This report comments on the financial results, trends and risks arising from audits of TAFE financial and performance statements, and the financial statements of the 16 entities they control.

Summary

This report comments on the outcomes of the 2014 financial audits of the 12 technical and further education (TAFEs) institutes and their controlled entities. It also comments on performance reporting and risk management at the TAFEs, being two key areas of governance within TAFEs.

The TAFEs whose financial reports are complete and commented on in this report had a combined net deficit of $75.4 million for 2014. This result follows a combined net deficit of $15.1 million in 2013.

Our indicators of financial sustainability risks show short-term challenges at six TAFEs, and longer-term risks emerging for the whole sector as spending on asset replacement and renewal is decreasing.

Victoria's TAFEs have undergone a period of structural change since 2012 when the then government altered its funding model. The agility of TAFEs to respond to these changes and associated challenges has varied, and not all have responded in a timely and/or financially sustainable way.

While some steps have been taken by the sector to respond to the structural changes, bigger steps are needed by TAFE boards and the Department of Education & Training to turn around the financial decline within the sector.