The Adelaide Entertainments Corporation, a subsidiary to the Minister of Tourism, was established on 4 February 1999 pursuant to regulations under the Public Corporations Act 1993. The functions of the Corporation are limited by regulation to:
manage and operate the Adelaide Entertainment Centre site;
manage, promote and sponsor events at the Adelaide Entertainment Centre site or elsewhere;
foster and assist the commercial development of the Adelaide Entertainment Centre site in order to complement and enhance the commercial potential of the Adelaide Entertainment Centre;
carry out other functions conferred on the subsidiary by the Minister.
The following chart depicts the structure of the Corporation.
When the Corporation was created on 4 February 1999 it assumed the operations of the Adelaide Entertainment Centre. The Centre, which had no separate legal status, had operated under a Board of Management, which was established under the Australian Formula One Grand Prix Board pursuant to a Management Agreement with the Premier.
The Schedule to the Public Corporations Act 1993, requires the Adelaide Entertainments Corporation, established pursuant to section 24 of the Act, to keep proper accounts of its financial affairs and to prepare financial statements in respect of each year.
It further provides that the Auditor-General must audit the accounts and financial statements of the Adelaide Entertainments Corporation.
During 1999-2000 specific areas of audit attention included:
revenue raising (venue hire and other)
accounts payable
inventory
financial management policies and procedures
general ledger and journals
receipting and banking
salaries and wages
property, plant and equipment
management and financial reporting
preparation for the GST.
An audit management letter conveying issues arising from the audit was forwarded to the Chairman of the Adelaide Entertainments Corporation Board. The main matters communicated and the Corporation’s response is outlined in ‘Audit Findings and Comments’ hereunder.
As mentioned previously, the Corporation was established as a subsidiary to the Minister for Tourism on 4 February 1999 pursuant to regulations under the Public Corporations Act 1993.
The changeover to an entity under the Public Corporations legislation places certain governance requirements on the Corporation, including:
preparation of a charter approved by the Treasurer and the responsible Minister;
establishment of internal audit related activity;
determination and agreement between the Treasurer and responsible Minister in relation to dividend and taxation policy.
Although the Corporation came under the Public Corporations legislation framework from February 1999, it has operated under a charter that essentially reflected administration and financial policy requirements that existed under the former Management Agreement with the Premier. Audit was of the view that its translation under the Public Corporations legislation required the Corporation and the Department of Treasury and Finance to review its funding and financial policy position in the context of its changed status, including a revisit of the dividend and taxation policy that ought to apply to the Corporation. This suggested review would necessitate a revision of the charter. In relation to dividend policy this is further commented on under ‘Interpretation and Analysis of Financial Statements’ hereunder.
Regarding the matter of internal audit activity the Corporation, under the Public Corporations regulations establishing the Corporation, is required to establish and maintain an Audit Committee and internal audit activity. The Corporation has an Audit Committee. Audit raised with the Corporation consideration of implementing some form of internal audit activity that would review and report to the Audit Committee on areas of risk identified by the Corporation.
The Corporation has advised that it is finalising a new Strategic Plan. As part of that process it has revised its charter and has also consulted with the Department of Treasury and Finance concerning its funding and financial policy arrangements. Regarding internal audit the Corporation has advised that as part of its strategic plan review it has identified key risk areas and is to consider what approach it is to adopt in internal monitoring of risks and controls over these risks.
Last year’s Report included comment regarding the requirement for the Corporation to complete documentation of policies and procedures consistent with the requirements of Treasurer’s Instruction 2 ‘Financial Management Policies’.
Follow up of this matter during the year indicated that while the Corporation had progressed the establishment of further policies and procedures concerning a number of areas there is still some work to be undertaken to fully document all areas consistent with Treasurer’s Instruction 2.
This matter was communicated to the Corporation and Audit was advised that the Corporation is in the process of reviewing and updating its current policies and procedures documentation, not only to comply with Treasurer’s Instruction 2 but also to reflect any revised policies and practices arising out of consultation with the Department of Treasury and Finance concerning its funding and financial policy arrangements.
The audit of the financial accounts and financial accounting systems and practices of the Corporation indicated a generally satisfactory position.
As required by subsection 36(1)(a)(iii) of the Public Finance and Audit Act 1987, the audit of the Adelaide Entertainments Corporation 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.
Audit formed the opinion that 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, were sufficient to provide reasonable assurance that the financial transactions of the organisation were conducted properly and in accordance with the law.
The general purpose financial statements of the Corporation record an operating deficit of $334 000 ($706 000). The special purpose financial statement (Note 3 to the general purpose financial statements refers) reflecting principally the direct trading operating performance of the Corporation shows an operating profit of $1.9 million ($1.9 million). The difference in the basis of the form and content of the general purpose and special purpose financial statements is explained in Note 3.
The general purpose financial statements record in 1998-99 dividends of $860 000 determined in respect of the 1997-98 financial year. Dividends determined in relation to 1998-99 and 1999-2000 of $665 000 and $714 000 respectively have not been brought to account in the general purpose financial statements in consideration of consultation currently under way between the Corporation and the Department of Treasury and Finance regarding determination of dividend and taxation policy of the Corporation (Note 3 to the general purpose financial statements refers).