Volume Two 2014 focusing on Universities
Today the Auditor-General of New South Wales, Grant Hehir, released his Volume Two Report to Parliament for 2014 focusing on the audits of all ten NSW Universities’ 2013 financial statements.
NSW university sector in good shape
The NSW public university sector is in a good financial position with the combined operating margin improving to 6.6 per cent in 2013 up from 4.9 per cent in 2012.
'Overall the university s’s combined operating revenues, excluding capital grants, increased by 1.9 per cent more than operating expenditure with employee expenses increasing by an average of 4.5 per cent, and other expenses by 6.3 per cent,’ said the Auditor-General.
'However, operating expenditures grew at a faster pace than operating revenues at five of the ten NSW universities, which is unsustainable in the longer term,’ he added.
Debt levels low but increasing
The combined debt for all ten universities has been steadily increasing but remains low relative to their ability to service interest costs.
The combined debt has increased from 3.3 per cent of equity in 2009 to 8.5 per cent in 2013. NSW Universities’ borrowings at 31 December 2013 were $1.2 billion, an increase of $233 million from the previous year.
The combined interest coverage ratio of 23 indicates that, as a whole, universities can comfortably meet their interest costs.
Financial reports unqualified
The Universities’ internal controls are appropriately designed and operating effectively to produce reliable and timely financial reports.
'I issued unqualified audit opinions on all ten Universities’ 2013 financial statements’ said the Auditor-General.
There are areas where internal controls could be improved, many of which have been raised in previous years. For example, information security remains an issue with some universities not properly reviewing user access to systems. An assessment of automated computer controls and processes within student administration systems uncovered a number of weaknesses. For example, changes to student details in the student administration system were able to be processed and approved by the same person.
'Internal control weaknesses, if not addressed promptly, may expose universities to security attacks, result in data integrity issues, fraud or identity ’ said the Auditor-General.
In the procurement area, some universities have poor controls over purchase orders, credit card usage and electronic payments. Contract management can be improved to mitigate risks and ensure intended benefits are realized.
During 2013, the number of equivalent full-time students in NSW universities increased by 2.4 per cent to 257,690 with overseas students representing 21.8 per cent.
The number of overseas students fell in five NSW universities in 2013 following falls at seven universities in 2012.
The average fee revenue received per overseas student increased 31.6 per cent from 2008 to 2012. Fees received per domestic student increased by 13.1 per cent over the same period.
Domestic student fees are significantly subsidised by the Australian Government.
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