City decides to conduct its own audit of Arena finances

The city of Corbin delayed for another month the public release of its annual audit for the 2008 fiscal year, and City Manager Bill Ed Cannon confirmed this week one of the main reasons for the delay is that city leaders are taking a closer look at the financial condition of the Southeast Kentucky Agriculture and Exposition Center.

Cannon told the News Journal Monday that the city is conducting its own audit of the facility. The decision comes days after city leaders received an audit of the facility conducted by a firm hired by SMG Worldwide Event Management – the company that manages the 5,000-seat arena.

"I just feel like it is something we need to do. As a manager, I think it is the right thing to do," Cannon said. "I don’t know if what they gave us is a true picture or not. That’s why I’m having this checked … I just feel like we need to do our own to verify this stuff."

Cannon said Cloyd and Associates would be conducting the audit of the facility.

Last month, Cannon said he was hopeful that the city’s regular audit would be available by October, but said it could be delayed until the end of the year if a financial inspection of the Arena becomes complicated.

Cannon said the city has been given a copy of SMG’s audit but could not provide it to the News Journal for inspection Monday.

In July, Arena management provided a profit/loss statement to the city showing the facility had lost $74,418.66 since opening in March. According to a feasibility study conducted before the facility’s construction, it was estimated to lose about $300,000 in its first year of operation.

Broken down, the profit/loss statement for the arena showed $739,299.92 in total revenues and $630,684.75 in operating expenses, which would normally be a net profit of $108,615.17. But capital expenses of $119,038.89 and pre-opening expenses of $63,994.94 ($183,033.83 total) accounts for the net loss.

The facility has had only a single event since July 22 – a point of concern for Cannon and other city leaders.

SMG used an accounting firm from Richmond to conduct its audit of The Arena, Cannon said. The company sought the audit pursuant the terms of a one-year contract it has with the city.