There are eight public universities in Victoria, which control a further 51 entities. We conduct the financial audits of all of these 59 entities. This report outlines the results of, and our observations from, these financial audits for the year ended 31 December 2016. We also discuss the frameworks in place for identifying and managing the risk of fraud, and comment on the financial sustainability of the sector.
Financial sustainability, reporting and internal controls in the university sector are generally sound. There are opportunities to build on what has been achieved and improve further.
We issued audit opinions to 55 of the 59 university sector entities on their financial reports for the year ended 31 December 2016. We had yet to complete our audits of the remaining four entities at the date of this report.
All but three of our opinions were clear. We qualified the 2016 financial reports of Deakin University, the University of Melbourne and the Australian National Academy of Music (ANAM). We also qualified the 2015 ANAM financial report after our report Universities: 2015 Audit Snapshot was tabled in Parliament.
In our opinion, the accounting for grant revenue in these four financial reports does not comply with the requirements of Australian Accounting Standards.
Revenue recognition is a longstanding issue in the university sector. New accounting standards, which adopt a different approach to revenue recognition and measurement, are due to apply in coming financial years. This is an opportune time for the sector to review and realign their revenue accounting policies, as they will need to do a significant amount of work to be able to comply with these new standards.