Councillors will vote on whether Vanfest 2018 goes ahead at their March meeting on Thursday.
General Manager Steve Loane’s recommendation to the Council is to suspend the music festival for this year and work on Vanfest 2019.
Council has received the independent audit into the festival, which Council took on for three years from 2017, and Mr Loane has recommended Council take time to implement the auditors’ recommendations.
Those include: Council formally assess and document how licence and event management agreements for Vanfest comply with the requirements of Council’s procurement policy; a more rigorous budgeting process; a review of policies and procedures for negotiation of significant commercial arrangements; and a review of risk assessment for events managed by third parties.
Mr Loane’s report to councillors says Vanfest 2017 sustained a $326,413.17 loss – generating $695,817.01 in income and facing costs of $1,003,145.91.
These figures include ticket refunds and the event cancellation insurance claim, but do not include the intellectual property licence fee of $200,000.
It’s estimated the event would have run at a $207,328.90 loss if the second day had not been cancelled due to severe weather.
Mr Loane also notes economic analysis software forecasts the event would deliver $1.416 million into the local economy.
The future of this year’s festival lies with councillors on Thursday.
“It has become evident that event planning must start nine-12 months (ahead) to source performers and key stakeholders,” Mr Loane said in his report to Council.
“Therefore, I recommend that it would be prudent to suspend Vanfest for 2018 to allow for proper planning and due diligence and that Council implement the auditor’s recommendations as it works towards presenting Vanfest 2019.”
Auditors Grant Thornton were asked to look into the probity, governance, risk management and control processes of Vanfest 2017 in the first year of Forbes Shire Council’s three-year lease of the event.
The audit covers Council’s decision to purchase the intellectual property for three years, the agreements with Vanfest and the event manager, the festival’s finances through to risk assessment.
The report is extensive and included in full on Council’s website within the March Council business paper.
The auditors say they “did not see evidence of detailed assessment” of the $270,000 Council agreed on for the three-year Vanfest licence fee.
“In the April 2017 Council meeting, it is noted that the payment would constitute $75k for assets accumulated from prior year events such as chairs and stage items and $150k for the purchase of goodwill of the event,” the report says.
“We did not see evidence of a detailed due diligence on these two amounts and subsequently how the total licence fee moved from $225k ($150k + $75k) to $270k in the final agreement.”
The auditors go on to say they have not seen audited financial results of the festival, and that “all prior year reported numbers appear to have been taken on face value. This assumption impacts the accuracy of the data reviewed by the Council and used in the decision making process”.
The auditors looked at Council’s procurement policy – which stipulates public tenders or expressions of interest for expenditure of $150,000 or greater.
“We have not seen documented evidence for how the Council considered the application of the tendering requirements for the three components being the licence fee, the event management fee and the bar service contract,” the audit says.
The auditors looked at management of conflict of interest, and do note that Cr Grant Clifton – one of the founders of Vanfest and father of the event manager – did not take part in Council’s resolutions relating to the event.
The auditors recommend:
On the basis Council continues to conduct the event under the current licence agreement, Council should implement a more rigorous budgeting process;
Council should periodically assess the economic and community impact of the event in considering involvement in the event. This would provide a more complete perspective of the impact of the event on Forbes and a more complete assessment of the alignment to Council’s strategic objectives;
Council consider the establishment of a representative working group to advise and assist Council and the community on broader opportunities from Vanfest;
Council should formally assess and document how the procurement of the licence agreement and the event management agreement comply with the requirements of the Council’s procurement policy, records management policy and the requirements of the Local Government Act 1993;
The Council should clarify with the event manager the event management services set out in Schedule 2 of the event management agreement and confirm the processes by which these services will be delivered in accordance with Council’s policies and procedures;
The Council should retain a dedicated point of contact for the event manager to assist the efficient delivery of Vanfest in accordance with Council’s policies and procedures;
Council review the policies and procedures for negotiation of significant commercial arrangements to ensure the appropriate separation of duties including the separation of decision making from negotiation; and
Council should review its risk assessment protocols regarding events which are managed by third parties to ensure consistency and compliance with Council policies.