Accountability

Responsibility of public sector entities to achieve their objectives in the reliability of financial reporting; effectiveness and efficiency of operations; compliance with applicable laws; and reporting to interested parties.

Asset

An item or resource controlled by an entity that will be used to generate future economic benefits.

Student volumes

Student enrolments drive the sector's operational activity, including its two largest sources of income—student fees and Commonwealth student assistance grants. 

Figure E1 shows the total EFTSL has steadily increased over the last five years.

Figure E1 
University sector number and proportion of domestic and overseas EFTSL for the years ended 31 December 2015–19

Figure D1 shows financial and non-financial sustainability indicators used to assess the financial sustainability risks of universities. These indicators should be considered collectively and are more useful when assessed over time as part of a trend analysis.

Our analysis of financial sustainability risk in this report reflects on the position of each university.

Figure D1
Financial and non-financial sustainability indicators, formulas and descriptions

Figure C1 shows the risk ratings applied to issues raised in management letters. It also details what they represent and the expected timeline for the issue to be resolved. 

Figure C1
Risk definitions applied to issues reported in audit management letters

Figure B1 lists the entities included in this report. It details the nature of the audit opinion for their 2019 financial reports, and the date it was issued to each entity.

Figure B1
Audit opinions issued for universities and their controlled entities for the year ended 31 December 2019

We have consulted with DET and the eight public universities in Victoria, and we considered their views when reaching our audit conclusions. As required by the Audit Act 1994, we gave a draft copy of this report to those agencies and asked for their submissions and comments. We also provided a copy of the report to the Department of Treasury and Finance. 

Responsibility for the accuracy, fairness and balance of those comments rests solely with the agency head.

Responses were received as follows:

DET

In this Part of the report, we summarise the financial outcomes of the university sector for the year ended 31 December 2019 and comment on the sustainability of the sector in the context of information we obtained and observed during our audits. The detailed data and calculations that underpin our financial sustainability comments of the sector are provided in Appendix D.

3.1 Conclusion

The new revenue and income standards AASB 15 Revenue from Contracts with Customers and AASB 1058 Income of Not-for-Profit Entities led to differences in accounting treatment across the sector for research grants. While not considered to be material for this year, the inconsistent application across the sector and the impact on our audit report will need to be revisited during 2020.

This Part summarises the results of our financial audits and includes observations about internal controls for the university sector for the year ended 31 December 2019. 

2.1 Conclusion

The financial reports of the universities and their controlled entities are reliable. Parliament and the community can use them with confidence.