Results of 2019 Audits: Technical and Further Education Institutes

Tabled: 30 June 2020

1 Audit context

The technical and further education (TAFE) sector delivers vocational education and training (VET) to equip students with practical and educational skills for a variety of careers, and provides pathways to university courses.

Twelve TAFE institutes and their 14 controlled entities make up the TAFE sector in Victoria.

In Victoria, private registered training organisations (RTO) also provide VET courses to students. Private RTOs are private-sector organisations and are not included in this report.

Figure 1A provides an overview of the TAFE sector in Victoria.

Figure 1A
TAFE sector at a glance

Figure 1A TAFE sector at a glance

Source: VAGO

1.1 Legislative framework

TAFE institutes are established and governed under the Education and Training Reform Act 2006. This Act:

  • outlines the requirements for establishing a TAFE board and its governance responsibilities
  • defines the function and powers of TAFEs
  • defines the objectives of TAFEs.

TAFEs aim to:

  • perform functions for the public benefit
  • facilitate student learning
  • collaborate as part of a strong network of public training providers.

TAFEs are 'public bodies' under the Financial Management Act 1994 (FMA). They are required to comply with the FMA and with any general or specific direction given by the Assistant Treasurer. They are also subject to the Public Administration Act 2004, which provides a framework for governance in the public sector. Each TAFE board is accountable to the Minister for Training and Skills and Minister for Higher Education.

The Department of Education and Training (DET) oversees the sector on behalf of the Minister for Training and Skills and Minister for Higher Education. This includes overseeing the governance, breadth, depth and appropriateness of the training delivery provided by TAFEs. DET funds the delivery of this training through a subsidy for each training hour delivered.

1.2 TAFE funding model

The predominant revenue stream for TAFEs is from delivering training courses. In 2019, the TAFE sector earned $1 139.5 million in training revenue and government contributions to support course delivery ($1 149.7 million in 2018). The sector generates added ancillary revenue from the sale of goods, interest and other income—these streams totalled $66.7 million in 2019 ($63.3 million in 2018).

Student revenue

The TAFE sector has two broad student categories—government subsidies and full-fee paying.

Government-subsidised students are domestic students studying courses that are eligible for a government grant (also known as contestable funding).

Full fee-paying students consist of private domestic students and international students. Domestic students may self-fund their course, or access Commonwealth VET student loan funding. In this case, the Commonwealth pays the TAFE the course fees, which the students then repay through the Australian taxation system when they earn above a minimum threshold.

1.3 Report structure

In this report, we provide information on the outcomes of our financial audits of the 12 TAFEs and their 14 controlled entities for the year ended 31 December 2019. The financial results of controlled entities are consolidated into those of their respective parent entities, and we do not discuss them separately in this report.

We identify and discuss the key matters arising from our audits and analyse the information included in the TAFEs' financial and performance reports.

Figure 1B outlines the structure of the report.

Figure 1B
Structure of this report

Part

Description

2 Results of Audits

Comments on the results of the financial and performance report audits of the 12 TAFEs for the 2019 financial year. Summarises the internal control issues observed during our audits.

3 Financial sustainability

Provides insight into the TAFE sector's financial sustainability risks, and the efficiency and effectiveness of their operations.

Source: VAGO

Appendix B lists the 12 TAFEs and their 14 controlled entities included in this report, and details the financial audit opinions issued for the year ended 31 December 2019.

We carried out the financial audits of these entities under section 10 of the Audit Act 1994 and in accordance with Australian Auditing Standards. Each entity pays the cost of its audit.

The cost of preparing this report was $165 000 which is funded by Parliament.

1.4 Recommendation

We recommend that all technical and further education institutes:

1. review and update their risk registers and their business continuity plans to incorporate learnings from the COVID-19 pandemic.

1.5 Submissions and comments

We have consulted with DET and the 12 TAFE entities and considered their views when reaching our conclusions. As required by the Audit Act 1994, we gave them a draft copy of this report and asked for their submissions or comments. We also provided a copy of the report to the Department of Treasury and Finance for information.

The following is a summary of those responses. The full responses are included in Appendix A.

DET has noted our report and the key findings that the sector remains sustainable and that the financial and performance reports are reliable.

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