Changes to VRQA requirements for Independent Schools

Our education sector regulator the Victorian Registration and Qualifications Authority (VRQA) has recently amended the guidelines for minimum requirements for Independent Schools.

There are numerous changes as outlined in the latest guidelines which can be found here.

Amongst the various changes is the requirement for the school’s business plan to be validated by an ‘independent’ qualified accountant which previously could be verified by the schools own qualified accountant. The plan must include certain features such as:

  • enrolment estimates and assumptions;
  • the estimated socioeconomic status of students and assumptions underpinning this status;
  • estimated State and Commonwealth grant funding; and
  • five-year financial forecasts.

The VRQA Minimum Standards and Requirements for School Registration states the following:

“The business plan must be validated by an independent qualified accountant who is not employed by or associated with the school or a related entity. The accountant should provide a signed statement that confirms the reasonableness of the business plan and validates any underlying assumptions.”

While the expression “validated” and “confirms” have been used in the VRQA guidelines, an independent auditor who performs as engagement reviewing the business plan may only provide an opinion based on mandated auditing standards. There are 3 types of engagements which can be performed in this instance:

  • An Audit: The auditor provides reasonable assurance on whether a set of information in prepared is accordance with a determined framework;
  • A Review: The assurance practitioner provides limited assurance on whether anything has come to their attention which would indicate that a set of information is not prepared in accordance with a determined framework; and
  • An Agreed Upon Procedures (AuP) engagement: The assurance practitioner performed procedures in accordance with a specified scope and provides a report outlining their factual findings.

The most suitable engagement to meet the requirements of VRQA is an AuP engagement in accordance with Australian Auditing Standard ASRS 4400 Agreed upon Procedures Engagements to Report Factual Findings. Based on our experience with VRQA, an AuP engagement in relation to VRQA requirements is acceptable to meet the Minimum Requirements.

The VRQA requirements do not specify the need to engage a Registered Company Auditor (RCA) to perform the engagement, however, the engagement performed by an RCA will ensure it is performed in accordance with Australian Auditing Standards and the Accounting Professional & Ethical Standards (APES), in particular, the requirements relating to independence.

Our team have performed AuP engagement of Independent School business plans in the past where schools preferred independent review of the business plans prior to the requirement being mandated.

If you would like the peace of mind for your school, contact our Audit Specialists to discuss how we can help you meet your compliance requirements.
About the Author
Ahmad Samadi
Ahmad plays a key role in the management and development of our audit division and our firm as a Director. Ahmad’s key strengths lie within external audits, data analytics and internal audits.
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