Report highlights

What this report is about

Results of the financial statement audits of the public universities in NSW for the year ended 31 December 2022.

What we found

Unmodified audit opinions were issued for all ten universities.

Nine universities reported net deficits in 2022, and all showed a decline from their 2021 results.

Results were impacted by a decline in investment income and government grants.

Wage remediation provisions across the universities increased by 116% to $110 million at 31 December 2022.

Expenditure increased as universities transitioned back to face-to-face teaching with the lifting of most COVID-19 restrictions.

Revenue from overseas students decreased by 0.5% overall in 2022, although not all universities were impacted equally.

Nearly 42% of fees and charges revenue came from overseas student revenue from three countries of origin (43% in 2021).

What the key issues were

We reported 88 findings to universities on internal control deficiencies (105 in 2021).

Six high risk findings were identified (four in 2021), relating to:

• IT control deficiencies in monitoring privileged user access
• password configuration
• cyber security process improvements
• lack of security over access to EFT payment files
• the status of a university's work in assessing its liability for underpayment of staff
• inadequate review of contracts leading to incorrect accounting treatments.

Two out of 13 entities reported financial losses from cyber incidents in 2022.

Retention policies on personally identifiable information (PII) vary and universities can further reduce their PII exposure risk from cyber attack.

What we recommended

Universities should:

• conduct a comprehensive assessment of their employment agreements and historical pay practices to identify potential underpayments
• prioritise actions to address repeat findings on internal control deficiencies in a timely manner
• review their PII retention policies to ensure PII stored is limited to the entity's needs, held only for the minimum duration it is legally and operationally required, and access is strictly limited.

Further information

Please contact Ian Goodwin, Deputy Auditor-General on 9275 7347 or by email.

What the report is about

In this report, we have analysed the key findings and recommendations from our audit reports over the past four years.

This analysis includes financial audits, performance audits, and compliance audits of state and local government entities that were tabled in NSW Parliament between July 2018 and February 2022.

The report is framed by recognition that the past four years have seen significant challenges and emergency events.

The scale of government responses to these events has been wide-ranging, involving emergency response coordination, service delivery, governance and policy.

The report is a resource to support public sector agencies and local government to improve future programs and activities.

What we found

Our analysis of findings and recommendations is structured around six key themes:

• Integrity and transparency
• Performance and monitoring
• Governance and oversight
• Cyber security and data
• System planning for disruption
• Resource management.

The report draws from this analysis to present recommendations for elements of good practice that government agencies should consider in relation to these themes. It also includes relevant examples from recent audit reports.

In this report we particularly call out threats to the integrity of government systems, processes and governance arrangements.

The report highlights the need for balanced advice to government on options and risks, for transparent documentation and reporting of directions and decisions, and for early and open sharing of information with integrity bodies and audit.

A number of the matters highlighted in this report are similar to those described in our previous Insights Report, (Performance Audit Insights: key findings from 2014–2018) specifically in relation to cyber and information security, to performance measurement, reporting and evaluation, and system and workforce planning and capability.

Further information

Please contact Scott Stanton, Acting Deputy Auditor-General on 9275 7347 or by email.

What the report is about

Results of the financial statement audits of the public universities in NSW for the year ended 31 December 2021.

What we found

Financial reporting

Unmodified audit opinions were issued for all ten universities.

The University of Wollongong reported the retrospective correction of a prior period error relating to a $169 million contract termination liability.

All universities reported positive net results in 2021 (four in 2020) and each showed improvement from 2020. This was mainly due to expenditure decreasing by a combined $644 million (5.8%) from 2020. Universities implemented redundancy programs in response to the COVID-19 pandemic, which resulted in a decrease of nearly 2,300 full-time equivalent staff in 2021.

All universities held an investment in Education Australia Limited, which paid to its shareholders a fully franked dividend comprising cash and shares in IDP Education Limited. This increased the combined investment revenues of the universities by $515 million in 2021. However, it affected each university's net result differently depending on elections made in their historical accounting treatment.

Government grants increased by $442 million from 2020, of which $297 million related to the Commonwealth's 2021 additional Research Support Program funding to the NSW universities which was a COVID-19 support measure to the sector.

Over 43% of universities' course fees revenue comes from three countries (39% in 2020). Students from China now represent over half of all overseas student enrolments. A high level of reliance on student revenue from a single country poses a concentration risk for universities.

Internal controls

We reported 105 findings to universities on internal control deficiencies (110 in 2020).

Four high-risk findings were identified (three in 2020), relating to:

• the status of one university's work in assessing its liability for underpayment of staff
• IT control deficiencies over privileged user access
• control deficiencies that resulted in non-recognition of a liability in one university's prior year's financial statements
• a detailed review of payroll compliance for casual staff, which remains outstanding at one university.

There were 45 repeat findings of control deficiencies in 2021 (45 in 2020). 

All universities have drafted or implemented a cybersecurity policy and established a governance committee accountable for cybersecurity. However, improvements could be made in:

• recording and monitoring of attempted cyber incidents
• assessing cyber risks relating to IT vendors
• implementation of cybersecurity control measures for key systems. 

Four out of 13 entities experienced a significant cyber incident during 2021. 

What we recommended

• Universities should prioritise actions to address repeat findings on internal control deficiencies, particularly where the issue has been repeated for a number of years.
• Universities and controlled entities should prioritise improvements to their cybersecurity and resilience.

Further information

Please contact Scott Stanton, Acting Deputy Auditor-General on 9275 7347 or by email.

What the report is about

Results of the financial statement audits of the public universities in NSW for the year ended 31 December 2020.

What we found

Unqualified audit opinions were issued for all ten universities.

Two universities reported retrospective corrections of prior period errors.

Universities were impacted by the COVID-19 pandemic with student enrolments decreasing in 2020 compared to 2019 by 10,032 (3.3 per cent). Of this decrease 8,310 students were from overseas.

In response to the pandemic, each university provided welfare support, created student hardship funds, provided accommodation and flexibility on payment of course fees. State and Commonwealth governments provided additional support to the sector.

Six universities recorded negative net operating results in 2020 (two in 2019). The combined revenues of the ten universities from fees and charges decreased by $361 million (5.8 per cent).

Despite the impact of the COVID-19 pandemic, which will continue to impact the financial results of universities in 2021, enrolments of overseas students in semester one of 2021 increased at two universities. This growth meant that total overseas student enrolments increased by 7,944 or 5.8 per cent across the sector as a whole. However, eight universities experienced decreases in overseas student enrolments compared to semester one of 2020. All universities have experienced growth in domestic student enrolments.

What the key issues were

There were 110 findings reported to universities in audit management letters.

Three high risk findings were identified. One related to the continued work by the University of New South Wales to assess its liability for underpayment of casual staff entitlements. The other two deficiencies were at Charles Sturt University, relating to financial reporting implications of major contracts, and resolving issues identified by an internal review of its employment contracts to reliably quantify the university’s liability to its employees.

What we recommended

Universities should prioritise actions to address repeat findings. Forty-five findings were repeated from 2019, of which 23 related to information technology.

Further information

Please contact Ian Goodwin, Deputy Auditor-General on 9275 7347 or by email.

The Auditor‑General of New South Wales, Margaret Crawford, released a report today on the results of financial audits of NSW universities for the year ended 31 December 2019.

All ten NSW universities received unqualified audit opinions. The 2019 financial results for universities are reported as at 31 December and reflect results from operations before the impact of the COVID‑19 pandemic.

The combined revenues for all NSW universities increased by $381 million to $11.4 billion in 2019, driven by increases in student revenues. Revenue from overseas students continued to grow faster than that from domestic students and contributed $3.6 billion in course fees to NSW universities in 2019.

Overseas students from the top three countries of origin, being China, India and Nepal, represented 72.4 per cent of all enrolments of overseas students and 65.4 per cent of all overseas student revenues for 2019. Revenue from students from these three countries comprised 40.9 per cent of total student revenues for all NSW universities, creating a considerable concentration risk for NSW universities.

The COVID‑19 pandemic may significantly impact the financial results of NSW universities in 2020. NSW universities provided data on COVID‑19 impacted student enrolments for semester one 2020. Overall numbers of student enrolments in semester one 2020 were 5.8 per cent beneath projections. Overseas student enrolments were 13.8 per cent beneath expectations and domestic student enrolments were 2.4 per cent below expectations.

The report makes recommendations to the NSW universities, aimed at strengthening controls over information technology, cyber security, validating published performance information, procurement practices and the oversight of their overseas controlled entities' legal and policy compliance functions.

Further information

Please contact Ian Goodwin, Deputy Auditor-General on 9275 7347 or by email. 

The Acting Auditor-General of New South Wales, Ian Goodwin, released a report today on the results of financial audits of NSW universities for the year ended 31 December 2018.

All ten NSW universities received unqualified audit opinions.

The combined revenues for all NSW universities increased to $10.7 billion in 2018, with expenses also increasing to $9.5 billion. Expenses grew at a higher rate than revenue, contributing to a 17 per cent decrease in universities combined operating margin per student. 

Revenue from overseas students continued to grow faster than that from domestic students. Overseas students contributed just over 60 per cent of all NSW universities’ student revenues. The increasing dependency of some universities on revenue from students from a single country of origin makes them more susceptible to changes in the economic and/or political environment.

Information technology remained the most common source of control weaknesses in our 2018 audits. 

The report makes recommendations to the NSW universities, aimed at strengthening controls over cyber security and validating published performance information. The report also recommends NSW universities strengthen their oversight of their overseas controlled entities' legal and policy compliance functions.

Further information

Barry Underwood, Director, Office of the Auditor-General, on 9275 7101, 0403 073 664 and email barry.underwood@audit.nsw.gov.au.

Further information

Barry Underwood, Director, Office of the Auditor-General, on 0403 073 664 and email barry.underwood@audit.nsw.gov.au.

The Auditor-General, Margaret Crawford released her report today on the results of financial audits of NSW universities for the year ended 31 December 2017.

No qualified audit opinions were issued for any university and the quality and timeliness of financial reporting continues to improve.

NSW universities' revenues have grown over the last five years, notwithstanding decreases in government grants. Growth in revenue is largely due to increases in the number of students, particularly students from overseas. Revenue from overseas students increased by 23 per cent in 2017.

'NSW universities should assess their student revenue concentration risk where they rely heavily on students from a single country', the Auditor-General recommended.

The report makes further recommendations to NSW universities, aimed at strengthening financial reporting, performance and controls.

Information technology weaknesses were the most common source of deficiencies in our 2017 audits.

'Universities should ensure controls, including information technology controls, are properly designed and operate effectively to protect intellectual property, staff and student data, and assets', the Auditor General recommended.

Further information

Barry Underwood, Director, Office of the Auditor-General, on 0403 073 664 and email barry.underwood@audit.nsw.gov.au.

The Auditor-General, Margaret Crawford released her report ‘Universities: 2016 Audits’ today. The report focuses on key observations and findings from the most recent audits of the ten NSW universities. No qualified opinions were issued on the universities’ financial statements and the quality and timeliness of financial reporting continued to improve.

The Auditor-General, Margaret Crawford released her special report ‘2016 – An Overview’ today. The report focuses on key observations and findings from 2016 audits and highlights key areas of focus for financial and performance audits in 2017.

The quality and timeliness of financial reporting continued to improve across the NSW public sector in 2016. Only one qualified audit opinion was issued and most agencies signed their financial statements on time.

We found the Government’s cluster governance arrangements were unclear and inconsistently implemented across the sector in 2016. Clearer arrangements would improve cooperation and coordination amongst cluster agencies and help deliver government priorities that cut across agencies.

Our 2016 audits found examples where key projects suffered from project management, cost and time issues. Strong project governance will be critical if the NSW Government’s $73.3 billion investment program to 2019-20 is to deliver the intended outcomes.

In 2017, we will build on our 2016 financial audits and continue to report our observations and findings as they relate to financial performance and reporting, financial controls, governance and service delivery. Our 2017 performance audits will have regard to what we see as key risks and opportunities for the NSW Government, and the Premier's and State Priorities. In 2016, performance against the Premier's and State Priorities was mixed and inconsistently reported. We will monitor and report on agencies’ performance in achieving the priorities in 2017.

We will audit all local councils’ financial statements and conduct performance audits across the local government sector for the first time in 2017. We will also work alongside councils and their audit committees as they implement changes to governance structures and business planning processes.

Further information

Barry Underwood, Executive Officer, on 9275 7220 or 0403 073 664 and email barry.underwood@audit.nsw.gov.au.