Improving accountability in sports – Lessons from funding reviews of local federations

Local federations play a key role in sport development, turning international ambitions into action at the national and community levels. To support them, international sports governing bodies allocate significant funding to programmes aimed at growing participation, nurturing talent, and ensuring sustainable development of sports. These programmes are undoubtedly important to the international development of sports, however, independent reviews of how these funds are managed and utilised sometimes reveal issues that threaten the effectiveness, transparency, and accountability of the funded programmes.

Building on the insights shared in our previous article on the importance of reviewing the funds given by international sports governing bodies to local federations, this piece shifts focus to explore the critical lessons learned from the review exercise.

Understanding these common challenges—and how to address them—is critical for international sports governing bodies as well as local federations, to ensure that financial resources fulfil their intended purpose and maximise impact.

1. Poor Record Keeping

One of the most prevalent issues identified during funding reviews is inadequate supporting documentation to evidence how funds were spent. Local federations often lack a proper accounting system for recording financial transactions, resulting in incomplete or disorganised documentation. This includes missing invoices, incomplete receipts, poorly maintained records, lack of contracts or agreements and a lack of delivery or service notes to evidence that the goods or services have effectively been received. Causes include limited administrative capacity, lack of training and an absence of standardised procedures.

Poor record keeping not only compromises transparency but also inhibits the ability to verify that funds were utilised as intended. In the worst cases, poor record keeping masks fraudulent activities or unauthorised spending.

Recommendations:

Implement clear record-keeping policies and standardised filing systems.
Adopt digital systems for storing and tracking financial records.
Train staff on the importance of maintaining an accurate paper and digital audit trail.
Conduct regular internal reviews to detect gaps early.

2. Gaps in Finance Team Capabilities and Absence of Finance Policies

Some local federations operate without skilled finance staff or documented finance policies. Without trained finance professionals, critical financial controls and regulatory compliance requirements can be neglected and this creates a significant risk of errors, inefficiencies, or fraud. The absence of formalised financial policies or procedures can leave federations without guidance on key areas like expenditure authorisation limits, cash management procedures, procurement controls, or travel and allowances policies.

Recommendations:

Hire or designate qualified finance professionals with clear roles and responsibilities.
Develop comprehensive financial policies and procedures tailored to the federation’s size and complexity and ensure they are actively implemented.
Provide ongoing training and capacity building aligned with international standards.
Establish oversight committees to monitor policy adherence.

3. Lack of Budgeting and Poor Planning

Where local federations lack robust financial planning processes, budgets can be prepared hastily or without sufficient detail, failing to link expenditures clearly to programme objectives. This can lead to cost overruns, overspending beyond approved limits or underspending in key areas. Overspending can compromise other projects or result in penalties from international governing bodies, including withholding of future funds. Additionally, without regular budget monitoring, federations can struggle to adjust spending in response to changing circumstances.

Recommendations:

Require programme-specific, itemised budgets aligned with approved activities.
Implement rolling budget forecasts that can be updated regularly.
Introduce real-time budget monitoring systems to flag overspending early.
Encourage use of budget variance reports to understand and correct discrepancies.

4. Issues relating to Procurement Procedures

Funding reviews often reveal that local federations either lack documented procurement policies or fail to follow them consistently, resulting in federations awarding contracts or making purchases without competitive bidding or documented evaluation of offers, increasing the risk of inefficiency or corruption. This can stem from a lack of knowledge, perceived urgency, or weak governance culture.

Without clear policies mandating competitive bidding, conflict of interest declarations, or documented approvals, procurement decisions may be influenced by personal relationships or favoritism. This can lead to overpricing, substandard goods or services, and reputational damage. Absence of proper procurement records further complicates verification and accountability during reviews of funds.

Recommendations:

Develop and enforce transparent procurement policies covering thresholds, bidding processes, and vendor selection criteria.
Mandate documentation of all procurement decisions and supplier contracts, using procurement templates and checklists to guide federation staff.
Require competitive bidding for significant purchases or service contracts as well as conflict of interest declarations.
Conduct periodic procurement reviews to assess compliance and performance.

5. Expenditure Used Outside of Specific Programme Purposes

A common issue identified in funding reviews is the use of funds for activities unrelated to the approved programme objectives—such as infrastructure project funding being used to cover administrative overheads. This misallocation often results from weak financial controls, unclear guidance on allowable expenses, or urgent needs within the federation that compete for limited resources. Using funds outside their designated purpose is usually a breach of the funding agreement and diminishes the intended impact of the investment, potentially impacting future funding and stakeholder trust.

Recommendations:

Establish clear funding agreements outlining allowable and non-allowable expenditures.
Implement tracking systems to monitor how funds are allocated and spent.
Require justification and formal approval for any budget reallocations.
Conduct regular financial reviews to verify alignment with programme objectives.

6. High Reliance on Cash Transactions

While cash can be necessary in certain contexts, a high reliance on cash transactions increases risks of misappropriation, theft, or inaccurate record-keeping. Cash transactions are inherently difficult to track and reconcile, especially without stringent controls like dual authorisation or cash count verifications. Some federations operate with cash as the primary payment method due to limited banking infrastructure, digital literacy, or heightened security concerns. In addition to this, some federations do not have any upper limits set for cash payments or balance of petty cash held or a specific policy on cash withdrawals.

Recommendations:

Transition to bank transfers, mobile payments, or other digital methods wherever possible.
Train staff on cash handling best practices and fraud prevention.
Establish strict cash management procedures, including dual authorisation, cash withdrawal processes, upper limits for cash payments, cash logs, and periodic reconciliations.
Promote use of mobile money platforms in low-banking regions where applicable.

7. Insufficient Controls on Funds Transferred to Subsequent Beneficiaries

Local federations often act as intermediaries, distributing funds to regional associations, clubs, or third-party beneficiaries. However, reviews often reveal insufficient controls over these transfers of funds, including the absence of formal agreements, monitoring mechanisms, or reporting requirements. This lack of oversight increases the risk of funds being misused or transferred without accountability. Limited oversight also hinders federations’ ability to assess programme effectiveness or respond to compliance breaches—where the subsequent beneficiaries do not comply with the funding regulations of the specific international sports governing body - ultimately weakening the entire funding chain.

Recommendations:

Establish formal sub-grant agreements detailing roles, responsibilities, and reporting obligations.
Set up monitoring mechanisms such as site visits, periodic financial and activity reports, and reviews of sub-beneficiaries.
Provide capacity-building support to sub-beneficiaries to strengthen their financial management.

8. Lack of Audit Trail and Incorrect Reporting

One common issue identified during our funding reviews is the submission of incomplete or inaccurate financial reports to international sports governing bodies. This issue stems from inconsistent bookkeeping practices, missing documentation, and limited understanding of reporting requirements. The absence of a reliable audit trail undermines the ability of international sports governing bodies to verify the use of funds and assess programme effectiveness. This erodes trust, delays disbursements of funds, and may trigger remedial actions or funding suspension. The absence of a robust audit trail also impairs forensic investigations in the event of suspected financial irregularities.

Recommendations:

Standardise reporting templates and formats for financial submissions.
Offer training on financial reporting requirements and deadlines.
Ensure use of accounting software capable of tracking expenses by funding stream or project.
Schedule independent external reviews and encourage timely submission of financial reports.

Strengthening Fund Management for Greater Impact

The challenges in fund management at the local federation level underscore the importance of enhanced financial governance and capacity building. International sports governing bodies, in partnership with local federations, must prioritise transparent processes, rigorous oversight, and continuous training to safeguard funding.

By systematically addressing documentation gaps, strengthening internal controls, and promoting accountability, the international sports community can ensure that financial resources translate into tangible development outcomes. Ultimately, robust fund management is not merely a compliance requirement—it is a strategic imperative that underpins the credibility and sustainability of sports development worldwide.

About the Author

Sandrine Woo is a Director in BDO LLP’s International Institutions and Donor Assurance (IIDA) team, BDO’s global centre of excellence for supporting global grant-makers. Each year the IIDA team performs over 5,000 engagements for a range of grant-makers, delivering fieldwork in more than 170 countries/territories. One of the specialisations of the IIDA team is international sports governance and funding accountability. With over 20 years of specialist expertise, BDO is dedicated to promoting transparency, accountability and impact in global sport development.