Schools will need to comply with the new Victorian Registration and Qualifications Authority (VRQA) Guidelines to the Minimum Standards by 1 July 2018.
The new Guidelines significantly impact schools’ governance requirements, with particular emphasis being placed on ensuring directors are able to carry out their responsibilities, and that there are controls in place to prevent improper use of position or the making of unauthorised profit.
Effective and compliant boards will be a focus for VRQA going forward, and this will require schools to critically assess whether their board would stack up in an audit.
Boards which have either:
- had little turnover in the last 5 years; or
- a significant representation of parent or faith-body members,
will require particular review.
School leaders should conduct a 5 minute check on their key board documents ahead of 1 July, as set out below.
Last week, I had the privilege of speaking to a room full of school business managers and principals, and a key topic of discussion was School board governance and preparing for 1 July.
There’s been a lot of media attention on school governance recently, although it’s likely that the update to the VRQA Guidelines was given priority as a result of the Acacia College and Mowbray College insolvencies and closures in 2012.
These closures triggered outrage and calls from the community for more consistent requirements on schools to prevent school closures. The new Standards aim to do just that. The Standards are supported by Guidelines issued by the VRQA.
Standard 15 – School Governance
A number of schools will need to consider whether their board members will fit the new requirements of “fit and proper” and “responsible person”. Key leaders outside of the board must also be “responsible persons”.
A responsible person must “be able to carry out the person’s responsibilities in “compliance with the law”, and must not be insolvent, guilty of an indictable offence, or in breach of any requirements of the Working with Children Act.
The previous guidelines emphasised “skills, knowledge and experience”. This has been replaced with the requirement that the person is “able to carry out the person’s responsibilities”.
This new requirement aligns with the Australian Charities and Not-for-profits Commission (ACNC) Governance Standards. A person is more likely to be “fit and proper” and “able to carry out the person’s responsibilities” if they:
- have basic financial knowledge to be able to responsibly manage money and able to make their own independent assessment of the accuracy of financial records. This was recently emphasised in the Public Inquiry into the RSL (Bergin Report);
- attend, prepare for, and participate at board and/or management meetings; and
- attend training to refresh their knowledge on their duties.
As best practice, schools should strive for diverse boards which cover a broad range of skills across governance, finance, legal and culture. The new requirement is aimed at eliminating non-contributing board members who are well-meaning but are unable to govern to the standard required.
We expect that boards which have not faced turnover in the last 5 years, or which have significant numbers of parents or faith-body representatives, to be likely to require further analysis against the new Guidelines.
Standard 17 – Not-for-profit
A closely related required is the not-for-profit requirement.
Previously, the Guidelines required the school to be “not for profit” (with limited historical exceptions).
Now, the new Guidelines require the school to have “sufficient controls to prevent” gain or profit from occurring.
Schools must not be a party to prohibited agreements or arrangements. This includes agreements or arrangements to divert any profit or gain from the school – including to related faith bodies or places of worship – or prohibited payments to other persons such as excessive fees or payments not made in good faith.
This change reflects the ACNC’s renewed focus on regulating improper use of funds and aligns with the fiduciary duties of directors not to make unauthorised profits at the detriment of the organisation.
Standard 12 – Care, Safety and Welfare of Students
Student safety should be of upmost importance to schools. While this Standard has not changed, the new Guidelines emphasise the duty on schools to ensure student safety. In particular, the Wrongs Amendment (Organisational Child Abuse) Act 2017 (Vic) now imposes a duty of care on schools. It reverses the onus by creating a presumption of liability on schools where child abuse occurs.
Consequences of non-compliance
Schools will need to be compliant with the new Standards by 1 July 2018. The VRQA can require schools to report non-compliance to parents, and at worst, schools may find their registration suspended or cancelled.
Next steps for schools – 5 minute desktop audit
Schools need to ensure their practices are in line with the new Guidelines and take action if, following this 5 minute desktop audit, there are unresolved issues:
- Board skills review – who do you have? What are their skills? Are there cliques and cronies? Are members fit and proper? Do you need a board skills review?
- Constitution – check director terms limits, and how a director can be removed (you will be surprised!);
- Board policy check – ensure you have a proper, best practice suite of policies (including at a minimum a code of conduct, child safety policy, conflict of interest policy, fraud prevention policy, dispute policy);
- External audit process – ensure you have a process for rigorous and regular external board evaluation – and have the ability to implement recommendations;
- Board education plan – ensure your board undertakes regular education; and
- Review your child protection policy, and recruitment processes to ensure your school is complying with child safety legislation.
How we can help
Moores can assist with your governance requirements, from conducting governance analysis, through to policy development and training.
We are experienced in working with schools and the education sector, with particular focus on practical and commercial approaches to regulatory complexities.
For further assistance, please do not hesitate to contact us.