“The Annual Dinner is an occasion for a prominent personality to present a serious lecture to an audience of some 900 paying guests – after they have enjoyed dinner and over an hour of networking.

“The Annual Dinner’s presentation is the highlight of the evening. Guests look forward to the hush and silence of a packed room of colleagues and business professionals taking in the thoughts and experience of a figure of stature and international recognition.”  The Sydney Institute

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The Weekly Spaghetti Bolognese Dinner is an occasion for this person to engage in a serious hour of cooking and washing up.

The Weekly Spaghetti Bolognese Dinner last Sunday evening was a special occasion as the phone rang and I was treated to a serious lecture by a figure of unheralded stature, Jeff Knapp, about the latest financial statements of The Sydney Institute.

Jeff is a former lecturer in accounting at the University of NSW.

It is often a highlight of the evening when Jeff rings. The customary networking is concluded in little over a minute before Jeff, this colleague and business professional, delivers his thoughts and experience to his audience of one.

Unlike the universities however which are wont to sally forth with pretentious statements about academic freedom while becoming increasingly vassaled to corporate interests and an orgy of consultancies and conflicts, Jeff knew that he would never be muzzled by this audience of one.

And so it was that, in the manner of the respectful and high-powered Sydney Institute gathering, I endeavoured to brace for a period of hush and silence. For, knowing all too well that Jeff liked both to ask the questions, and to answer them, any effort to butt-in during Jeff’s presentation would be fruitless. So it was that I resorted to taking notes.

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Jeff Knapp: It’s the annual dinner of the Sydney Institute on Wednesday night mate. John Howard is – and I’m quoting the website here – “the prominent personality of stature and international recognition” who is going to deliver a serious lecture to go with the dinner. It’s at The Star in Pyrmont.

I couldn’t help it, I bought the accounts. Do you want me to send them to you?

Me: Ye …

Jeff: What a trifecta. You get dinner, over an hour of networking in a packed room of colleagues and a serious lecture from John Howard; all for $440 a head. Bargain! Apparently, they have 900 paying dinner guests lined up. A table of ten costs $3,190 for corporate members, or $4,400 for non-members.

Me: Do y…

Jeff: That’s a plate of food for $440 with Johnny Howard bending your ear. What on earth is on the menu, gold plated shellfish?

It’s the “leading intellectual event of its kind in Australia”, they say. The website says the Sydney Institute is a privately-funded not-for-profit, current affairs forum encouraging debate and discussion. Like … who is more biased, the ABC or the ABC?

Me: And coal, how good is coa …

Jeff: The website says the Sydney Institute is genuinely pluralist. Can’t argue with that. There are two types of people: Conservatives and the Far Left. Who would have thought you could monetise this two-state concept into a $440 dinner plate. Whatever happened to the middle ground?

Anyway, it’s hard to beat a right-wing corporate think tank that doesn’t have its own house in order. If you have a look at the Income Statement … have you got to page 6?

Me: Ju …

Jeff: What a treat. The accounts show total income of $1,160,090 for the year. Corporate contributions are $837,664. That’s what they mean by privately funded, mostly funded by corporations. You can say what you want about GetUp. I’m not a fan but at least they disclose where their money comes from.

I can’t find any details about the corporations that finance the Sydney Institute.

But there’s more, the 2018 accounts have a 31 December year end. They were lodged with the Australian Securities and Investments Commission on 7 May 2019, or seven days after the deadline set by the Corporations Act. Michael, rules are rules. Although, I suppose you can have rules and what Matthias Cormann calls administrative errors.

Checking the lodgement record of the Sydney Institute on the ASIC website. It seems the Sydney Institute has had an administrative error six times in the last seven years by lodging its annual report with ASIC after the legal deadline.

Me: Gold, Jeff! They’ve broken the law six ti …

Jeff: Can’t lodge their annual accounts on time. Let me give you the rest year-on-year: 2017 is 28 days late, 2016 – 1 day late, 2014 – 27 days late, 2013 – 6 days late, and 2012 – 37 days late.

Me: Can directors go to prison for tha …

Jeff: They can be fined. But there’s more mate. If you turn to the table of contents page in the annual report, they mention an Independent Auditor’s report on Page 20. PricewaterhouseCoopers (PwC) is the auditor. But their audit report that is supposed to be on page 20 is not there, it is missing.

How do you say that in Latin? In absentia or minus habens?

Me: Think it’s audit in absentis J …

Jeff: Audit in absentis

Me: Audit non est

Jeff: Audit … non … est

I could find the audit independence declaration on Page 4. It is signed and dated 30 April 2019 or 14 days after directors authorised the financial report for issue on 16 April 2019. Michael, as a rule, the directors should not sign off a financial report before the audit report and audit independence declaration have been signed. Another administrative error I’m afraid.

Me: Multi errores adminis…

Jeff: A plurality of errors, you could say. We have found the pluralism. It is true though that you get what you pay for. Apparently, PwC did the audit of the Sydney Institute on a pro bono basis.

There are so many not-for-profits and charities in our society that could do with some pro bono audit work from the accounting profession. And here is PwC deciding the Sydney Institute qualifies as a not-for-profit entity most worthy of its free audit services.

Look, here’s another not-for-profit audit client of PwC, The Australia Cambodia Foundation Inc. It’s paying audit fees.

Me: So the rich old corporate people of Sydney are in greater need of charity from PwC than the poor children of Cambo…

Jeff: The Foundation, otherwise known as Sunrise Cambodia, runs the Arunreas Orphanage Centre – 7000km away from the Star Casino – in Sihanoukville, Cambodia. The children will probably be going to bed about the time Johnny rises to address the faithful.

Here we go, look, The Foundation’s accounts for 2018 disclose audit fees of $29,440, an increase of $22,400 (300 per cent) over the audit fees charged for 2017.

Me: Nice fee uplift from Pw…

Jeff: Thinking about PwC’s pro bono choices makes me feel sad. Luckily, I still have the Sydney Institute accounts to cheer me up.

Plant and equipment, shown on page 17, includes a library at cost of $890. Check this out. The library is not being depreciated. I think the library is for reference books. I imagine there are copies of Tony Abbott’s Battlelines

Me: Great Again, by Donald J Trum…

Jeff: Andrew Bolt’s Still Not Sorry. That should be on the shelves somewhere. The conviction in those books may last forever but the physical books themselves … the library wears out. Books have a useful life and books should be depreciated in the accounts.

Me: Perhaps a there is a green/leftist usurper at PwC who has deemed they don’t have a useful life J…

Jeff: Michael, I don’t want to be pernickety but, in my opinion, the Sydney Institute should explain in its accounting policies why the library is not depreciated.

There is one final irregularity I need to share with you. In 2018, the income from the Annual Dinner for 2018 is shown as $251,803.

The Sydney Institute website said there were 860 guests at this annual dinner. It also said the ticket costs for 2018 were $380 for a non-member and $280 for a member, excluding GST.

Something isn’t adding up here. If we assume 700 members were in attendance, and 160 non-members, I get a total of $256,800. The accounts show income of $251,803. That suggests an Annual Dinner income gap of $4,997. 

Michael, do you know what that indicates?

Me: They can’t add up?

Jeff: No, I’m saying that the number of guests, the ticket prices and the income do not compute. Either, there has been an administrative error or there were at least 17 guests at the 2018 annual dinner who didn’t have to pay for the privilege of being there.

Me: 17 people finished their meal and did a runner?

Jeff: I would say that 17 attendees appear to have been free-riding.

Me: Maybe PwC got pro bono tables for their pro bono audit work?

Jeff: I’m not saying that either.

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Postscript

After receiving questions from michaelwest.com.au, the Sydney Institute filed a supplementary financial report for 2018 with ASIC on 29 May 2019. The supplementary financial report is not yet available for download from ASIC’s website.

The Sydney Institute’s company secretary Gerard Henderson responded to one question relating the missing Auditor’s Report:

I refer to your email of 28 May. A small error was made in the filing of The Sydney Institute’s Annual Report in that the filing did not contain the 3 page Independent Auditor’s Report. The Institute’s Annual Report, including the Independent Auditor’s Report, was re-filed on Wednesday 29 May 2019 and accepted by ASIC.

As you will be aware, the Institute is a forum for debate and discussion in which a wide diversity of views are heard, discussed and published. The Sydney Institute does not advocate policies.

Other questions relating to the Institute’s financial backers, its apparent breaches of the Corporations Act and the income inconsistencies are yet to receive a response.

The questions put

It appears your accounts have been filed late five out of the past six years. This would appear to constitute five breaches of the Corporations Act. Has ASIC penalised the SI for these breaches?
 
A couple more issues: 
 
1. the 2018s don’t have an Independent Audit report. Did this go missing or did PwC not file?
2. the income from events does not seem to reconcile with the published guest numbers?
Income of $252,000 from functions in the year prior – NSW premier spoke. Ticket prices were $309 for members and $418 for others – more than 900 paying guests.
Going off those measures, the take from this one function alone was 278k. Appears to be a revenue gap of 26k.
3. Was this the only function where people paid?
4. Could you please provide a list of SI donors? Do you think the SI should be more transparent about its funding, like GetUp, given its position of influence?

BCA investigation: power of the business lobby in Australia

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