PTE Financial Viability requirements: Graduated information and monitoring arrangements for PTEs
TEC has adopted a graduated system of information provision and monitoring as set out below.
The TEC will undertake a risk assessment of all TEC funded PTEs in receipt of $2 million or more of TEC funding or any PTE that comes to its
attention as warranting a financial review. This assessment will allow the TEC to risk rate PTEs according to a five point scale (A to E) with those
PTEs classified as being of greater risk (ie risk category D or E) or of poor financial viability (i.e. risk category C), needing to provide additional
information as set out below. TEC will confirm a PTE’s risk rating with each individual provider that is risk assessed.
Description/TEC funding
Meets
Prudenti
al
Standard
s
Provide
annual
accounts
to TEC
Get accounts
audited (and
provide audit
management letter
if requested)
Provide prospective
information to TEC
covering the period of
agreed funding i.e. Budget
P&L and Balance Sheet.
(TEC may also request
monthly cash flow
forecasts and latest
management accounts).
Action Plan
required if
prudential
standards not
met
More frequent
monitoring based on
PTE’s own internal
management
accounts (where of
acceptable quality).
PTE receives greater than $4million in
TEC funding and rated Heightened
Risk(risk category D) or Technical
Insolvency (risk category E)
Usually
not
Yes
Yes
Yes + requested
information.
Yes
Yes, as specified by
the TEC.
PTE receives greater than $4million in
TEC funding and rated Poor risk (risk
category C)
Yes
Yes
Yes
Yes + requested
information if required.
Not generally
required
Yes - six monthly or
as otherwise
required.
PTE receives greater than $4million in
TEC funding and rated Strong (risk
category A) or Adequate (risk
category B) risk
Yes
Yes
Yes
Yes
Not required
No
PTE receives between $2 million and
$4million in TEC funding and rated
Heightened Risk(D) or Technical
Insolvency(E)
Usually
not
Yes
Yes
Yes + requested
information
Yes
Yes
PTE receives between $2 million and
$4million in TEC funding and rated
Poor(C) risk
Yes
Yes
Independent
Accountant
attestation based
on prospective
information.
If requested
Not generally
required
If requested
PTE receives between $2 million and
$4million in TEC funding and rated
Strong(A) or Adequate(B) risk
Yes
Yes
Independent
Accountant
attestation based
on prospective
information.
Not required
Not required
No
PTE receives less than $2 million in
TEC funding and rated Heightened
Risk(D) or Technical Insolvency(E)
Usually
not
Yes
Independent
Accountant
attestation based
on Prospective
information
Yes + requested
information
Yes
If requested
PTE receives less than $2 million in
TEC funding and rated Poor(C) risk
Yes
If
requested
Independent
Accountant
attestation.
If requested
Not generally
required
If requested
PTE receives less than $2 million in
TEC funding and rated Strong(A) or
Adequate(B) risk or has not been
assessed for risk
Yes
If
requested
Independent
Accountant
attestation.
Not required
Not required
No
Additional and related information requirements
All TEC funded PTEs will be required to meet the Prudential Financial Standards for funding on an ongoing basis from 31 December 2014.
All new PTEs seeking TEC funding will be required to demonstrate compliance with the Standards as part of the initial acceptance into a TEC funded
scheme/pool.
All PTEs with total TEC funding greater than $2 million or any PTE that has been identified as raising material financial viability risks (i.e. risk categories C,
D or E) will need to provide a set of financial accounts to the TEC within three months of their financial year end. Those accounts must be prepared in
accordance with Generally Accepted Accounting Practice.
All PTEs receiving $4 million or more of TEC funding will be required to produce a full set of financial statements including a statement of financial
performance/comprehensive income, a statement of financial position and a statement of cash flows for their financial year.
All PTEs receiving $4 million or more of TEC funding will be required to undergo an annual external audit of their accounts by an independent qualified
auditor. It is envisaged that this requirement will replace the need for an Independent Accountant Attestation. This requirement will be confirmed by the
TEC after further consultation with NZQA.
All PTEs classified as risk category C, D or E will be more closely monitored and are required to report to the TEC on a more frequent basis. That will be
achieved through utilising an entity’s own management accounts and reports wherever possible. In most cases this will involve six-monthly reporting. The
TEC will write to PTEs if additional information is required.
PTEs may be able to seek a review of their financial assessment if there are circumstances with a particular bearing on their financial viability – for
example to take account of a recent capital contribution, abnormal circumstances or a post balance date event.
The TEC reserves the right not to fund, discontinue funding, or limit funding, to any PTE assessed as risk categories C, D or E.
The TEC reserves the right to seek additional information to that set out in the table above if it requires the information to undertake any of its functions.
The reporting and monitoring requirements set out above are in addition to the current NZQA requirements in relation to Accountant Attestations and
Student Fee Protection Mechanisms. Refer Student Fee Protection Rules 2013, available from the NZQA web site.