Report 21: 2019-20

Audit Results Report – Annual 2019 Financial Audits

Executive summary

This report contains the findings from the financial audits of universities and TAFEs for reporting periods ending on 31 December 2019, and other State government entity and cemetery board audits finalised since 5 November 2019[1]. Three local government audits finalised since my Report 16: March 2020 are also included in this report.

Western Australia’s public tertiary education sector comprises 4 universities and 5 TAFEs (2 metropolitan and 3 regional). The universities had combined assets of $7 billion and the TAFEs $1.2 billion at 31 December 2019. Total revenue of this sector in 2019 was $3.4 billion (universities $2.9 billion and TAFEs $509 million), including Commonwealth and State funding. Further details of the sector’s revenue and expenditure are included in Appendix 3.

To ensure the sector produces timely and accurate financial reports, it is important that university and TAFE management keep appropriate accounts and records. An effective internal control system is essential for accurate reporting, to alert management to irregularities in electronic environments and manual procedures, and to help prevent, detect and investigate errors and fraud.

The Auditor General Act 2006 (AG Act) requires the Auditor General to annually audit the financial statements, controls and key performance indicators (KPIs) of universities and TAFEs, all of which have a 31 December reporting date.

A clear (unqualified) audit opinion generally indicates that satisfactory financial controls are in place. It also indicates that financial statements are complete, accurate, comply with relevant legislation and applicable accounting standards; and fairly represent performance during the year and the financial position at year end.

Key findings

  • We issued clear audit opinions:
    • on financial statements, controls and KPIs of the 4 public universities and the 5 TAFEs
    • on the financial statements of 7 university subsidiaries and request audits
    • for 8 other smaller entities
    • for 3 local government entities
    • for 10 certifications.

Management issues

  • There were 23 financial and management control weaknesses identified at universities and TAFEs, compared to 34 last year. Twenty-six per cent were unresolved from the previous year, the same percentage as last year.
  • We identified 88 information system control issues at the universities and TAFEs. Forty-eight percent were unresolved issues from the previous year. Last year there were 90 issues and 57% were unresolved prior year issues. 
  • Annual leave and long service leave liabilities of the universities increased by 11.4% and by 1.7% for TAFEs in 2019, with a combined total of $351 million at year end.

Potential effects of COVID-19 in 2020

  • The universities and the 2 metropolitan TAFEs recognised in the Notes to their 2019 financial statements that it was too early, at the time of finalising their financial statements, to estimate the potential effect of COVID-19 on the entities.

Financial and performance measures

  • The universities predominantly rated low to medium risk for their financial performance against financial indicators in 2019. The risk levels were similar to 2018. 
  • We have summarised significant financial transactions of universities and TAFEs noted during our audits. Key financial ratios and information commonly used for assessing financial performance are also presented. 
  • The results of surveys of university and TAFE students and graduates are presented to show performance measures for each institution.

Recommendation

Universities, TAFEs and other entities should address identified financial management, KPI and information systems control weaknesses in a timely manner to ensure the continuing integrity of their financial controls and external reporting.

[1] Audit Results Report – Annual 2018-19 Financial Audits of State Government Entities, Report 12, November 2019 reported on the 2018-19 financial audits completed by 5 November 2019

 
Page last updated: May 12, 2020

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