HISTORY TRUST OF SOUTH AUSTRALIA

FUNCTIONAL RESPONSIBILITY AND STRUCTURE

Establishment

The History Trust of South Australia (the Trust) was established pursuant to the History Trust of South Australia Act 1981.

Functions

The functions of the History Trust of South Australia are to:

· accumulate, conserve and exhibit objects of historical or cultural interest;

· undertake the management of museums and other premises vested or placed under its care, control and management;

· advise the Minister on the conservation of objects that are of historical significance to the State;

· disseminate, or encourage the dissemination of, information relevant to the history of the State.

Structure

The structure of the History Trust of South Australia is illustrated in the following organisation chart.

AUDIT MANDATE AND COVERAGE

Audit Authority

Audit of the Financial Report

Subsection 19(2) of the History Trust of South Australia Act 1981 and subsection 31(1)(b) of the Public Finance and Audit Act 1987 provide for the Auditor-General to audit the accounts of the Trust 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 History Trust of South Australia 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:

· revenue, including cash receipting and banking, and retail operations;

· expenditure, including accounts payable and salaries and wages;

· property, plant and equipment including the adequacy of asset registers;

· collection management.

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, Accounting Standards and other mandatory professional reporting requirements in Australia, the financial position of the History Trust of South Australia as at 30 June 2006, the results of its operations and its cash flows for the year then ended.

Assessment of Controls

In my opinion, the controls exercised by the History Trust of South Australia in relation to the receipt, expenditure and investment of money, the acquisition and disposal of property and the incurring of liabilities, except for the matter raised in relation to receipting and banking as outlined under ‘Audit Communications to Management’, are sufficient to provide reasonable assurance that the financial transactions of the History Trust of South Australia 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 Chief Executive. The response to the management letter was considered to be satisfactory. The major matter raised with the Trust and the related response are considered herein.

Receipting and Banking

Audit review revealed the need for all monies received from customers and visitors at the Museums, to be collected and receipted in the presence of two officers, in order to ensure accurate and complete receipting, banking and recording. The Trust indicated that this recommendation will be adopted wherever possible, however limited staff resources at the Museums may prevent this from occurring at all times.

INTERPRETATION AND ANALYSIS OF FINANCIAL REPORT

Highlights of the Consolidated Financial Report

	2006	2005	Percentage
	$’million	$’million	Change
*OPERATING REVENUE*
Government grants	3.8	3.8	-
Other	2.6	2.3	13
Total Operating Revenue	6.4	6.1	5
*OPERATING EXPENDITURE*
Employee costs	2.8	2.7	4
Supplies and services	2.8	2.5	12
Other expenses	1.0	0.9	11
Total Operating Expenses	6.6	6.1	8
Deficit	(0.2)	-

Net Cash Flows from Operations	0.4	0.5	(20)

	2006	2005	Percentage
	$’million	$’million	Change
*ASSETS*
Current assets	2.1	1.8	17
Non-current assets	29.7	30.2	(2)
Total Assets	31.8	32.0	(1)
*LIABILITIES*
Current liabilities	0.5	0.4	25
Non-current liabilities	0.4	0.4	-
Total Liabilities	0.9	0.8	13
*EQUITY*	31.0	31.2	(1)

Income Statement

Operating Revenues

The Government Grant for the current year was $3.8 million, the same as for 2004-05. Other revenues were $2.6 million ($2.3 million) with the increase due mainly to additional revenue of $228 000 from sponsorships. Overall operating revenues increased by $386 000.

A structural analysis of operating revenues for the Trust for the four years to 2006 is presented in the following chart. The analysis highlights the Trust’s ongoing dependence on government funding and the continuing increase in other revenue, due mainly to increased sponsorship and grant revenue.

Operating Expenses

Total operating expenses rose by $516 000 to $6.6 million. Employee costs rose by 4 percent to $2.8 million due mainly to increases in salary and wage rates.

A structural analysis for the four years to 2006 of the main operating expense items for the Trust is shown in the following chart.

Operating Result

The Trust has recorded small deficits from 2003 to 2006. The following chart shows the operating revenues, operating expenses and surpluses/deficits for the current and preceding three years.

Balance Sheet

For the four years to 2006, a structural analysis of the main non-current assets is shown in the following chart.

The written down value of property, plant and equipment was $17.2 million, a decrease of $0.6 million from the previous year, which is primarily due to current year depreciation. The value of the Trust’s heritage collections increased by $54 000 to $12.5 million due mainly to revaluation increments and donations during the year.

As shown in the chart, the primary assets of the Trust are heritage assets and the buildings that house them including the National Motor Museum, South Australian Maritime Museum and Migration Museum. The total equity of the Trust is essentially represented by these assets.

Cash Flow Statement

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

	2006	2005	2004	2003
	$’000	$’000	$’000	$’000
Net Cash Flows
Operations	400	535	142	68
Investing	(23)	(33)	(128)	-
Change in Cash	377	502	14	68
Cash at 30 June	1 629	1 252	750	736

The table shows that although the cash flows from operations have fluctuated over the four years, there has been an increase in the overall cash holding of the Trust. The Trust operating deficits over this same period reflect the impact of depreciation expense. The Trust has sufficient cash to cover its current liabilities.

Cash flows used in investing activities reflects the Trust’s purchase of property, plant and equipment and heritage collection items in 2004, 2005 and 2006.

FURTHER COMMENTARY ON OPERATIONS

Admissions Receipts and Attendances

Results for the individual museums are shown hereunder:

	Admissions Receipts			Attendances
	2006	2005	2004	2006	2005	2004
	$’000	$’000	$’000	$’000	$’000	$’000
National Motor Museum	323	330	258	65	67	61
South Australian Maritime Museum	211	219	227	72	71	69
Migration Museum	48	33	36	155	152	170

The increase in Migration Museum attendances in 2006 reflects the program of exhibitions held this year as part of a number of festivals including the Adelaide Festival of Arts.