field work. No material differences were identified.

5.1.1 The Venue Development Program (Capital Project)

The audit of expenses is summarized as follows (a detailed financial report is presented in


Appendix B-1). The project will only be completed September 30, 2010.

Summary of expenses

The table below summarizes the expenses that were audited (including these of prior
audits) for each respective year of the Contribution Agreements, along with the
corresponding payments made by Canadian Heritage.

Summary of Eligible Expenses and Contributions Paid by Canadian Heritage to Date


Period Covered by the Contribution Canadian Heritage
Agreements Eligible Expenses Contribution Paid
4
April 2003 to March 2006 $40,497,284 $39,325,000 5
6
April 2006 to March 2007 $239,880,077 $239,883,028
April 2009 to April 2010 $10,426,974 $10,257,141
Cumulative Totals $290,804,335 $289,465,169 7 8

The amount of eligible expenses for the period of April 2009 to April 2010 consists of an
audited amount of $9,642,155 (refer to Appendix B-1) and an unaudited amount of
$784,819 (refer to Appendix C-1).

5.1.2 The Paralympic Project

The audit of expenses by fiscal periods is summarized in a detailed financial report


presented in Appendix B-2.

4
Previous audit report dated October 2007.
5
$825,000 has been reduced from the amount in the previous audit report dated October 2007 due to an audit
adjustment in 2003-2004.
6
Previous audit report dated February 2010.
7
Given that the Capital Project is scheduled to be completed September 30, 2010, after the audit field work,
the confirmation of the equal contributions by the Provincial and Federal Governments will be evidenced in
the July 31, 2010 VANOC Financial Statements audited by VANOC’s external auditors.
8
Subsequent to the audit field work, VANOC sent an invoice for the final payment of $534,831 to the
Department of Canadian Heritage.

14
5.1.3 The Bilingual Signage Project

The audit of expenses is summarized in a detailed financial report presented in Appendix


B-3.

VANOC may claim expenses until September 30, 2010.

5.1.4 The Olympic and Paralympic Torch Relays Project

The audit of expenses is summarized in a detailed financial report presented in Appendix


B-4.

5.1.5 The Olympic Opening Ceremony Project

The audit of expenses is summarized in a detailed financial report presented in Appendix


B-5.

5.1.6 The Victory Ceremonies Project

The audit of expenses is summarized in a detailed financial report presented in Appendix


B-6.

5.1.7 The Canada CODE Project

The audit of expenses is summarized in a detailed financial report presented in Appendix


B-7.

5.1.8 Value in Kind

In return for Games marketing rights, corporate partners have provided financial support to
VANOC through cash or by supplying goods and services. Any goods and services
provided are recorded as value in kind in VANOC’s books and treated as non-cash
activities when a fair value can be reasonably estimated and when the goods and services
are consumed by VANOC in the normal course of operations and would otherwise have
been purchased.

The audit team examined the supporting documentation for the value in kind expenses that
were included on the expense invoices selected for sampling of Capital Project expenses.
These would arise when third party contractors used VANOC VIK directly in their
activities. The audit team attempted to examine the recording of the value in kind expenses
to ensure that they were not included in the eligible expenses. However, it was found that
due to timing differences and the grouping of transactions in VANOC’s financial systems,
the individual transactions in the Capital Project expense invoices could not be fully
reconciled to the total value in kind expenses amount contained in the Canadian Heritage
audit sample. Therefore, any amount relating to value in kind expenses has been presented
as unaudited amounts.

Under the Contribution Agreement, value in kind is not an eligible expense; however, there
were no specifications with regards to the reconciliation and reporting requirements of

15
expenses associated with sponsorship revenues received by VANOC using goods and
services (value in kind).

Risk assessment

The absence of accounting, reconciliation and reporting requirements of value in kind


expenses associated with sponsorship revenues paid using goods and services (value in
kind) in the Contribution Agreements increases the risks of ineligible expenses claimed to
the Department of Canadian Heritage. In addition, if the value in kind expenses are not
properly reconciled it increases the risk that other eligible expenses which are based on
value in kind expenses, such as the Marketing Royalties, become ineligible. (Please refer to
Appendix C-1)

Recommendations

It is recommended that:

1. The Director General, Financial Management Branch should clarify the accounting,
reconciliation and reporting requirements associated with sponsorship revenues paid
using goods and services (value in kind) and specify these requirements in the
Contribution Agreement.

Management Response

Agreed

5.2 VANOC has complied with the terms and conditions of the Contribution
Agreements, including the reporting requirements.

The audit team confirmed that VANOC has complied with the reporting requirements up to
April 30, 2010 and the terms and conditions of the Contribution Agreements for each
project audited.

Analysis

The audit team reviewed the timing and nature of the reports which are required in the
Contribution Agreements and which were submitted by VANOC to the Department of
Canadian Heritage. The applicable Final Financial and Final Activity Reports were
submitted by VANOC in compliance with the payment conditions in the Contribution
Agreements.

When dealing with an organization whose mandate and objectives are to plan, organize,
finance and stage a big project, the use of multi-year agreements would better align with the
multi-year lifecycle of the project. This would reduce administrative burden to the
recipient and inefficiencies and also reduce administrative time and effort to the Programs.

Reducing the administrative burden on recipients was a key recommendation made by the
federal Blue Ribbon Panel, an independent panel mandated to provide advice on how to
16
achieve strong accountability for the funds spent on contributions, while allowing for their
efficient management and effective access thereto.

Risk assessment

When a multi-year approach is not used with recipients managing projects that span over
many years, there is an increased risk of administrative burden to the recipient,
inefficiencies and increased administrative time and effort to the Programs.

Recommendations

It is recommended that:

2. The Director General, Financial Management Branch should encourage Programs to


use multi year agreements for similar projects that span numerous years.

Management Response

Agreed

17
Appendix A – Audit Criteria
Based on a combination of the evidence gathered through documentation examination, analysis
and interviews, each of the audit criteria listed below was assessed and a conclusion for the audit
criteria was determined using the following definitions:

Conclusion on Audit Criteria Definition of Opinion


Well managed or no material weaknesses noted,
1 Criteria Met - Well Controlled
controls are effective.
Criteria Met with Exceptions –
2 Requires minor improvements.
Controlled
Criteria Met with Exceptions - Requires improvement in the areas of material
3
Moderate Issues financial adjustments, some risk exposure.
Requires significant improvements in the area of
Criteria Not Met – High Impact –
4 material financial adjustments, serious risk
Significant Improvements
exposure.

The following are the audit criteria and examples of key evidence and/or observations noted which
were analyzed and against which conclusions were drawn. In cases where significant
improvements and/or moderate issues were observed, these were reported in the audit report.

Audit Criteria Conclusion Examples of Key Evidence /


on Audit Observation
Criteria

FUNDS DISBURSED ARE IN ACCORDANCE WITH THE CONTRIBUTION AGREEMENTS TERMS


AND CONDITIONS AND TREASURY BOARD POLICY ON TRANSFER PAYMENTS.
• Reconciliation of General Ledger to
1 - Adequate supporting
Criteria Met reports sent to the Department of
documentation is kept for all
with Canadian Heritage. Immaterial
expenses.
Exceptions – differences.
Controlled • VANOC tracks Venues and Operations
costs through Work Authorization
codes.
Capital Project
• Statistical sampling of 74 expenses for
the 2009-10 fiscal year.
ƒ Refer to Appendix D-1 for the
Explanation of Audit
Adjustments.
ƒ Refer to Appendix C-1 for the
Explanation of Unaudited
Amounts.
Paralympic Project
• Statistical sampling of 71 expenses for
Paralympics direct expenses for 2007-
08, 2008-09 and 2009-10 fiscal
18
Audit Criteria Conclusion Examples of Key Evidence /
on Audit Observation
Criteria
periods.
• For the Paralympics indirect expenses,
the audit focused on the allocation
methodology used by VANOC, testing
the accuracy and reasonableness of
calculation of the monthly allocation
and performing high level
reconciliations of the costs centers
upon which the allocation is based.
ƒ Refer to Appendix C-2 for the
Explanation of Audit
Adjustments.
Bilingual Signage Project
• Judgmental sampling of 4 expenses for
the period of April 1, 2009 to April 30,
2010.
ƒ Refer to Appendix C-3 for the
Explanation of Audit
Adjustments.
Olympic and Paralympic Torch Relays
Project
• Statistical sampling of 150 expenses
for the period of April 1, 2009 to
March 31, 2010.
ƒ Refer to Appendix C-4 for the
Explanation of Audit
Adjustments.
Olympic Opening Ceremony Project
• Statistical sampling of 301 expenses
for the period of April 1, 2008 to
March 31, 2010.
ƒ Refer to Appendix D-5 for the
Explanation of Audit
Adjustments.
ƒ Refer to Appendix C-5 for the
Explanation of Unaudited
Amounts.
Victory Ceremonies Project
• Judgmental selection of four Provinces
for the 2009-10 fiscal year.
ƒ Refer to Appendix C-6 for the
Explanation of Audit
Adjustments.
Canada CODE Project
• Judgmental, randomly selected,

19
Audit Criteria Conclusion Examples of Key Evidence /
on Audit Observation
Criteria
sampling of 57 expenses for the 2009-
10 fiscal year.
ƒ Refer to Appendix C-7 for the
Explanation of Audit
Adjustments.
2 - Funding provided by the Criteria Met • The expenses funded for all seven
Department of Canadian with activities are for eligible costs with the
Heritage has been applied to Exceptions – exceptions noted in appendix B-1 to B-
the eligible expenses as Controlled 7.
described in the Agreements • These expenses included payroll costs.
and in accordance with the The payroll process is adequate.
definition of “Eligible
Costs” set out in the
Agreements.
3 - Funds were disbursed Criteria Met • No questionable recurring expenses or
and allocated to eligible with any unusual expenses were observed.
expenses within the time Exceptions – • VANOC has implemented a process to
frame of each specific Controlled ensure that costs are allocated to the
contribution agreement. correct fiscal year and for recording
accrued expenses.
Capital Project
ƒ Refer to Appendix C-1 for the
Explanation of Unaudited
Amounts.
Paralympic Project
ƒ Refer to Appendix C-2 for the
Explanation of Audit
Reclassification and
Adjustments.
Bilingual Signage Project
ƒ Refer to Appendix C-3 for the
Explanation of Audit
Adjustments.

Canada CODE Project


ƒ Refer to Appendix B-6 for the
Explanation of Audit
Adjustments.
4 - The accounting records Criteria Met - ƒ VANOC has a long-term records and
of VANOC are readily Well retention plan in place which ensures
available for audit by the Controlled that key business documents are
Department of Canadian maintained and accessible for the
Heritage. Adequate required legal timeframes of seven
archiving procedures are in years after the fiscal year ending July
place to ensure that all 31, 2010.

20
Audit Criteria Conclusion Examples of Key Evidence /
on Audit Observation
Criteria
pertinent records and
accounting information will
be readily available for
future audit in accordance
with the agreements.
5 - Funds transfers Criteria Met - • Where applicable, VANOC did not
between categories of Well exceed the budget in any category by
expenses, if applicable, are Controlled 15 percent or more.
performed in accordance
with the Contribution
Agreements.
6. The terms and conditions Criteria Met - • Agreements with outside third parties
of the Agreements entered Well were in compliance.
into by VANOC with Controlled
outside third parties comply
with Annex B of the
Contribution Agreements.

THE RECIPIENT HAS COMPLIED WITH THE REPORTING REQUIREMENTS AND WITH THE
OTHER TERMS AND CONDITIONS OF THE CONTRIBUTION AGREEMENTS.
7- Project final Financial Criteria Met - • The Final Financial Reports were
Reports provided to PCH Well submitted according to the timelines.
are prepared in accordance Controlled • The reports have been signed off by
with the requirements of the someone duly authorized by VANOC.
Agreements and reconciled • The reports show all revenues and
to the yearly audited expenses.
financial statement of
VANOC.
8- Final Activity Reports Criteria Met - • The Final Activity Reports were
provided to PCH are Well submitted according to the timelines
prepared in accordance with Controlled and are in accordance with the
the requirements of the requirements of the Agreements.
Agreements.
9 - VANOC has updated its Criteria Met - • The Financial Management Policy and
Financial Management Well Procedures have been updated.
Policy and Procedures. Controlled

21
Appendix B-1: Summary of Reported and Audited Amounts of the Venue
Development Program (Capital Project)

Summary of Reported and Audited Amounts for the period April 1, 2009 to April 30, 2010
Budgeted
Amounts as Amounts Unaudited
per Canadian As per Amounts
Contribution Heritage Accounting (Appendix C-1) Adjustments Audited
Budget Line Agreement Share Records (note 1) (Appendix D-1) Amounts
$ % $ $ $ $
Richmond Speed Skating Oval 100% 206,540 1 (161,137) 1 (14,910) 30,493
Whistler Sliding Center 100% 1,621,637 2 (144,599) 2 (74,290) 1,402,748
Whistler Nordic Competition Venue 100% 2,055,331 3 (479,083) 3 (95,543) 1,480,705
Interest Adjustment 100%
Contingency 50%
BC Place Upgrades 57% 6,746,509 4 (18,300) 6,728,209
Less Legacy Equipment

Total $ $ 10,630,017 $ (784,819) $ (203,043) $ 9,642,155


10,792,000 9
Unaudited Amounts $ 784,819
Sub Total of Eligible Expenses $ 10,426,974
Contribution Paid by Canadian Heritage (Max. 10,792,000) $ 10,257,141
Canadian Heritage Contribution Outstanding $ 169,833

Note 1: These amounts represent cash royalties calculated as a percentage of the value in kind expenses consumed by VANOC. The royalties are paid to the
International Olympic Committee and to the Canadian Olympic Committee. The audit team was not able to perform a reconciliation and audit of the value in
kind expenses recorded, and therefore the marketing royalties paid, due to timing differences and the grouping of transactions in VANOC’s financial system.

9
The Contribution Agreement does not specify the budgeted amounts as per individual budget line.

22
Appendix C-1: Explanation of Unaudited Amounts
of the Venue Development Program (Capital
Project)
Corporate partners can provide financial support to the Games either through cash or by
supplying goods and services recorded as value in kind in VANOC’s books and treated as
non-cash activities. Value in kind goods and services are recognized by VANOC in the
accounting records as “value in kind expenses” when a fair value can be reasonably
estimated and when the goods and services are consumed by VANOC in the normal course
of operations and would otherwise have been purchased.

The audit team examined the supporting documentation for the value in kind expenses that
were included on the expense invoices selected for sampling of Capital Project expenses.
The audit team then examined the recording of the value in kind expenses in VANOC’s
financial system to ensure that they were not included in the eligible expenses submitted to
Canadian Heritage. It was found that the individual transactions in VANOC’s detail
transaction listing could not be fully reconciled to the total value in kind expenses amount
reported to Canadian Heritage. Therefore, amounts relating to value in kind expenses are
still eligible expenses, but they have been classified as unaudited amounts.

In this instance, the unaudited amounts represent marketing royalties paid in cash to the
International Olympic Committee as per the Host City Contract and to the Canadian
Olympic Committee as per the Marketing Plan Agreement. The marketing royalties are
calculated as a percentage of the value in kind expenses recorded. As the value in kind
expenses could not be reconciled and audited by the audit team due to timing differences
and the grouping of transactions in VANOC’s financial system, these cash marketing
royalties are identified as unaudited.

1. Richmond Speed Skating Oval

Description $
Allocation of marketing royalties based on value in kind expense. 168,592
Adjustment made to the allocation. (7,455)
Total Unaudited Amount - Richmond Speed Skating Oval $ 161,137

2. Whistler Sliding Center

Description $
Allocation of marketing royalties based on value in kind expenses. 145,466
Adjustment made to the allocation. (867)
Total Unaudited Amount - Whistler Sliding Center $ 144,599

23
3. Whistler Nordic Competition Venue

Description $
Allocation of marketing royalties based on value in kind expenses. 481,956
Adjustment made to the allocation. (2,873)
Total Unaudited Amount - Whistler Nordic Competition Venue $ 479,083

24
Appendix D-1: Explanation of Audit Adjustments of
the Venue Development Program (Capital Project)
1. Richmond Speed Skating Oval

Description $
Correction of an adjustment entry made in error to the marketing royalties
calculation. $(14,910)

2. Whistler Sliding Center

Description $
Correction of an adjustment entry made in error to the marketing royalties
calculation. (1,734)
The Recipient claimed accrued expenses on April 30, 2010 for costs that
were not supported by appropriate documentation. (56,550)
The Recipient claimed expenses which no support documentation was (16,006)
available.
Total adjustment Whistler Sliding Center $(74,290)

3. Whistler Nordic Competition Venue

Description $
Correction of an adjustment entry made by error to the marketing royalties
calculation. (5,746)
The Recipient claimed costs for which no support documentation was
available. (4,765)
The Recipient claimed costs that were partially not supported by appropriate
documentation. (85,032)
Total adjustment Whistler Nordic Competition Venue $(95,543)

4. BC Place Upgrades

Description $
The Recipient claimed costs that were partially not supported by appropriate
documentation. $(18,300)

25
Appendix B-2: Summary of Reported and Audited Amounts of the
Paralympic Project

Summary of Reported and Audited Amounts for the fiscal year April 1, 2007 to March 31, 2008
Budgeted
Amounts as per Amounts
Contribution As per
Agreement for Accounting
Total Records for Reclassification Adjustments Audited
Budget Line Project the fiscal year (Appendix C-2) (Appendix C-2) Amounts
$ $ $ $ $
Revenue, Marketing and Communications 5,759,000 76,823 76,823
Sport and Games Operations 17,374,000 336,968 336,968
Service and Games Operations 43,226,000 160 160
Technology 22,428,000 17,738 17,738
Workforce and Sustainability 3,475,000 390 390
Finance 538,000 99 99
Total Functional Paralympic Expenses $ 92,800,000 $ 432,178 $0 $0 $ 432,178
IPC Marketing Rights Royalties 4,320,000 998,300 998,300
Total Paralympic Expenses $ 97,120,000 $ 1,430,478 $0 $0 $ 1,430,478
Contribution Paid by Canadian Heritage (Max. $1,442,000) $ 468,000
Canadian Heritage Contribution Maximum Achieved in Subsequent Years $0

26
Summary of Reported and Audited Amounts for the fiscal year April 1, 2008 to March 31, 2009
Budgeted
Amounts as
per Amounts
Contribution As per
Agreement for Accounting
Total Records for Reclassification Adjustments Audited
Budget Line Project the fiscal year (Appendix C-2) (Appendix C-2) Amounts
$ $ $ $ $
Revenue, Marketing and Communications 6,794,816 59,683 59,683
Sport and Games Operations 18,944,450 1,336,640 1 234,256 1 (19,858) 1,551,038
Service and Games Operations 45,438,870 35,298 35,298
Technology 22,192,469 2,860,995 2 (2,818,348) 42,647
Workforce and Sustainability 7,559,188 39,336 39,336
Finance 4,683,895 1,020 1,020
Total Functional Paralympic Expenses $ 105,613,688 $ 4,332,972 $ 234,256 $ (2,838,206) $ 1,729,022
IPC Marketing Rights Royalties 4,453,087 1,227,500 1,227,500
Total Paralympic Expenses $ 110,066,775 $ 5,560,472 $ 234,256 $ (2,838,206) $ 2,956,522
Contribution Paid by Canadian Heritage (Max. $5,062,000) $ 5,062,000
Canadian Heritage Contribution Maximum Achieved in Subsequent Years $ 2,105,478

27
Summary of Reported and Audited Amounts for the fiscal year April 1, 2009 to March 31, 2010
Budgeted Amounts
Amounts as Amounts As per Amounts
per As per Accounting As per
Contribution Accounting Records Accounting
Agreement Records Indirect Records for
for Total Direct Expenses the fiscal Reclassification Adjustments Audited
Budget Line Project Expenses (note 1) year (Appendix C-2) (Appendix C-2) Amounts
$ $ $ $ $ $ $
Revenue, Marketing and
Communications 6,794,816 211,874 6,656,380 6,868,254 6,868,254
Sport and Games
Operations 18,944,450 3,100,589 24,732,733 27,833,321 1 (234,256) 1 (19,344) 27,579,721
Service and Games
Operations 45,438,870 13,981,596 67,514,383 81,495,979 2 (5,740,485) 75,755,494
Technology 22,192,469 227,450 23,802,395 24,029,845 24,029,845
Workforce and
Sustainability 7,559,188 104,254 5,359,883 5,464,137 5,464,137
Finance 4,683,895 3,163 2,640,177 2,643,340 2,643,340
Revenue 0 0 90 90 90
Total Functional
Paralympic Expenses $ 105,613,688 $ 17,628,926 $ 130,706,041 $ 148,334,966 $ (234,256) $ (5,759,829) $ 142,340,881
IPC Marketing Rights
Royalties 4,453,087 1,069,600 0 1,069,600 1,069,600
Retention Expenses 0 0 (864,445) (864,445) (864,445)
Total Paralympic
Expenses $ 110,066,775 $ 18,698,526 $ 129,841,596 $ 148,540,121 $ (234,256) $ (5,759,829) $ 142,546,036
Contribution Paid by Canadian Heritage (Maximum of $26,470,000) $ 24,612,677
Canadian Heritage Contribution Maximum Achieved in Multi Years $30,000,000

Note 1: The audit of the 5% allocation was limited to the allocation methodology used by VANOC, testing the accuracy and reasonableness of calculation
of the monthly allocation and performing high level reconciliations of the costs centers upon which the allocation was based since the overall costs of the
games are subject to an annual external audit.

28
Appendix C-2: Explanation of Audit Reclassification
and Adjustments of the Paralympic Project
Fiscal year April 1, 2008 to March 31, 2009

Audit Reclassification

1. Sport and Games Operations

Description $
The Recipient claimed expenses prior to the effective date of the $ 234,256
agreement.

Audit Adjustments

1. Sport and Games Operations

Description $
The Recipient claimed an expense that was coded in Paralympic by error. $ (19,858)

2. Technology

Description $
The Recipient claimed an expense that was value in kind received from a
Paralympic corporate sponsor. Therefore, the amount is not eligible as per
the Contribution Agreement. $ (2,818,348)

Fiscal year April 1, 2009 to March 31, 2010

Audit Reclassification

1. Sport and Games Operations

Description $
The Recipient claimed expenses prior to the effective date of the $ (234,256)
agreement.

29
Audit Adjustments

1. Sport and Games Operations

Description $
The Recipient claimed an expense that was not supported by appropriate
documentation. $ (19,344)

2. Service and Games Operations

Description $
The Recipient claimed an expense which the audit team found should be a
deduction to revenue. Therefore, the amount is not eligible under the (165,000)
Contribution Agreement.
The Recipient claimed an expense that was reversed in the Olympic games
by error instead of the Paralympic games. (128,000)
The Recipient claimed an expense that was not supported by appropriate
documentation. (391,078)
The Recipient claimed some direct expenses charged to the Paralympic
games that were also included in the calculation for the indirect costs
allocation to the Paralympic games. Therefore the Indirect costs are (5,056,407)
adjusted.
Total adjustment for Service and Games Operations $ (5,740,485)

30
Appendix B-3: Summary of Reported and Audited Amounts of the Bilingual
Signage Project
Summary of Reported and Audited Amounts for the period April 1, 2009 to April 30, 2010
Budgeted
Amounts as per Budgeted Amounts
Contribution Canadian As per
Agreement for Heritage Accounting Adjustments Audited
Budget Line Total Project Contribution Records (Annex C-3) Amounts
$ $ $ $ $
Richmond Olympic Oval 287,509 287,509 105,422 105,422
UBC Thunderbird Arena 7,062 7,062 7,062 7,062
Vancouver Olympic Centre / Vancouver Paralympic
Centre 7,062 7,062 7,062 7,062
The Whistler Sliding Centre 7,062 7,062 7,062 7,062
Olympic Village Whistler / Paralympic Village
Whistler 7,062 7,062 7,062 7,062
Whistler Olympic Park / Whistler Paralympic Park 7,062 7,062 7,062 7,062
Whistler Athletes Centre 8,079 8,079 8,079 8,079
Whistler Creekside 7,062 7,062 7,062 7,062
Pacific Coliseum 7,062 7,062 7,062 7,062
Killarney Centre 7,062 7,062 7,062 7,062
Trout Lake Centre 7,062 7,062 7,062 7,062
Cypress Mountain 7,062 7,062 7,062 7,062
Olympic Village Vancouver / Paralympic Village
Vancouver 8,079 8,079 8,079 8,079

31
Whistler Media Centre 8,079 8,079 8,079 8,079

Budgeted
Amounts as per Budgeted Amounts
Contribution Canadian As per
Agreement for Heritage Accounting Adjustments Audited
Budget Line Total Project Contribution Records (Annex C-3) Amounts
$ $ $ $ $
BC Place 7,062 7,062 7,062 7,062
GM Place 7,062 7,062 7,062 7,062
General Design / Layout / Artwork / Contingency 153,510 153,510 338,649 1 (173,125) 165,524
Total $ 550,000 $ 550,000 $ 550,000 $ (173,125) $ 376,875
Contribution Paid by Canadian Heritage (Max. $550,000) $ 495,000
Canadian Heritage Contribution Exceeding the Total Audited Amount $ (118,125)

32
Appendix C-3: Explanation of Audit Adjustment of the
Bilingual Signage Project
1. General Design / Layout / Artwork / Contingency

Description $
The Recipient claimed an accrued expense that was partially not supported by
appropriate documentation. $(173,125)

33
Appendix B-4: Summary of Reported and Audited Amounts of the Olympic
and Paralympic Torch Relays Project
Summary of Reported and Audited Amounts for the fiscal year April 1, 2009 to March 31, 2010
Budgeted Amounts as per Budgeted Amounts
Contribution Agreement Canadian As per
for Eligible Expense Heritage Accounting Adjustments Audited
Budget Line Categories Contribution Records (Appendix C-4) Amounts
$ $ $ $ $
Operational Costs 6,985,287 4,700,000 4,055,718 1 (67,767) 3,987,951
Promotional Expenses 5,448,632 4,100,000 7,149,234 2 (274,098) 6,875,136
Administrative & Staffing Costs 908,451 500,000 590,276 3 (7,600) 582,676
Function Staffing Costs 4,513,346 3,100,000 3,804,296 3,804,296
National Choral Initiative 2,600,000 2,600,000 2,460,000 2,460,000
Total $ 20,455,716 $ 15,000,000 $ 18,059,524 $ (349,465) $ 17,710,059
Contribution Paid by Canadian Heritage (Max. $15,000,000) $ 15,000,000
Canadian Heritage Contribution Maximum Achieved $0

34
Appendix C-4: Explanation of Audit Adjustments of the
Olympic and Paralympic Torch Relays Project
1. Operational Costs

The Recipient claimed expenses incurred in March 2009 prior to the effective
date of the agreement. (2,020)
The Recipient claimed expenses that included a Goods and Services Tax
reimbursement of $2,119. (2,119)
The Recipient claimed an expense that was not supported by appropriate
documentation. (8,251)
The Recipient claimed expenses which were related to services provided after
the effective date of the activity. (55,373)
Total adjustments – Operational Costs: $ (67,767)

2. Promotional Expenses

Description $
The Recipient claimed expenses which part was related to services provided
prior to the effective date of the agreement. (66,145)
The Recipient claimed an expense that was not supported by appropriate
documentation. (207,953)
Total adjustments – Promotional Expenses: $ (274,098)

3. Administrative & Staffing Costs

Description $
The Recipient claimed expenses that were deemed not eligible under this $ (7,600)
activity.

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Appendix B-5: Summary of Reported and Audited Amounts for the
Olympic Opening Ceremony Project
Summary of Reported and Audited Amounts for the fiscal years April 1, 2008 to March 31, 2010

Budgeted
Amounts as Amounts
per Budgeted As per Unaudited
Contribution Canadian Accounting Amounts
Agreement for Heritage Records (Appendix C- Adjustments Audited
Budget Line Total Project Contribution (Note 1) 5) (Appendix D-5) Amounts
$ $ $ $ $ $
Operational Costs & 1,458,752 800,000 1,438,380 1 (81,971) 1 (52,844) 1,303,565
Overhead
Event Production &
Management 5,133,164 3,400,000 4,100,454 1 (247,465) 2 (294,130) 3,558,859
Ceremonies Creative Costs 19,655,308 15,800,000 37,998,787 1 (538) 3 (358,103) 37,640,146
Total $ 26,247,224 $ 20,000,000 $ 43,537,621 $ (329,974) $ (705,077) $42,502,570
Unaudited Amounts $329,974
Sub Total of Eligible Expenses $42,832,544
Contribution Paid by Canadian Heritage (Max. 20,000,000) $20,000,000
Canadian Heritage Contribution Maximum Achieved $0

Note 1: In accordance with an agreement between VANOC and PCH, 70% of the total costs incurred for all ceremonies activities
(Opening Ceremony, Victory Ceremonies and Closing Ceremony) were to be allocated to the Opening Ceremony for financial
reporting purposes. The total project costs above represent 70% of the total cash expenses submitted by VANOC for all ceremonies
activities. This allocation was reviewed and approved by Program Management.

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Appendix C-5: Explanation of Unaudited Amounts of the
Olympic Opening Ceremony Project
The Opening Ceremony activities were contracted to a third party production company responsible
for the production of all Olympic ceremonies activities. During the audit, the audit team noted
instances where project expenses such as salary costs, travel expenses and office expenses had been
reimbursed to the Australian division of the production company. These expenses were reimbursed
based on expense reports provided by the Australian division of the production company. However,
documents required to audit the expenses claimed were not located in Canada. Therefore, we were
unable to audit a total of $471,391 in expenses claimed by the Australian division. These expenses
are presented as unaudited amounts in Appendix B-5. These unaudited amounts did not have an
impact on the Department of Canadian Heritage contribution paid to VANOC.

Reference Description $
GL Total expenses from the Australian division reported under the
Operational Costs & Overhead budget line based on the accounting
ledger information provided by the Recipient.
Unaudited Amount: $117,102 x 70% 81,971
GL Total expenses from the Australian division reported under the Event
Production & Management budget line based on the accounting ledger
information provided by the Recipient.
Unaudited Amount: $353,521 x 70% 247,465
GL Total expenses from the Australian division reported under the
Ceremonies Creative Costs budget line based on the accounting ledger
information provided by the Recipient.
Unaudited Amount: $768 x 70% 538
$ 329,974

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Appendix D-5: Explanation of Audit Adjustments of the
Olympic Opening Ceremony Project
1. Operational Costs & Overhead

Description $
The Recipient claimed an expense incurred in April 2010, after the ending date
of the agreement. (50,438)
The Recipient claimed an expense that was not supported by appropriate
documentation. (25,053)
Total Adjustments - Operational Costs & Overhead $ (75,491)
Total adjustments related to Opening Ceremony (70%) $ (52,844)

2. Event Production & Management

Description $
The Recipient claimed a larger amount of the actual expenses based on the
supporting documentation. (124,984)
The Recipient claimed an accrued expense in March 2010 that was not supported
by appropriate documentation. (295,202)
Total Adjustments - Event Production & Management $ (420,186)
Total adjustments related to Opening Ceremony (70%) $ (294,130)

3. Ceremonies Creative Costs

Description $
The Recipient claimed expenses that were not supported by appropriate
documentation. (49,211)
The Recipient claimed expense incurred in April 2010 after the effective date of (108,730)
the agreement.
The Recipient claimed an accrued expense in March 2010 that was not supported
by appropriate documentation. (353,634)
Total Adjustments – Ceremonies Creative Costs $ (511,575)
Total adjustments related to Opening Ceremony (70%) $ (358,103)

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Appendix B-6: Summary of Reported and Audited Amounts of the Victory
Ceremonies Project
Summary of Reported and Audited Amounts for the fiscal year April 1, 2009 to March 31, 2010
Budgeted Amounts
Budgeted Amounts as per Canadian As per
Contribution Agreement for Heritage Accounting Adjustments Audited
Budget Line Total Project Contribution Records (Annex C-4) Amounts
$ $ $ $ $
Province / Territory 225,116 225,116 151,810 1 (7,308) 144,502
Administrative fee - VANOC 15,000 15,000 15,000 15,000
Delivery fee 35,000 35,000 35,000 35,000
Total $ 275,116 $ 275,116 $ 201,810 $ (7,308) $ 194,502
Contribution Paid by Canadian Heritage (Max. $275,116) $ 201,810
Canadian Heritage Contribution Exceeding the Total Audited Amount $ (7,308)

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Appendix C-6: Explanation of Audit Adjustments of the
Victory Ceremonies Project

1. Province / Territory

Description $
One of the Provinces’ claimed a larger amount than the actual expenses based on $ (7,308)
the supporting documentation.

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Appendix B-7: Summary of Reported and Audited Amounts of the Canada
CODE Project
Summary of Reported and Audited Amounts for the fiscal year April 1, 2009 to March 31, 2010
Budgeted
Amounts as per
Contribution Budgeted Amounts
Agreement for Canadian As per
Eligible Expense Heritage Accounting Adjustments Audited
Budget Line Categories Contribution Records (Annex C-7) Amounts
$ $ $ $ $
Production Management 205,000 50,000 194,781 194,781
Communication and Outreach 433,750 125,000 315,288 1 (9,334) 305,954
Infrastructure and Technology 747,000 225,000 647,239 2 (82,416) 564,823
Total $ 1,385,750 $ 400,000 $ 1,157,308 $ (91,750) $ 1,065,558
Contribution Paid by Canadian Heritage (Max. $400,000) $ 400,000
Canadian Heritage Contribution Exceeding the Total Audited Amount 0

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Appendix C-7: Explanation of Audit Adjustments of the
Canada CODE Project
1. Communication and Outreach

Description $
The Recipient claimed expense incurred prior to the effective date of the
agreement. $(9,334)

2. Infrastructure and Technology

Description $
The Recipient claimed expense incurred prior to the effective date of the
agreement. $(82,416)

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