ADELAIDE ENTERTAINMENTS CORPORATION

 

 

FUNCTIONAL RESPONSIBILITY AND STRUCTURE

 

Establishment

 

The Adelaide Entertainments Corporation, a subsidiary to the Minister for Tourism, was established on 4 February 1999 pursuant to regulations under the Public Corporations Act 1993.

 

Functions

 

The functions of the Adelaide Entertainments Corporation are to:

 

·                     manage and operate the Adelaide Entertainment Centre (the Centre) site;

·                     manage, promote and sponsor events at the Centre site or elsewhere;

·                     foster and assist the commercial development of the Centre site in order to complement and enhance the commercial potential of the Centre;

·                     carry out other functions conferred on the subsidiary by the Minister.

 

Structure

 

The structure of the Adelaide Entertainments Corporation at 30 June 2006 is illustrated in the following organisation chart.

 

 

 

AUDIT MANDATE AND COVERAGE

 

Audit Authority

 

Audit of the Financial Report

 

Subsection 36(1)(b) of the Public Finance and Audit Act 1987 and the Schedule to the Public Corporations Act 1993 provides for the Auditor-General to audit the accounts of the Adelaide Entertainments Corporation for each financial year.

 

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 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 to obtaining sufficient evidence to enable an audit opinion to be formed with respect to the financial statements and internal controls.

 

During 2005-06, specific areas of audit attention included:

 

·           Corporate governance                                     ·         Expenditure

·           Risk management                                            ·         Inventory

·           Strategic planning                                            ·         Fixed assets

·           Revenue                                                           ·         Cash

·           Payroll                                                              ·         Entrepreneurial events

 

 

AUDIT FINDINGS AND COMMENTS

 

Audit Opinions

 

Audit of the Financial Report

 

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 Entertainments Corporation as at 30 June 2006 and the results of its operations and cash flows for the year then ended.

 

Assessment of Controls

 

In my opinion, the controls exercised by the Adelaide Entertainments 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 Entertainments Corporation have been conducted properly and in accordance with law.

 

Audit Communications with Management

 

Audit considered the current control environment of the Corporation to be effective.

 

 

INTERPRETATION AND ANALYSIS OF FINANCIAL REPORT

 

Income Statement

 

Income

 

The Corporation’s income of $9.4 million in 2006 decreased by 9 percent from $10.3 million in 2005.

 

A structural analysis of income for the Corporation in the five years to 2006 is presented in the following chart.

 

Expenses

 

The Corporation’s expenses of $10.9 million decreased by 3 percent from $11.2 million in 2005.

 

For the five years to 2006, a structural analysis of the main operating expense items for the Corporation is shown in the following chart.

 

 

Operating Result

 

The Corporation recorded a loss of $1.5 million for the year ended 30 June 2006 after a loss of $900 000 for the previous year.  The Corporation’s reported operating loss for each of the past five years, excluding 2002-03, reflects the impact of depreciation expense associated with the Entertainment Centre building.  These results are consistent with the Corporation’s trading activities not fully recovering the capital cost of constructing the Centre.

 

The following chart shows the income, expenses and profits/losses for the five years to 2006.

 

 

Balance Sheet

 

The Corporation’s principal assets comprise land and buildings which were valued at $52.1 million as at 30 June 2006.  As reflected in the commentary under Operating Result, the Corporation’s trading activities do not fully recover the capital cost of constructing the Centre.

 

Cash Flow Statement

 

The following table summarises the net cash flows for the four years to 2006.

 

	2006	2005	2004	2003
	$’million	$’million	$’million	$’million
Net Cash Flows
Operations	0.8	1.3	(0.4)	2.8
Investing	(1.5)	(0.7)	(1.1)	(0.1)
Change in Cash	(0.7)	0.6	(1.5)	2.7
Cash at 30 June	2.5	3.2	2.6	4.1

 

The analysis of cash flows shows that the Adelaide Entertainments Corporation’s cash holdings have decreased from $3.2 million in 2005 to $2.5 million in 2006.  The decrease of $700 000 (22 percent) is due to the purchase of property, plant and equipment of $1.5 million which was offset by operating inflows exceeding operating outflows by $800 000.