Victorian Training Guarantee
Compliance Framework:
Annual Report 2013
Cover image provided courtesy of
Wavebreakmedia Ltd/Thinkstock
Published by the
Department of Education
and Early Childhood Development
Melbourne
June 2014
©State of Victoria (Department of Education
and Early Childhood Development) 2014
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Victorian Training Guarantee
Compliance Framework
Annual Report 2013
Introduction
The Victorian vocational education and training (VET) system is one of the most important contributors to the development
of a skilled, job-ready workforce for employment in Victoria’s industry and businesses. The government’s role under the
Victorian Training Guarantee (VTG) is to provide funding support to help people access training and help RTOs deliver
training when and where it is needed.
The Department of Education and Early Childhood Development (the Department) is responsible for maintaining the integrity
of the Victorian government-subsidised training system. The Department takes a strategic approach to the performance of
registered training organisations (RTOs) that are contracted to deliver this training. This responsibility sits alongside that of
the regulators that register education and training providers.
The Department performs its oversight functions by setting standards for entry to the government subsidised training market
and then, for RTOs that meet these standards, ensuring they deliver training in a manner expected of organisations that are
in receipt of public funds. The Department has a contract in place with each of these RTOs, and the Victorian Training
Guarantee Compliance Framework (detailed below) describes the Department’s oversight and contract compliance
activities. This document provides a status report on the effectiveness of that framework after its first year in operation.
Victorian Training Guarantee Compliance Framework
In 2012 the Department established the Victorian Training Guarantee Compliance Framework (the Framework) as a key
mechanism for assuring the integrity of the Victorian government-subsidised training system. The Framework sets out
expectations of RTO behaviour and contract compliance. It provides a comprehensive and transparent approach to
compliance and features six escalating and proportionate interventions to respond to non-compliance.
After a little over 12 months in operation, it is timely to assess how effective the Framework is in helping to assure the
integrity of government subsidised training delivery. This report presents information about the compliance performance of
RTOs against the 2013 contract, as distinct from the performance of RTOs in providing training against quality standards
(this is the responsibility of the regulators). Success can only be assessed over time; therefore, the Department proposes to
publish this status report annually as evidence of the performance of the Department’s approach, and RTOs’ response to
compliance. The move from one to three year VET Funding Contracts from 2014 will support providers to deepen their
capability against the Framework’s longer term compliance objectives.
Highlights in 2013
In 2013 the Department focused on consolidating and refining its approach to compliance to help maintain and build a
training system that retains the confidence of the public, industry, students and RTOs. Highlights of this work include:
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Strengthened entry to market requirements targeting a number of risks identified through contract management in
2011 and 2012;
Regular monitoring of RTOs to identify potential areas of contract non-compliance and indicate where further
investigation was required;
Auditing to verify compliance with the funding contract and identify opportunities for improvement in the business
processes of individual RTOs and at the system level;
An integrated approach to managing complex and/or sensitive RTO matters was established with the focus on
actions to address inappropriate behaviours of a small number of RTOs and dealing with formal disputes under the
contract and related legal proceedings;
Effective payment processing with no occasions where the system supporting the payment process failed in its
processing task; and
Earlier conduct of 2014 entry to market process culminating in earlier contract offers to 505 RTOs (including
TAFE/Dual Sector Universities) of either one or three years in duration.
2013 in numbers
The scale and dimension of the contract functions managed by the Department in 2013 is illustrated in the following
numbers.
489 RTOs
36,516 payments
18 information sessions
contracted
processed during the year
conducted with RTOs
462,898 students
100% of payments
1389 RTO representatives
enrolled in government subsidised
processed on time
attending information sessions
5,600,076
8211
units ofenquiries
VET funded
270 audits
461 pre-contract assessments
from RTOs responded to
Conducted under 2013
conducted for existing RTOs seeking a
Compliance Program
2014 funding contract
109 RTOs
665 financial assessments
audited under 2013 program
Conducted as part of the 2014 entry-to-
training
77 meetings
held with RTOs
market process
597 RTOs
505 RTOs
66% of already contracted
applied for a funding contract for 2014
offered 2014 contract
offered a 3 year funding contract
(inc. TAFE/dual sector)
12% overall
were newly contracted for 2014
Compliance focus in 2013
The Department sets the parameters and relies on RTOs to deliver training in accordance with the terms and conditions of
the funding contract. This includes adhering to specified standards and ensuring training delivery has been correctly
reported and claimed for.
Each year, the Department’s compliance strategy is informed by an annual risk review which takes into consideration a
broad range of information about the performance of the VET training system including:
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shifts in the RTO market;
changes in policy direction and parameters;
information from regulators;
performance and risk issues that have arisen in relation to the previous year’s funding contract;
previous audit results;
training activity data; and
claims and payment history.
This risk review informs the focus and emphasis of compliance activities, including the annual Contract Compliance Audit
Strategy, the forthcoming year’s entry-to-market criteria, the terms of the funding contract and regular monitoring activities.
The Department judges the effectiveness of its compliance strategies in terms of RTOs’ demonstrated and sustained
changes against the following objectives:
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increased public confidence in the government-subsidised training system;
increased stability in the training market;
an optimal level of voluntary compliance amongst contracted RTOs; and
a very low level of inappropriate use of government funds.
After a little over a year of operation, this report demonstrates the effectiveness of the Framework in:
contracting a more stable and sustainable group of RTOs through strengthened entry to market requirements
and three year funding contracts;
helping RTOs to comply through regular and direct support on all aspects of the contract; and
taking proportionate action and intervention where compliance issues are identified.
Contracting a more stable and sustainable group of RTOs
The starting point for the government-subsidised training system is making clear essential standards required of RTOs to be
eligible for a funding contract. Strong entry standards and contract eligibility assessment processes maximise the likelihood
of selecting suitable RTOs to deliver government-subsidised VET.
Entry to market for 2013 contract
In response to the broader direction of Government policy outlined in Refocusing Vocational Training in Victoria (April 2012)
and a number of risks identified through contract management in 2011 and 2012, the contract entry criteria were tightened
for 2013.
One such market entry improvement was stronger requirements for RTOs to be eligible to claim a subsidy for reported RPL.
New and emerging risks will continue to be dealt with through the entry-to-market process and funding contract into the
future.
These more rigorous entry requirements saw the numbers of RTOs contracted in 2013 decrease to 489 from 556 in 2012.
Of the total number of RTOs expressing an interest in a contract for 2013, 131 RTOs failed to meet entry-to-market
requirements and were not offered a contract. The chart below provides a breakdown of the reasons RTOs were not offered
a funding contract in 2013. It should be noted that some RTOs failed on multiple dimensions, though only the area with the
highest level of failure has been recorded.
Chart 1. Reasons for no contract being offered
Entry to market process for the 2014 contract
During 2013, in light of the move to three year funding contracts, further enhancements were made to the process for
assessing RTOs for a 2014 contract. The expression of interest (EOI) process was conducted in two streams, with Stream 1
comprising RTOs with an existing 2013 funding contract and Stream 2 being conducted for potential new entrants to the
government-subsidised training market or RTOs that did not hold a 2013 contract.
A comprehensive pre-contract assessment process for RTOs from Stream 1 was undertaken during September and October
of 2013 to determine which RTOs might be considered for a three or one year contract, or no contract at all. The
assessment included consideration of an RTO’s duration of contiguous contracting with the Department, previous contract
performance history, findings from audits conducted and other due diligence. Where an RTO met assessment criteria and
there were no subsequent issues arising, the RTO was offered a three year contract; where it did not fully meet all criteria, it
was offered a one year contract and, where there were more significant issues, the RTO was not offered a contract in 2014.
The assessment process for Stream 2 RTOs followed the same approach as the EOI process conducted in the previous
year.
A total of 597 funding contract applications (both Stream 1 and Stream 2) were received in the 2014 funding contract EOI
process. After completion of the entry to market process, 487 RTO applicants were contracted for either one or three years
in duration and one contract offer was withdrawn. In addition, 18 TAFE Institutes/Dual Sector Universities, which were not
required to participate in the EOI process, were contracted for 3 years. Of the total RTOs contracted for 2014 and beyond,
nearly 88% have existing contracts with the Department and 12% are newly contracted.
Charts 2 and 3 provide a breakdown of the outcomes of the 2014 contract application process including the percentage of
applications offered three or one year contracts and those applications that failed the assessment process and were not
offered a funding contract for 2014. Chart 3 provides a breakdown of contract offers differentiated by the type of RTO.
Chart 2 . 2014 contract applications by outcome
Chart 3. 2014 contract offers by RTO type
Of the Stream 1 RTOs only deemed eligible for a one year contract, the following table provides information about the
reasons given for their not fully meeting all aspects of the assessment criteria for a three year contract. It should be noted
that the table provides detail about the primary reason for an RTO’s being offered a one year contract; in many instances the
RTO may have been deficient in more than one category.
Table 2.
Reason for one year contract offer
Number of RTOs
Insufficient contract duration
27
Non-Victorian based RTO
10
Quality and reliability of data reporting
23
Adverse contract compliance audit findings
16
Issues with performance history
32
A total of 108 applications for a funding contract in 2014 were unsuccessful. Of the applications received, 35 (32 per cent),
were from Stream 1 RTOs with a 2013 service agreement, while 73 (68 per cent) were from Stream 2 (RTOs without a 2013
service agreement). Unsuccessful applications were a result of RTOs’ not having met one or more entry standards in
relation to financial management and viability and contract performance history (including poor results from compliance
audits).
Chart 4. Unsuccessful applications
As part of the 2014 funding contract EOI process, RTOs (including TAFE/Dual Sector Universities) were invited to indicate
their interest in a suite of Optional Initiatives. The outcome of this component of the EOI process sees 142 RTOs providing
training services under the Single and Teenage Parents Initiative and 67 under the Young People Transitioning from Care
Initiative. 74 RTOs are Recognition of Prior Learning Approved Providers.
Helping RTOs to comply
A key element of the Framework is providing help and support to RTOs to maximise their capability to voluntarily comply
with their funding contract requirements. The Department assists RTOs by being very clear about requirements and
expectations, providing a secure online enquiry service, conducting regular information sessions, providing an effective
payment service, conducting audits in a manner that assists RTOs to comply, and supporting quality data reporting.
The terms and conditions of the funding contract set standards of behaviour and prescribe minimum requirements with
regard to RTO practice in the delivery of training services. They are reviewed annually in response to emerging risks and
RTO behaviour and revised to address these risks and more clearly articulate the Department’s expectations (the
Department also provides supplementary information throughout the year for this purpose).
Responding to enquiries lodged by RTOs
Enquiries from RTOs constitute a significant area of regular support provided by the Department to individual RTOs. In any
one year, the Department receives about 8000 requests for assistance from RTOs via this service.
Enquiries lodged by RTOs cover a wide range of issues associated with the operation of the funding contract and the
policies underpinning the VTG. The higher volumes of enquiries received from RTOs relate, in particular, to the service
agreement, funding claims processing and data reporting requirements. Chart 5 provides data on the most common
enquiries lodged by RTOs during 2013.
Chart 5 Nature of enquiries lodged by RTOs
Information sessions providing support to RTOs
During 2013 the Department conducted 18 information sessions to provide support and assistance to RTOs. These
information sessions were designed to address key aspects of the VTG contracting process, including contractual
requirements and changes, entry-to-market processes, the audit program and system and data reporting requirements.
Table 3 provides a breakdown of the information sessions held and attendance at these sessions.
Table 3.
Nature of Information Session
Number of
Information
Sessions
Number of
RTOs
attending
Number of
attendees
% of RTOs
attending
Information
Sessions
VTG Compliance Framework, key
contractual requirements, contract
compliance audit program and SVTS data
reporting
8
312
482
64%
2014 Pre-Contract Assessment Process
Briefings for RTOs with a 2013 Service
Agreement
2
352
382
72%
2014 Call for Expressions of Interest
Briefings
2
60
76
an/a
2013 End of Year Data Reporting
Information Sessions
6
402
449
82%
Assistance provided to RTOs to improve data integrity and quality
The Department is responsible for the continued operation, maintenance and improvement of the Skills Victoria Training
System (SVTS), the operational IT system established to support management of the government-subsidised training
system. RTOs upload data to SVTS regularly, with more than one million transactions loaded every day. The Department
maintains and upgrades SVTS to ensure it is reliable and aligned with any changes to the parameters of the VTG. SVTS’
high degree of reliability is vital to the operation of the government-subsidised training system and the regular payment of
RTOs.
The Department provides support to RTOs to promote accuracy and reliability of training delivery data uploaded to SVTS for
payment. This is done by providing support and assistance through user-guides and answers to Frequently Asked
Questions, conducting face-to-face information sessions and answering over 200 SVTS-related enquiries per week.
Effective and reliable payment processing
An important way the Department assists RTOs is by providing a reliable and accurate payment service. Each fortnight
during the reporting year data received from RTOs is verified and reconciled using a facility in SVTS to validate and check
the accuracy of the data provided by RTOs for payment. During 2013, over 36,500 payment invoices were processed on
time and there were no occasions where the system supporting the payment process failed in its processing task. In 2013
SVTS had no unplanned outages that affected payment.
The Department also assisted RTOs to make accurate and reliable funding claims by responding to the various enquiries
lodged by RTOs about funding data and claims. In 2013 the Department received and responded to over 1600 such
enquiries.
Auditing to support voluntary compliance
The contract compliance audit approach is designed to support RTOs to better meet contract requirements, facilitate good
practice and identify opportunities for improvement. At the completion of each audit a report is prepared and presented to
the RTO detailing the findings of the audit, including opportunities for improvement. Where appropriate, an Agreed
Management Action Plan (AMAP) is developed jointly between the auditor(s) and the RTO describing specific activities to be
undertaken by the RTO to address audit findings. As part of the 2013 audit program, 38 RTOs developed AMAPs in
consultation with their auditor(s) to address identified opportunities for improvement.
Feedback from RTOs, obtained through meetings with individual RTOs or the satisfaction survey, is positive about how the
audit program is assisting them to improve their business processes and manage transactions in compliance with the
funding contract.
RTOs are given the opportunity to complete a contract compliance audit satisfaction survey upon completion of an audit to
encourage open and honest feedback on the performance of the program. Results from satisfaction surveys conducted
indicate that the approach adopted is useful in assisting RTOs to improve business processes and controls. The 2013 audit
satisfaction survey of RTOs participating in the audit program indicates that:
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66% of RTOs were satisfied or very satisfied with the process of developing an Agreed Management Action Plan
with auditors.
76% of RTOs indicated that they were satisfied or very satisfied with the opportunity the overall audit process
presented to assist them to improve business processes and controls.
Taking proportionate action and intervention
Employing a continuum of compliance strategies provides the Department with the flexibility to respond based on the nature
of the risk or non-compliance encountered. Importantly, action taken is underpinned by a sound base of evidence gathered
through contract compliance activities.
Monitoring RTO contract behaviour and intervening early to address identified risks
Regular fortnightly monitoring of RTO behaviour and contract performance provides early warning of emerging risks and
potential contract performance issues. This leads to a range of actions to confirm that risk, including gathering further data,
meeting with the organisation to better understand the issues and taking further compliance action, where appropriate, such
as audit, suspension of payments or other investigative action.
In 2013, 117 RTOs were identified through fortnightly monitoring with potential areas of compliance risk. In these
circumstances, further investigation was undertaken, resulting in 21 meetings between RTOs and the Department. 12 of
these were resolved as a result of the meeting and 9 required further action (such as referral to audit).
Chart 6. Regular fortnightly monitoring of RTO behaviour
Suspending payment
As part of the strategy of intervening early where potential contract performance and compliance issues are identified, the
Department may suspend payments to RTOs while undertaking further consideration and investigation. Claims data
submitted by an RTO is systematically analysed and—combined with other data from audit, complaints, enquiries and other
intelligence—is used to decide whether further investigation or other action is warranted. Placing payments on hold, until the
Department is satisfied there are no significant risks or outstanding issues, is one such option.
During 2013, 29 RTOs had their payments placed on hold for a period until the issues identified were investigated and
resolved. As at the last payment period in 2013, a total of 14 RTOs had payments on hold pending further action. Chart 7
provides a breakdown of the duration payments were placed on hold over 2013
Chart 7. RTOs with payments placed on hold in 2013
Auditing to assess compliance
The Department undertakes an annual program of audits which includes an examination of RTO business processes,
transactional data and records relating to the VTG program. The Contract Compliance Audit Program is a key tool used to
support compliance and enforcement: it assists with managing risks with the VTG program and seeks to ensure that funding
claimed and paid has been expended for the purposes for which it was provided.
On an annual basis, the Department reviews its risk parameters and undertakes a risk assessment of RTOs to determine
candidates for the annual audit program. RTOs are assessed against a these parameters and classified as high, moderate
or low risk. The majority of RTOs selected for audit are chosen based on their risk profile, although the program includes a
small, random sample of RTOs (that is, the risk profile is not considered in relation to the latter group).
The Program comprises a Core program of planned audits, a program of Supplementary audits where findings from the core
program recommend further audit investigation, and a program of Off-cycle audits identified through the Department’s
ongoing risk review activities. A total of 109 RTOs (including TAFEs) have been audited under the 2013 audit program.
Arising from findings of the Core program, 40 RTOs were required to undergo Supplementary audit to assess the nature and
extent of potential issues of non-compliance.
A focus of the annual Compliance Audit Program is to audit RTOs that are identified as being higher risk, particularly in
terms of ensuring that funding provided has been expended for the purposes for which it was provided. Therefore, the
Program is structured to maximise the proportion of VET funding subject to audit. Chart 8 provides a comparison of the
proportion of RTOs subject to audit relative to the proportion of VET funding audited under the 2013 Program.
Chart 8.
A suite of audit types is used to support RTOs to maximise their contract performance and ensure that key requirements are
met. Audits conducted under the Program include:
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Business Process Audit (BPA) – to assess an RTO’s business processes to support meeting contract
requirements and to facilitate good practice and identify opportunities for improvement
Transactional Compliance Audit (TCA) – to assess an RTO’s level of compliance at a transactional level
Follow-up Audit – to assess whether an RTO has addressed the issues identified in previous audits
Evidence of Participation Audit (EOP) – to assess whether an RTO has evidence of participation to support a
claim for payment
Evidence of Eligibility Audit (EOE) – to assess whether an RTO has evidence of eligibility to support student
enrolment
Evidence of Concession Audit (EOC) – to assess whether an RTO has evidence that supports the granting of a
fee concession or fee waiver
Chart 9 provides a breakdown of the audits conducted under the 2013 Audit Program.
Chart 9. Breakdown of types of audits conducted under 2013 program
The 2013 Core Program
The Core program comprises BPA and TCA audits of RTOs identified as part of a planned annual program. Its primary focus
is to identify areas of weakness and opportunities for improvement. The program:
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provides feedback to RTOs on the effectiveness of processes in place to manage key risks (including noncompliance with contractual requirements);
provides RTOs with specific recommendations, where necessary, as to how to address the issues identified in the
audit; and
identifies the need for a transactional compliance audit.
BPA and TCA audits are conducted on a sample of records and business process documentation held by the RTO. Where
audit identifies low or medium risk issues, a Management Action Plan will be developed between the RTO and the auditor,
and subsequently agreed with the Department, to address the weaknesses. Where the audit sample identifies potentially
more serious issues, supplementary auditing is generally undertaken across a larger suite of records to establish whether
non-compliance has occurred with a greater degree of certainty.
Charts 10 and 11 provide a breakdown of the findings of Core program audits conducted in 2013.
Chart 10. Findings of 2013 Business Process Audit
Chart 11.
2013 supplementary audits
Depending on the specific audit findings of the Core Audit program, the Department will determine if, and what type of,
supplementary audit activity will be conducted. In 2013 40 RTOs, (44% of RTOs from the 2013 Core program) were
identified to undergo further audit investigation as a result of there being potentially serious findings identified through BPA
and TCA audits.
Supplementary audit action is generally focused on more detailed investigation into student enrolment practices particularly
the assessment of documentary evidence of student eligibility for enrolment in the VTG; processes in place to assess and
verify student eligibility for fee concession or waiver and whether there was documentary evidence of actual student
participation in training.
Chart 12 provides a breakdown of the supplementary audit activity indicating 44% of all further audit activity related to
evidence of student eligibility for government-subsidised training, 21% into whether there was evidence of actual student
participation in training, and 16% to the processes in place to verify student eligibility for fee concession or waiver.
Chart 12. Focus of supplementary audit action
2013 off-cycle audits
The off-cycle audit program is conducted alongside the planned program and is triggered by the identification of potential
issues and risks through regular contract monitoring, complaints and other intelligence gathering. In 2013, 29 RTOs were
audited under the Off-cycle audit program, constituting 26% of audit activity conducted under the 2013 Program.
Outcomes from audit activity
Adverse audit findings may result in a range of further actions including further investigation, suspension of payments,
student enrolments and/or training delivery within the contract, referral to the regulator, a decision not to offer contracts,
reimbursement of funds claimed and, finally, contract termination.
Where a Supplementary or Off-cycle audit has identified serious adverse findings relating to incorrect claiming of funding the
Department may act to reclaim funds associated with these findings. Currently, under the 2013 Audit Program 36 RTOs
have been identified by the Department as having audit findings warranting funds reimbursement. To date, the total amount
of funds identified to be reimbursed to the Department from the 2013 audit program is $6.1m, representing approximately
0.5 per cent of overall annual government expenditure on the VTG. In the majority of cases the amounts identified to be
reimbursed are small because the degree of non-compliance evident through the audit findings is limited. However, there
are a small number of cases where audit has identified more extensive non-compliance and more significant amounts of
funds to be reimbursed. Chart 13 provides a breakdown of the RTOs identified to reimburse funds arising from adverse
findings of the 2013 audit program.
Chart 13. RTOs identified to reimburse funds
Audits for evidence of eligibility of students for subsidised training (EOE) and evidence of participation of students in training
(EOP) have resulted in the highest proportion of funds identified for reimbursement, with EOE accounting for 61% of funds
identified for reimbursement and EOP accounting for 31%.
Investigating non-compliance and correcting behaviour
Over the 2013 calendar year, a coordinated approach to managing complex and/or sensitive issues of non-compliance was
undertaken to address inappropriate behaviours and performance on the part of a small number of RTOs. A robust
framework for managing formal disputes under the funding contract and related legal proceedings has assisted in the
resolution of these cases.
These cases have required the Department to increase levels of intervention to deal with complex contracting issues,
significant adverse audit findings and serious complaints. Actions have included corresponding with each RTO to gain
further information, suspending payments, engaging and briefing legal services, suspending the commencements of new
students, forensic and financial investigations, recouping of funds, dispute resolution processes, termination of funding
contracts, and court proceedings.
During 2013 there were 73 RTOs, of approximately 600 RTOs*, with complex and/or sensitive issues of non-compliance
being managed by the Department. This represents about 12 % of all contracted RTOs delivering training services in 2013.
(*This figure includes 489 RTOs with a funding contract in 2013 and RTOs without a 2013 contract but with payments in the
2013 calendar year relating to training commenced under contracts from earlier years.) Of these, 66 RTOs were being
monitored closely or actively managed in 2013 – 35 RTOs had been carried forward from 2012, with 31 RTOs added in
2013.
Of the 73 RTOs:
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36 RTOs were being monitored more closely because of potential issues of inappropriate behaviour and/or
performance;
For 30 RTOs there remained unresolved issues necessitating escalation to a higher level of interaction and
corrective action and more active management by the Department’s attention to rectify matters; and
7 RTOs were under intensive management because serious breaches of the contract had occurred and corrective
action was underway. In most of these cases, the RTO has been engaged with the Department in the formal
dispute resolution process under the Service Agreement/VET Funding Contract (as applicable), or in legal
proceedings as a result of the dispute being unable to be resolved.
Chart 14 provides a breakdown of the complex and /or sensitive cases managed by the Department
during 2013.
Chart 14. Cases under case management by category
The small number of RTOs with inappropriate behaviours and performance issues came to the Department’s attention
through a variety of means. This occurred through one or more compliance activities including departmental, monitoring,
complaints, regulator action, audit findings, the entry to market process and/or potential insolvency events. A profile of the
primary reasons for these RTOs is outlined in Chart 15.
Chart 15. Source of issue identification
The nature, intensity and duration of actions for case managed RTOs vary. RTOs can move from being closely monitored
for a number of months, rapidly increasing to being under active management, and often returning to close monitoring
following satisfactory resolution of current issues. Resolution of issues with monitored and actively managed RTOs across
2013 was high, with 57 of the 66 cases (86%), resolved or deemed to require no further action. This high level of resolution
resulted from the proactive and coordinated approach adopted in 2013 to managing these more complex and/or sensitive
cases.
Only a few RTOs are escalated to intensive management, with the duration of these cases being lengthy given the legal
proceedings that follow. In relation RTOs under intensive management, the two most recent cases have been resolved
within the calendar year, one following referral to Victoria Police and the other following dispute resolution. However, the five
cases carried forward from previous years remain unresolved and are still in dispute resolution.
Managing Complaints
A total of 12 formal complaints were received by the Department about contracted RTOs in the 2013 calendar year, with the
following profile (only formal complaints have been included, meaning lodged in writing to the Department and registered as
a compliant, excluding disclosures or informal information). One complaint was carried forward from 2012, and therefore
complaint management comprised 13 complaints across the calendar year. The Department has formalised its complaints
management process over this period. Complaints were received from a number of sources, a breakdown of these is
provided in Table 4. A profile of the nature of complaints received is provided in Table 5.
Table 4. Complainant
%
ofComplai
38%
nts
Further Explanation
RTO employee
Numb
er
5
Student
3
23%
One was a past student, one a current student and one a
prospective student.
Regulator and/or
Market Monitoring
Unit
Unknown
1
8%
N/A
4
31%
Some complaints are made anonymously
Four were past employees and one was currently employed by RTO
Complaint
Number
% of Complaints
Allegations of wilful non-compliance by RTO
8
62%
Issues relating to training delivery and issuing of
certificates
Issues relating to training delivery by third party
arrangements
3
23%
2
15%
Table 5.
The Department initiated a range of different actions arising from the complaints received in 2013 this included: undertaking
audit activity; referring the complainant to the relevant regulator and/or Consumer Affairs Victoria; instigating of a forensic
investigation; and/or referring the matter to the Police. Of the complaints handled in 2013, 69% (or 9) were fully resolved in
that year, with 23% (or 3) resolved in the first part of 2014 and only 1 complaint remaining to be resolved.
Working with the Regulator
The relationships and information exchange between the Department and the regulators (the VRQA and ASQA) are
fundamental to maintaining the standards of government subsidised training. Of the 73 RTOs with more complex cases
managed in 2013:
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the Department received formal advice from the relevant regulator in relation 28 of these RTOs. This related to
instances where there were concerns about registration; and
the Department has referred three RTOs to the relevant regulator, based on information that came to its attention
compliance activities.
Escalating matters and imposing sanctions
A series of actions will follow where issues remain unresolved, a serious breach of contract has occurred or there is
reasonable suspicion that a breach has occurred. Escalation to a higher level of intercession with the RTO and imposition of
sanctions may be required to resolve the issues. The escalation action may include:

Referring matters for police investigation
The Department will refer matters to the Victoria Police where there is reasonable suspicion that a breach of fraud
has occurred. In 2013 four RTOs were the subject of police investigations. Of these, two were referred by the
Department to the Police and two were instigated by the Police.

Forensic and financial investigations
The Department also initiated forensic investigations into four RTOS. Two of these investigations were initiated
prior to 2013 and two were new investigations in 2013. Two RTOs had financial investigations initiated by the
Department and undertaken in 2012, with one case resolved and once case ongoing.

Dispute resolution
The framework for handling disputes involves a series of meetings designed to resolve the dispute. Where these
meetings do not achieve resolution, formal mediation is undertaken. Failing resolution through these steps, the
dispute is then referred for external arbitration.
In 2013, five RTOs have been in the dispute resolution process with the Department, representing 7% of all casemanaged RTOs and less than 1% of all contracted RTOs. Three of these were initiated by RTOs and two were
initiated by the Department. Of these five disputes, one originated from 2011, two were initiated in 2012 and two in
2013. Of the five disputes handled in 2013, three have been resolved and two disputes remain unresolved.

Terminating the funding contract
The Department will act to terminate a funding contract where there are proven material breaches. Setting clear
terms and conditions in the funding contract is an important way the Department is being transparent about the
standards expected of contracted RTOs. Material breaches are clearly defined in the funding contract to alert RTOs
to aspects of performance that the Department regards as serious enough to warrant consideration of contract
termination. The material breach clause signals very clearly that the Department will take termination action to
address material breaches where they occur.
The Department exercised its right to terminate funding contracts for proven material breaches on four separate
occasions in 2013. Table 6 provides information about these terminations identifying the type of material breach
that occurred and the means of identification of these breaches.
Table 6.
Number
of RTOs
3
1
Means of
Identification
Type Material Breach
Audit
Failure to meet obligations regarding the application of all eligibility criteria
Audit
Making claims for payment for the delivery of Training Services that had not
occurred at the time claim was made