The education sector

This presentation summarises our report to parliament on the results of our 2017–18 financial audits of the entities in the education sector. This includes the Department of Education; Department of Employment, Small Business and Training; TAFE Queensland; seven public universities; eight grammar schools; and some statutory bodies.

Audit results

This year, we provided unmodified audit opinions on all education entities’ financial statements within the statutory deadline. This means that readers can rely on the audited financial statements of these entities.

We found that education entities implemented year end processes that resulted in the timely delivery of draft financial statements.

However, the quality of draft financial statements reduced. Eleven entities made unnecessary changes, which increases their risk of error and the cost of financial statement preparation.

Regarding new accounting standards, overall, education entities have taken appropriate action to understand requirements and analyse impact.

Internal controls

We found an increased risk of fraud in two universities. In one instance, changes to supplier bank account information had not been checked, and in two instances, security over payment files was inadequate. Management has put appropriate controls in place.

We assessed that the control environments across the remaining entities were generally effective.

We identified a number of lower risk deficiencies, mainly related to information technology processes and system controls.

Most internal control matters identified in prior years have been actioned and resolved.

Financial performance and position

Collectively, the financial performance of education entities has declined since last year. The sector’s combined operating surplus was $257.9 million, representing a decrease of $62.3 million. Any increase in revenue has been offset by an increase in expenses. The most significant expense continues to be employee expenses.

The sector’s financial position continues to be positive, totalling $30.8 billion at the respective balance dates of each entity. This is an increase of 4.5 per cent from the previous year. This increase is attributed to an upward movement in the valuation of property, plant and equipment and investments in financial assets, offset by an increase in borrowings for asset purchases.

Future challenges and emerging risks

All education entities are financially sustainable. However, the sector continues to face challenges. This includes changes to Australian Government funding and flow-on consequences from introducing a Prep year in 2007, which will reduce the number of students graduating from Grade 12 in 2019. In response, universities are diversifying their revenue sources, with increases in international student revenue.

TAFE Queensland’s financial performance is declining, as a result of decreasing student numbers in a competitive market and reduced government funding.

Education entities have significant asset portfolios. They must plan for the renewal of assets no longer suited to modern learning styles and maintain existing assets at an appropriate standard.

For more information

For more information on the results, financial performance, and future challenges and emerging risks highlighted in this summary presentation, please see the full report on our website.