Universities taught accounting lesson

WA’S universities may have been pitching for offshore business for decades, but have been criticised for procedures that keep tabs on revenue or enrolments from international students associated with new ventures.

The WA Auditor General found both Murdoch University and Curtin University of Technology had short-comings in relation to contracts defining their offshore projects, in the year ending December 31 2001.

The biggest issue appeared to be the uncertainty of arrangements with offshore partners, mainly in Asia where administration services are often provided as part of deals with WA institutions.

The auditor general found Murdoch had provided for a doubtful debt of $2.2 million in its 2001 financial report due to fee revenue it expected would not be collectable.

“A significant portion of this amount was in respect of students who have completed individual modules but discontinued their studies,” the auditor general said in his Report on Public Universities and TAFE Colleges released this month.

“In these cases, agreements provided for the offshore partner to only remit revenue upon completion of a whole course.”

The report stated it had become apparent that provisions in the contract were inadequate to ensure recovery of debts due.

Murdoch deputy vice-chancellor, Professor Jeff Gawthorne, said an agreement with an offshore partner, the HR Education Group in Hong Kong, was terminated last year because of continued late payment of some funds.

Professor Gawthorne said no students in the program were disadvantaged and the last students would graduate by the end of this year.

“HREG had regularly failed to pay funds that were due to the university under the contract,” he said.

“All teaching costs were covered and the high academic standards of the university were maintained.

“The university is considering its options for legal action against HREG and the prospects for recovering the debt.”

At Curtin, the issue was under different circumstances, with some contracts stipulating offshore partners profits would be affected by revenue earned, while others related to the student numbers enrolled.

The auditor general was concerned that the revenue from offshore projects could be difficult to determine accurately because contracts did not provide for independent verification of student numbers and related revenue due from partners.

“Consequently the university [Curtin] is unable, for some programs, to reliably determine the amount of offshore revenue to which it is entitled,” the auditor general reported.

Curtin pro vice chancellor international and enterprise Jeanette Hacket said that the university had added the need for independent verification in new contracts, though she claimed it had not been an issue from an operational point of view.

“We believe we always knew how many students there were and how much revenue we had,” Ms Hacket said.

“We are completely confident that the processes we have in place would pass rigorous scrutiny.”

In fact, Ms Hacket said, a recent audit by the Australian Universities Quality Agency had not raised any concerns with the offshore partnership arrangements, where students study courses set and assessed by Curtin, though not always badged as a Curtin product.

She said this was a growing area of business for Australian universities and it was important that processes and systems were in place to control quality standards in offshore markets.

The report noted that only the University of WA had centralised the management and monitoring of offshore programs.

The auditor general recommended that:

p all programs be assessed for risk, approved in advance and comprehensive enforceable contracts are in place prior to the start of operations;

p management be provided regular financial reports and closely monitor all aspects on offshore programs;

p all revenue be clearly recognised and reliably measured in a timely manner; and

p debtors be monitored closely.

p See Editorial, Page 8.

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