Australia’s arts and entertainment industry is a vibrant and growing sector contributing significantly to the national economy. In Victoria, the industry employs more than 327,000 workers across the state – from performers and producers to designers, editors and technicians.
In recognition of the sectors’ growing presence, the Victorian Government announced in July 2025 a four-year funding commitment commencing in 2026 to support jobs and local talent.
Eligible organisations can now apply for funding to build their workforce, grow their reach, and create more opportunities for individuals to get involved in the sector. But behind the glamour and creativity lies a complex financial ecosystem that demands rigorous oversight. For accountants and financial advisors, businesses operating in this sector present a unique blend of challenges and opportunities.
A Diverse and Dynamic Sector
From large scale international film productions to local art exhibitions, the Melbourne entertainment landscape is as diverse as it is dynamic. Each business, whether it be a not-for-profit theatre company, a commercial film studio or touring performers, operate under distinct financial models, funding structures, and regulatory obligations.
Global uncertainty across the industry continues to raise conversations at Board level and within management teams, with topics such as funding sources, international tariffs, and local infrastructure requirements front of mind. The demand for film production in Australia continues to rise with several high-profile films being produced around the country in recent times. The challenge for local producers is managing operations in a way that is profitable and sustainable.
In response to growing uncertainly, screen agencies across Australia continue to invest in local productions and talent in an effort to reduce our reliance on major international film studios.
Key financial and reporting challenges
The arts and entertainment industry presents a number of specific complexities as follows:
Revenue recognition – Revenue can be generated across a number of different streams such as ticket sales, royalties and profit distributions. The timing of revenue recognition for each type of revenue should be considered against the requirements of AASB 15 Revenue from contracts with customers and will be dependent on when performance obligations are satisfied.
For a for profit company, government grant funding provided by local, state or national bodies also need to be considered against the requirements of AASB 120 Accounting for Government Grants and Disclosure of Government Assistance to determine if income can be recognised on receipt or deferred and recognised over time.
Further consideration should be given to compliance obligations such as ensuring funds are used in accordance with grant conditions, verifying milestone reporting and organising acquittals where required. This is an area which is usually overlooked, resulting in a non-compliance with the terms of funding.
Asset valuations – Creative intellectual property, such as scripts, recordings and performance rights can be difficult to value and/or account for (i.e. does one record it as an asset on the balance sheet?).
Careful consideration should be given to the capitalisation requirements of any development costs in line with AASB 138 Intangible Assets as well as annual impairment considerations for indefinite life or underperforming assets. Similarly, licensing deals require fair value considerations where a valuation specialist may be required.
Cash-heavy operations and related fraud risks – Businesses operating in this industry have an inherent exposure to physical cash transactions. Strict cash management processes and the need for strong internal controls are critical to mitigate the risk of skimming or underreporting of sales.
Technology risks – The rise of digital platforms and product offerings such as streaming services, virtual events and hybrid experiences have created heightened technology risks in recent times. Boards and management teams need to be aware now more than ever of the risks surrounding cybersecurity, data privacy, digital rights management, and platform revenue splitting arrangements.
Ensuring there is an effective general IT control environment in place together with appropriate policies and procedures is an important consideration for risk mitigation.
Governance and ESG in the Spotlight
Industry stakeholders are becoming increasingly interested in governance, diversity, and sustainability reporting. Recent changes in federal legislation have now fast tracked the requirement for mandatory climate-related disclosure for certain businesses.
The impact of these changes and upcoming reporting requirements should be considered with a focus on identifying key performance metrics, ESG strategies, reviewing diversity and inclusion policies and ensuring sufficient data is available to adequately evaluate environmental impacts.
That’s a Wrap: A Sector Worth Watching
The arts and entertainment industry requires more than technical expertise — it demands cultural intelligence and awareness, adaptability, and a deep understanding of the sector’s nuances. As the industry continues to evolve, so too must the financial advisors, ensuring transparency, accountability, and trust remains centre stage.
HLB Mann Judd has extensive experience in providing tailored service offerings to meet the needs of our clients in the arts and entertainment industry.
If you would like to discuss how we can help you with an accounting or auditing issue please reach out for further information.