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Victorian universities financially “strong” – auditor

VAGO    |      29 May 2015

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 The Victorian Auditor General has reported that Victoria’s eight universities are in a strong financial position but he was critical of lax procedures governing travel expenditure.

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VAGO uni surpluses

The eight universities, and their subsidiaries, generated a combined surplus of $537.1 million for the year ending 31 December 2014.  This includes, however, audit adjustments  of $259 million arising from qualifications concerning the treatment of certain income by Deakin University, the University of Melbourne and the Australian National Academy of Music.

The auditor says that the surplus, when combined with the universities’ generally good liquidity position, means that the sector is in a healthy financial position and is a low financial sustainability risk in the short term.

He reports that, over the long term, there are emerging risks the university sector should monitor.  There is a trend of declining available cash after operations to fund new assets and asset renewal. Coupled with this, spending on new assets and asset renewal has fallen from 2013 to 2014. He notes that “consuming more assets than you are renewing or replacing will have a cumulative adverse effect over time”.

The analysis of the financial sustainability risks of universities does not take into account proposed funding changes by the Commonwealth government. During the 2014 financial year, the eight universities received 45% of their revenue ($2 731 million) from Commonwealth Government grant funding, excluding capital grants. He notes that universities will need to respond to any changes to the funding model promptly and efficiently to ensure they remain financially sustainable.

He reports that, while universities have policies and procedures in place for travel and accommodation expenditure, they are not comprehensive, and compliance with these policies and procedures is poor. Consequently, universities cannot demonstrate public money is spent prudently and to the benefit of the university.    He says these results are troubling and should concern those who govern universities.  The report makes a number of recommendations for strengthening policies and procedures and compliance.

The Victorian secretary of the National Tertiary Education Union Colin Long said the audit report “throws out the window” the universities claim that financial problems  justify cuts to jobs, student services and courses.

 While universities squirrel away surpluses and management continue to give themselves generous pay rises, staff are losing their jobs, workloads are increasing, and quality is jeopardised.

He says that around 1000 staff at Victorian universities have lost their job in the last twelve months.

 

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