The university sector, comprised of the eight Victorian universities, generated a net surplus of $509.1 million for the year to 31 December 2015. This continues a strong financial result for the sector, which has generated similar surpluses in each of the past five years.

The sector has been assessed as a low financial sustainability risk. However, our financial sustainability review noted that the sector has emerging issues regarding longer-term capital renewal, which need to be reviewed and addressed by the universities.

Two universities, Deakin and Melbourne, have received modified audit opinions regarding their treatment of grant funding. These qualified opinions have been issued to both entities for nearly ten consecutive years. Parliament and the public can have confidence in the financial reports of the remaining six universities and fifty-one controlled entities, who received clear audit opinions for their 2015 financial reports.

We reviewed the governance frameworks in place at universities oversighting the awarding of qualifications to overseas-based international students. This review highlighted issues with the recognition, mitigation and management of reputational and other risks linked to these ventures. The universities are also not reviewing whether the expected benefits of these ventures are being achieved.