Education and Employment Legislation Committee
Department of Education
20 November, 2013
Senator WRIGHT: These are questions that I wanted to ask AITSL earlier on. I was referred to this area. The questions relate to the accountability for funding for non-government schools. I understand that non-government schools in receipt of federal government funding provide annual audited statements. A qualified accountant then looks over a randomly selected sample of these. In the February additional estimates hearings I asked the department for figures of cases that require further investigation. In 2012 I understand eight major and 10 minor cases were examined. The department has said that major cases typically include allegations of misuse of Australian government funding or have a major impact on the education of a large group of students. Can you please detail the 2012 allegations and the result of the auditor's investigation for these incidents?
Mr T Cook: I think we will have to take that one on notice. I think there would be quite a bit of detail in relation to that. I do not have it on hand.
Senator WRIGHT: Thank you. Can you perhaps just give me an example of what would constitute a major case. You gave a general two subgroups. But is there something more illustrative?
Mr Hehir: A major case might be if we have received advice that a school was operating for profit rather than not for profit. We regard that very seriously, and we would investigate that normally through an audit process. Another one might be where perhaps capital funds have not been acquitted properly or there are allegations around the use of capital funds or the inappropriate use of capital funds. Again, we would audit that very closely.
Senator WRIGHT: Thank you. That is more illustrative. When I get the other answers on notice I will be able to see what the particular allegations were, and the results of the investigations. In response to those questions on notice the department has also told me that the increase in major cases in 2012 was due to the examination of schools that have a common controlling entity. Can you tell me what the entity was and how it has since been resolved?
Mr Zanderigo: Those schools would be a number of schools that have an association with the Australian Federation of Islamic Schools. A number of schools that have been associated with that federation for some time were established by support from that council. For a number of those schools we have been monitoring and have had some investigations in the last couple of years.
Senator WRIGHT: How were those being resolved?
Mr Zanderigo: There has been a variety of audits undertaken in relation to those schools We also have had close liaison with the schools. We also have embarked on a process to work with the schools and the council to help them understand better their compliance obligations in respect of our funding. Generally speaking, with those schools we have not found any incidences of improper conduct. Generally speaking, we have had quite a lot of issues relating to lack of understanding of their obligations, so we have invested quite a lot of time with them to help them better understand their obligations. We have made clear to them that we will continue to monitor them until we are satisfied that they fully comply. Similarly, some of these schools have been in a process with the states and territories, who have been looking at their compliance with their regulations and their funding requirements. We have been working with the states and territories to assist in that.
Senator WRIGHT: You used the term 'generally speaking', which suggests to me that in some cases there may have been aspects of improper conduct. Is that the case?
Mr Zanderigo: For these particular schools, no. There have been some queries about some of the transactions for those schools. Mr Hehir mentioned earlier that one of the requirements we have is based on the obligation of funding that schools operate not for profit. We have had a situation with one school in particular in New South Wales where our audit of that question with the school resulted in us deciding that they were compliant with our requirements, but in New South Wales, which has a different set of requirements, the New South Wales government found them to be operating for profit, and some process is unfolding in New South Wales to address that.
Senator WRIGHT: Have there been any cases in terms of investigation of these matters where there has been a decision to cease funding?
Mr Zanderigo: No. On occasion we will change our cycle of payments to schools, but for these ones we have not taken any decisions that I am aware of to stop payments.
Senator WRIGHT: So there has never been a decision on the basis of this audit process—
Mr Hehir: In terms of recurrent funding there certainly has not been. In other areas, particularly around capital cases, we will have a look very closely at how the funding is being spent.