The South Australian Motor Sport Board was established pursuant to the South Australian Motor Sport Act 1984. The South Australian Motor Sport (Miscellaneous) Amendment Act 2000 proclaimed on 13 July 2000 provides for (amongst other things) amendments to the functions of the South Australian Motor Sport Board.
The functions of the Board are to:
enter into agreements on behalf of the State under which motor sport events, whether promoted by the Board or by some other person approved by the Minister, are held in the State;
undertake on behalf of the State the promotion of motor sport events;
establish a temporary motor racing circuit and conduct and manage motor racing events promoted by the Board;
provide advisory, consultancy, management or other services on the conduct of sporting, entertainment or other special events or projects, whether within or outside the State;
such other functions as the Minister may from time to time approve.
The Board comprises nine members appointed by the Governor and is subject to the general control and direction of the Premier.
The Board has the right to stage a motor sport event for a fixed period of five years, commencing in 1999, with an option to extend the contract for a further five years. Pursuant to a Naming Rights Sponsorship Agreement effective 1 April 1999, the event is known as the ‘Clipsal 500 Adelaide’.
The Board also has a responsibility under certain contractual arrangements entered into by the Premier of the State of South Australia and the Board with a company, ‘Panoz Motorsport Australia Pty Ltd’, to provide a motor racing circuit and promote a race event in the ‘Le Mans’ style to be known as ‘The Race of a 1000 Years’ which is to be staged on 29, 30 and 31 December 2000.
In relation to the Financial Statements and notes thereto, figures presented in the statements for 1999-2000 cover the 12 month period ending 30 June 2000, whereas the comparative figures cover the eighteen month period, 1 January 1998 to 30 June 1999.
The Board’s Financial Statements show an operating deficit of $398 000 ($1.22 million) for the reporting period. As commented under the heading ‘Interpretation and Analysis of Financial Statements’ of this section of this Report, had the Board applied an Accounting Policy Statement requirement of the Treasurer in relation to ‘contributions’, the operating result would have been an operating deficit of $513 000 (operating surplus of $2.54 million). The same accounting treatment was applied in respect of the financial reporting period ending 30 June 1999.
Subsection 18(3) of the South Australian Motor Sport Act 1984 provides for the Auditor-General to audit the accounts of the Board in respect of each financial year.
The Board’s administration and financial accounting operations are not large and complex in nature. Furthermore, major activities associated with the staging of the ‘Clipsal 500 Adelaide’ were contracted out to external parties.
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 Statements and internal control.
During 1999-2000 specific areas of audit attention included:
contracting out arrangements
revenue, including receivables
expenditure, including accounts payable and salaries and wages
plant and equipment, including the adequacy of asset register maintenance
reporting and monitoring of Board operations.
The review of the Board’s general financial control structure and operations was assessed as satisfactory.
As required by subsection 36(1)(a)(iii) of the Public Finance and Audit Act 1987, the audit of the South Australian Motor Sport Board 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 South Australian Motor Sport Board 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 Financial Statements and notes thereto, reflect a summary of transactions on an accrual basis of accounting for the 12 month period ending 30 June 2000 (18 month period, 1 January 1998 to 30 June 1999 in respect of comparative figures).
During the reporting period, the Board received contributions from the State Government comprising, $1.1 million ($4.7 million) for capital works and $780 000 ($900 000) for operating. The Statement of Cash Flows refers.
The Operating Statement of the Board for the 12 month period ended 30 June 2000 records an operating deficit of $398 000 ($1.22 million for the 18 month period 1 January 1998 to 30 June 1999).
As explained in Notes 3.1 and 3.2 to the Financial Statements, the Board has applied an International Accounting Standard in difference to the mandatory Accounting Policy Statement of the Treasurer, in relation to the financial accounting and reporting treatment of the capital contribution (grant) of $1.1 million ($4.7 million). The application of the Accounting Policy Statement APS 11 ‘Contributions’, rather than the International Accounting Standard, would have resulted in the Board recording an operating deficit of $513 000 (operating surplus of $2.54 million).
As such, the Independent Audit Report covering the Financial Statements of the Board has again been qualified in respect of this matter.
As mentioned, with respect to my Independent Audit Report on the Financial Statements of the South Australian Motor Sport Board, I have again issued a Qualified Audit Opinion.
An extract from the Independent Audit Report is provided hereunder:
Note 3.1 to the Financial Statements - Basis of Accounting - states that ‘The financial statements have been prepared as a general purpose financial report in accordance with ... the Treasurer’s Instructions and Accounting Policy Statements issued pursuant to the Public Finance and Audit Act 1987 ... except ... in relation to the entity’s financial accounting and reporting treatment of the State Government Grant - Capital’.
Accounting Policy Statement APS 11 ‘contributions’ requires that grants be recognised as revenue when received. The Board has determined that the capital grants received be amortised over the fixed five year race staging period. The Board has based its determination on the application of International Accounting Standard IAS 20 ‘Accounting for Government Grants and Disclosure of Government Assistance’.
As a result, of the total of $5.8 million received by way of capital grants only $2.2 million has been recognised as revenue with the remaining $3.6 million recognised as a liability. This has resulted in the Board showing an operating deficit for the reporting period of $398 000 against an operating deficit of $513 000 had there been compliance with APS 11.
In my opinion, except for the effect on the financial report of the matter referred to in the qualification paragraphs, 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 Australian Accounting Standards and other mandatory professional reporting requirements, the financial position of the South Australian Motor Sport Board as at 30 June 2000, the results of its operations and its cash flows for the period then ended.