In this part of the report, we discuss the significant upcoming changes in accounting standards that will impact the university sector's financial reporting.
Six of the eight universities are well progressed in their preparations for the significant changes to the accounting standards that will apply in 2019.
In this part of the report, we summarise the financial outcomes of the university sector for the year ended 31 December 2018 and comment on the sustainability of the sector in the context of information we obtained and observed during our audits.
The sector continues to be financially sound.
In this part of the report, we summarise the results of our financial audits and observations for the university sector for the year ended 31 December 2018.
The financial reports of the universities and their controlled entities present fairly, except for those of the University of Melbourne and Deakin University with respect to their recognition of research grant revenue, which does not accord with current accounting standards.
Eight universities and their 47 controlled entities make up the Victorian public university sector. Their principal activities are providing higher education and conducting research. Figure 1A illustrates all main income sources, activities and key stakeholders for the sector.
Figure 1A
University sector 2018 income sources, activities and key stakeholders
Source: VAGO.
| AASB | Australian Accounting Standards Board |
| DET | Department of Education and Training |
| EFTSL | effective full-time student load |
| FMA | Financial Management Act 1994 |
| FTE | full-time equivalent |
| Go8 | Group of 8 |
| HESA | Act Higher Education Support Act 2003 |
| TEQSA |
In Victoria, there are eight public universities, which control a further 47 entities that we are required to audit.
Each year, we conduct the financial audits of these 55 entities. This report outlines the results of these financial audits and our observations for the year ended 31 December 2018.
We also comment on the financial performance and sustainability of the sector and discuss the significant upcoming changes in accounting standards that will impact the universities’ financial reporting.
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.
The systematic allocation of the depreciable amount of an intangible asset over its expected useful life.
An item or resource controlled by an entity that will be used to generate future economic benefits.
Figure E1 shows indicators used in assessing the financial sustainability risks of TAFE institutes. These indicators should be considered collectively and are more useful when assessed over time as part of a trend analysis.
Figure E1
Financial sustainability risk indicators, formulas and descriptions
|
Indicator |
Formula |
Description |
|---|---|---|
|
Net result margin (%) |
Figures D1 shows the performance statement indicators, description and methodology, while Figures D2–D13 show each TAFE institute's reported performance against the four indicators for 2016 to 2018.
Figure D1
Performance statement indicators and formula
|
Indicator |
Description and methodology |
|---|---|
|
Training revenue diversity |