Schools put on notice with updated VRQA risk framework

The Victorian Registration and Qualifications Authority (VRQA) has updated its Provider Risk Framework (Framework) that it will use to determine the appropriate level of oversight for each registered provider, including schools. It demonstrates the VRQA’s increased focus on governance and financial viability, while continuing to emphasise the importance of child safety.

Schools should view their own governance and operations through the lens of the Framework, which will enable them to identify areas of greatest regulatory exposure and proactively take steps to mitigate risks and to avoid unnecessary regulatory scrutiny.

Areas of risk

The Framework identifies five key areas of risk being:

  1. Student welfare – the welfare of a student is compromised while enrolled with the provider.
  2. Students’ interests – the provider fails to meet the needs of students.
  3. Governance – the governance structure fails to underpin effective operations and successful management of the provider.
  4. Financial viability – financial failure of the provider leading to inability to deliver education or training. 
  5. Compliance – insufficient processes in place to ensure compliance with regulations and standards.

Under each area, the VRQA sets out indicators that indicate a lower level of risk is required of that provider and indicators that require an increased level of oversight. The VRQA notes that it may consider other factors.

Key risk indicators

The VRQA has set out some significant indicators of risk. Schools with these indicators are likely to be subject to increased level of oversight and scrutiny by the VRQA. Some of these indicators include:

  • Provider delivers to international or exchange students or delivers courses in high risk industries such as operating boarding facilities or overseeing homestay accommodation (student welfare);
  • Published curriculum does not clearly show that the eight key learning areas are offered for Years 7-10 (students interests);
  • Operation of an unincorporated association or cooperative model (governance);
  • Provider operates across state boundaries or internationally (governance);
  • High reliance on government funding or dependence on third party loans (financial viability);
  • Existence of cross-party or related party agreements (financial viability); and
  • Outstanding complaints, matters raised by parents or other regulators or out-of-cycle review activity (compliance).

Red Flags

The VRQA has also identified failure to have required policies and procedures in place as a red flag, such as:

  • failing to have adequate student welfare policies (including child safety); or
  • lack of business planning documents.

Lessons for schools

The updated Framework aligns with the VRQA’s increased interest in a school’s governance and commercial arrangements. Following the Betrayal of Trust Report in 2013, there is increased pressure on schools that are unincorporated or do not have proper governance structures in place. While there have been several legislative changes to ensure unincorporated entities cannot escape liability for child abuse, it remains an area of significant scrutiny by the VRQA. There is no clear rule that schools in Victoria must be separately incorporated. However, organisations with unincorporated entities should carefully consider their governance structure and ensure that their governing bodies can have sufficient oversight of all schools. In many cases, schools and school systems are being required to restructure in order to meet current regulatory requirements.

The Framework demonstrates that student welfare remains a key priority for the VRQA. This is unsurprising given that in the 2019/2020 year, the VRQA’s assessment of 699 providers found that 43% were non-compliant with the Child Safe Standards / Ministerial Order 870. There was also a 10% increase in complaints received by the VRQA compared with 2018-19, and these were predominantly in the areas of student welfare and child safety.

Organisations that operate multiple schools, especially those that also operate schools in other states, are likely to continue to be a focus of VRQA’s reviews and compliance action. This is particularly where there are related party transactions or lack of transparency regarding business planning, accountability, and oversight by the governing body. Organisations that do operate across multiple states and territories need to be mindful of the unique regulatory regime in Victoria and the often more onerous obligations.

Next steps

We recommend that schools in Victoria take the following next steps in response to the VRQA’s updated framework:

  1. Review risk framework – Schools should review and amend their existing risk frameworks to align with the VRQA’s risk framework. In particular, the governing body should be cognisant of the key indicators of risk and ensure it is prepared to address any scrutiny by the VRQA.
  2. Strategic planning – It is likely that a school’s corporate structure will continue to be an area of scrutiny both for VRQA and other regulators, particularly in relation to responsibility for child safety. Schools should consider this changing environment in its strategic planning moving forward.
  3. Governance training – While most schools have focused their training on their staff members, it is equally important that its governing body such as its Board or School Council also receives training. This is particularly so as many of the obligations under the Ministerial Order 870 are imposed on the “school governing authority” and it is important that your governing body understands their responsibility.
  4. Child safety review – It is clear that child safety continues to be an area where the VRQA regularly makes findings of non-compliance. Schools, particularly those between VRQA reviews, should proactively review and amend their child safety documents.

How we can help

For more information or guidance regarding the VRQA’s Provider Risk Framework, please do not hesitate to contact us.