ADELAIDE FESTIVAL CORPORATION

FUNCTIONAL RESPONSIBILITY AND STRUCTURE

Establishment

The Adelaide Festival Corporation is a body corporate established pursuant to the Adelaide Festival Corporation Act 1998. The Corporation is an instrumentality of the Crown.

Functions

The functions of the Corporation, as set out by section 5 of the Act, are to:

• conduct in Adelaide and other parts of the State the multifaceted arts event that is known as the Adelaide Festival of Arts;

• continue to further develop the Adelaide Festival of Arts as an event of international standing and excellence;

• conduct or promote other events and activities;

• provide advisory, consultative, managerial and support services within areas of the Corporation’s expertise;

• undertake other activities that promote the arts or public interest in the arts, or that otherwise involve appropriate use of its resources;

• carry out such other functions assigned to the Corporation by or under this or any other Act, or by the Minister.

The Adelaide Festival of Arts is a biennial event with 2004 being a Festival year.

Structure

The structure of the Adelaide Festival Corporation is illustrated in the following organisational chart.

AUDIT MANDATE AND COVERAGE

Audit Authority

Audit of Financial Statements

The Auditor-General audits the accounts of the Adelaide Festival Corporation pursuant to subsection 19(3) of the Adelaide Festival Corporation Act 1998.

Assessment of Controls

Subsection 36(1)(a)(iii) of the Public Finance and Audit Act 1987 provides for the Auditor-General to assess the controls exercised by the Adelaide Festival Corporation in relation to the receipt, expenditure and investment of money, the acquisition and disposal of property and the incurring of liabilities.

This assessment also considers whether those controls are consistent with the prescribed elements of the Financial Management Framework as required by Treasurer’s Instruction 2 ‘Financial Management Policies’.

Scope of Audit

The audit program covered major financial systems and was directed primarily towards obtaining sufficient evidence to enable an audit opinion to be formed with respect to the financial statements and internal controls. Further, with respect to the assessment of controls, the audit considered whether they were consistent with the prescribed elements of the Financial Management Framework as required by the Treasurer’s Instruction 2 ‘Financial Management Policies’.

During 2003-04, specific areas of audit attention included:

• revenue, including cash receipting and debtors

• expenditure, including accounts payable and, salaries and wages

• general ledger

• contracts

• budgetary control.

AUDIT FINDINGS AND COMMENTS

Audit Opinions

Audit of Financial Statements

In my opinion, the financial report presents fairly, in accordance with the Treasurer’s Instructions promulgated under the provisions of the Public Finance and Audit Act 1987, applicable Accounting Standards and other mandatory professional reporting requirements in Australia, the financial position of the Adelaide Festival Corporation as at 30 June 2004, its financial performance and its cash flows for the year then ended.

Assessment of Controls

Audit formed the opinion that the controls exercised by the Adelaide Festival Corporation in relation to the receipt, expenditure and investment of money, the acquisition and disposal of property and the incurring of liabilities are sufficient to provide reasonable assurance that the financial transactions of the Adelaide Festival Corporation have been conducted properly and in accordance with law.

Audit Communications to Management

Matters arising during the course of the audit were detailed in a management letter to the General Manager.

A satisfactory response was received to the matters raised in the management letter.

INTERPRETATION AND ANALYSIS OF FINANCIAL STATEMENTS

Statement of Financial Performance

Scope of Functions

In reviewing the financial performance of the Corporation it should be noted that, although the predominant role of the Corporation is to conduct the Adelaide Festival of Arts, its functions also extend to the promotion and conduct of other festivals and events such as the Festival of Ideas. The Statement of Financial Performance includes the expenses and revenues associated with these events as well as the Adelaide Festival of Arts.

Interpretation and Analysis

Given the biennial nature of the Adelaide Festival of Arts, the financial results for the event are recorded mainly over a cycle of two financial years. Other festivals may also be active across a number of financial years. As a result, the interpretation and analysis provided below is based on the biennial financial results of the Corporation.

A comparison of the last two biennial periods is provided in Note 21.

It is important to understand that when comparing the last two Festivals, while the 2002 Festival of Arts was a 10 day event, the 2004 Festival returned to a 14 day event.

Biennial Operating Result

As shown in Note 21, the biennial result for the Corporation for the 2003 and 2004 financial years was a surplus of $430 000 as compared to a deficit of $365 000 for the previous biennial period.

Operating Revenues

For the 2004 biennial period, Revenues from Ordinary Activities totalled $11.7 million, a decrease of $2.6 million compared to the previous biennial period. This decrease is mainly attributable to a decrease in grant funding received between the two biennial years. For the 2004 biennial period the Corporation received grant funding totalling $5.9 million, whereas for the 2002 biennial period grant funding totalled $9.2 million. It is important to note that the 2002 biennial grant funding includes $1.5 million for the Film Program, a program which was not undertaken during the 2004 biennial period.

The box office revenue for the 2004 biennial period totalled $2.1 million, an increase of $1 million from the 2002 biennial period.

Operating Expenses

Expenses from ordinary activities decreased by $3.4 million to $11.3 million. The decrease in expenditure is mainly attributable to:

• a decrease in administration expenditure of $800 000;

• a decrease in marketing expenditure of $400 000;

• nil expenditure for the Film Program for the 2004 biennial period compared to $1.7 million in the 2002 biennial period.

The following chart shows the operating revenues and operating expenses for the 2002 and 2004 biennial periods:

Statement of Financial Position

As at 30 June 2004, the Corporation’s net assets totalled $200 000 as compared to $1.6 million for the same time last year. The fluctuations in the Corporation’s net assets reflect the biennial nature of the Adelaide Festival of Arts.