This report sets out the key outcomes from financial audits of the eight universities and their 51 controlled entities for the year ending 31 December 2014.

Summary

Parliament, and the citizens of Victoria, can have confidence in the 2014 financial reports of the universities and their controlled entities, except for the following audit qualifications. Three entities, including the University of Melbourne and Deakin University, were qualified because of their incorrect recognition of Commonwealth Government grants. The qualifications on the universities have been in place for a number of years and are long standing issues that remain unresolved.

Including an adjustment for these qualifications, the universities produced a net surplus of $537.1 million for the 2014 financial year ($446.5 million for 2013). This large net surplus, when combined with their strong liquidity position, means most universities are considered to be low financial sustainability risks. However, there are some emerging longer-term sustainability risks that need to be monitored relating to the replacement or renewal of their assets.

Universities will need to respond promptly to any changes by the Commonwealth government to the funding model, so that they remain financially sustainable—as $2.7 billion of the universities' revenue came from the Commonwealth in 2014 ($2.6 billion in 2013), excluding capital grants.

As public bodies, universities are accountable for all public money spent and therefore must have the required documentation and support to demonstrate value for money was achieved. This was not the case when we looked at travel and accommodation spending by universities, which totalled $137 million in 2014. While there are frameworks in place to control this expenditure, these frameworks were not comprehensive, and our testing showed the policies and procedures were not routinely adhered to.