Audit Results Report – Annual 2018 Financial Audits

Executive summary

This report contains the findings primarily from the financial audits of universities and TAFEs for reporting periods ending on 31 December 2018, and other audits finalised since the date of our last results report 1.

Western Australia’s public tertiary education sector comprises 4 universities and 5 TAFEs (2 metropolitan and 3 regional). The universities had combined assets of $6.5 billion while the TAFEs had assets valued at $1.2 billion at 31 December 2018. Total revenue of this sector in 2018 was $3.1 billion (universities $2.6 billion and TAFEs $501 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.

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 12 university subsidiaries and request audits
    • for 5 other smaller entities
    • for 2 local government entities
    • for 57 certifications. 
  • We issued a qualified opinion for the Shire of Laverton.

Management issues

  • The financial management controls at universities and TAFEs were generally appropriate for ensuring efficient and effective use of resources and governance.
  • There were 34 financial and management control weaknesses identified at universities and TAFEs, compared to 60 last year. Twenty-six per cent were unresolved from the previous year, compared to 28% last year. 
  • We identified 90 information system control issues at the 4 universities and 5 TAFEs. Fifty-seven percent were unresolved issues from the previous year. Last year there were 114 issues and 33% were unresolved prior year issues. 
  • Annual leave and long service leave liabilities of the universities decreased by 3% and by 0.2% for TAFEs in 2018, with a combined total of $312.5 million at year end. 
  • The new Student Management System has been implemented at all of the TAFEs with successful data migration and generally sound controls.

Financial reporting

  • The universities and TAFEs adopted the new accounting standard AASB 9 Financial Instruments for the first time in 2018. This mainly impacted universities. It changed the classification and measurement of financial assets and required adjustments to be reported from 1 January 2018. 
  • The TAFEs applied the reduced disclosure requirements for financial reporting by Tier 2 entities, in accordance with Australian Accounting Standard AASB 1053, for the first time this year. This followed a Department of Treasury decision to streamline financial reporting, which we have long supported.
  • One university and one TAFE met our best practice standard for their good financial controls and reporting practices in 2018.

Financial and performance measures

  • The universities predominantly rated low to medium risk when measured against financial indicators. The risk level decreased slightly in 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 universities’ and TAFEs’ students and graduates are presented to show performance measures for each institution. 


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 2017-18 Financial Audits of State Government Entities, Report 7, November 2018

Page last updated: May 15, 2019

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