The State Theatre Company (the Company), a body corporate, established pursuant to subsection 5(1) of the State Theatre Company of South Australia Act 1972 (the Act), is administered by a Board of Governors.
The objectives of the Company are to:
present theatrical performances to promote the art of the theatre;
promote and commission the writing of works for theatrical performances;
promote the training of people concerned in the production, presentation and performance of theatrical works;
promote public interest and participation in the art of the theatre;
establish and conduct educational programs.
The Company uses the facilities of the Adelaide Festival Centre to stage theatrical performances and occupies workshops and offices within and adjacent to the Centre. The Adelaide Festival Centre Trust charges the Company for the use of those facilities and premises.
The structure of the Company is:
Surplus from ordinary activities was $31 000 ($127 000).
Production and performance employee expense increased by $313 000 to $1.9 million.
Subsection 26(2) of the State Theatre Company of South Australia Act 1972 provides for the Auditor-General to audit the accounts of the Company in respect of each financial year.
The audit program covered all major financial systems and was directed primarily towards obtaining sufficient evidence to enable an audit opinion to be formed with respect to the financial report and the adequacy of internal control.
The specific areas of audit attention included:
budgetary control and management reporting
accounts payable
payroll
revenue, including box office sales and grants received.
During the year, a management letter communicating issues arising from the audit was forwarded to the General Manager. The main issues related to the provision of the Company’s budgeted revenue and expenditure to the Minister before the beginning of the financial year, and opportunities to improve the control environment through the documentation of policies and procedures. A satisfactory response was received.
Further details relating to these issues are contained in ‘Audit Findings and Comments’ hereunder.
The overall assessment of the Company’s control structure was that it was satisfactory, although there was room for improving compliance with the prescribed elements of the Financial Management Framework relating to the documentation of policies and procedures.
In past Reports, Audit commented on the need for the Company to document its policies and procedures for all major activities as required by the prescribed elements of the Financial Management Framework.
Audit noted that this matter remained to be finalised in 2001-02.
The Company advised that a policies and procedures manual is expected to be completed by the end of December 2002.
Audit noted last year that there was room for improvement in respect of the provision to the General Manager of regular assurance that controls over management reporting and financial reporting have been operating effectively.
The Company has since established an account reconciliation checklist certified by the Finance Manager that is provided to the General Manager each month.
Approval of Budget by the Minister
Audit identified that the Company’s budgeted revenue and expenditure for 2001-02 and 2002-03 was not provided to the Minister before the beginning of the respective financial years as required by section 29(1) of the State Theatre Company of South Australia Act 1972. Furthermore, there was no evidence that the Minister approved the 2001-02 budget. Section 29(3) of the Act specifies that the Company shall not, without the consent of the Minister, incur any expenditure that is not authorised by a budget approved by the Minister.
The Company responded that it would endeavour to meet the statutory deadlines in respect of future budgets and that such deadlines are not consistent with those specified in the Tripartite Funding Agreement with the State and Commonwealth Governments.
As required by subsection 36(1)(a)(iii) of the Public Finance and Audit Act 1987, the audit of the State Theatre Company included an assessment of the controls exercised in relation to the receipt, expenditure and investment of money, the acquisition and disposal of property and the incurring of liabilities. The assessment also considered whether those controls were consistent with the prescribed elements of the Financial Management Framework as required by Treasurer’s Instruction 2 ‘Financial Management Policies’.
Audit formed the opinion that the controls exercised by the State Theatre Company in relation to the receipt, expenditure and investment of money; the acquisition and disposal of property; and the incurring of liabilities, except for the matters outlined under ‘Audit Findings and Comments’, were sufficient to provide reasonable assurance that the financial transactions of the organisation were conducted properly and in accordance with law.
Revenues from State and Commonwealth grants represent 56 percent (55 percent) of total revenues. The extent of the economic dependency of the Company on Government grants is stated in Note 2 to the Financial Statements.
Production and performance employee expenses increased by $313 000 to $1.9 million due mainly to the employment of additional artists and increased use of musicians and interstate artists.
Cash assets increased by $90 000 to $586 000 due mainly to an increase in one-off project grants from the State and Commonwealth Governments.
Unaudited statistical details on productions for the last four years, as provided by the Company, are presented in the following table:
|
*2001-02 |
2000-01 |
1999-2000 |
1998-99 |
|
|
Number of productions |
7 |
7 |
8 |
7 |
|
Number of performances |
161 |
161 |
198 |
144 |
|
Number of seats sold |
42 253 |
42 000 |
51 000 |
38 000 |
|
$ |
$ |
$ |
$ |
|
|
Total expenses per seat sold |
91 |
82 |
75 |
84 |
|
Box office and other internally generated revenue per seat sold |
40 |
39 |
38 |
33 |
|
Subsidy per seat sold |
51 |
43 |
37 |
51 |