Victorian Auditor-General's Office

Appendix A. Events relevant to the financial arrangement

A complex series of events led up to the decision by Holmesglen Institute of TAFE (Holmesglen) to make a loan to a Registered Training Organisation (RTO), as the first step in an acquisition strategy, and continued until the final arrangements were made for settlement of the loan.

The key events are set out in Figure A1 along with the issues and themes raised for the major parties involved; Holmesglen, Skills Victoria and the Department of Treasury and Finance (DTF).

2 Holmesglen's financial arrangement

At a glance

Background

Over the past decade Technical and Further Education (TAFE) institutes have been encouraged to grow cash reserves by being entrepreneurial. In this context the Holmesglen Institute of TAFE (Holmesglen) entered into a financial arrangement with a private Registered Training Organisation (RTO). The investment raised critical issues about the legal framework and the exercise of financial prudence in the TAFE sector. The transaction ultimately resulted in a loss of $3 million of public funds.

1 Background

1.1 Introduction

Technical and Further Education (TAFE) institutes provide the majority of reported vocational education and training (VET) in Victoria. VET is designed to equip students with specific workplace skills, including technical skills, through course design significantly influenced by industry.

Audit summary

In Victoria, Technical and Further Education (TAFE) institutes offer vocational programs to meet the needs of industry, individual students and the general community. Each TAFE institute has a high degree of autonomy and is governed by a board which is accountable to the Minister for Higher Education and Skills for its educational and financial performance.

TAFE Governance

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In the course of the 2010 annual audit of the financial statements of the Holmesglen Institute of TAFE a financially material loan of $6.5 million was identified. This audit examined the legality, propriety and financial prudence of this financial arrangement as well as the adequacy and effectiveness of coordination and oversight of Holmesglen and the TAFE sector, by Skills Victoria and the Victorian Skills Commission.

Municipal Solid Waste Management

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This audit examined whether waste management and resource recovery actions have been effective and efficient in achieving the Towards Zero Waste Strategy objectives and targets for municipal solid waste.

Allocation of Electronic Gaming Machine Entitlements

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This audit determined whether the financial outcomes from the allocation of electronic gaming machine entitlements represented best value for money, and whether the allocation process was managed in an effective and efficient manner.

Management of Major Road Projects

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This audit examined VicRoads' and the Linking Melbourne Authority's management of major road projects by assessing the development of business cases, the management of project risks and the achievement of intended outcomes.
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