By Dr Don Fuller

According to the Commonwealth Government, the regulators for tertiary education in Australia, the internal mechanisms of governance, such as an overall governing board and an academic board, need to be able to demonstrate a required level of governance, accountability and quality assurance to ensure an ability to manage and monitor the financial and academic performance of the organisation.

Financial management needs to be materially accurate and meet Australian accounting standards. Effective financial controls and safeguards need to be in place.

Such requirements and capabilities have been found to be demonstrably deficient at Batchelor Institute of Indigenous Tertiary Education.

For example, at the beginning of 2023, the NT Independent Commissioner Against Corruption, released a report into a review of Batchelor Institute, that found significant deficiencies in these areas, seen to be essential by educational regulators such as the Australian Skills Quality Authority, and the Tertiary Education Quality Assurance and Standards Agency.

This included the lack of a framework that established clear direction, expectation and guidance for staff.

The commissioner identified a number of important deficiencies in the way policies were developed, approved and promulgated within the institute.

The ICAC required Batchelor Institute to re-establish a legally mandated Indigenous advisory board.

It requires five Indigenous members appointed by the minister who must live in the Territory, and reside in different regions and represent both the Top End and Central Australia.

The chair the institute’s regular board – known as the council – Pat Anderson, who has occupied the position since February 2019, lives in Canberra.

The ICAC noted that during the review, the advisory board was not in existence and “had not been for some time”. More recently, it was reported that the council had four members, despite legislation requiring 10 members.

A properly constituted council is necessary to approve the budget and business plan, approve significant commercial activities and importantly, undertake risk assessments.

With respect to financial management, and accountability and risk management, the ICAC found the need to recommend a review of all financial controls and risk management at the institute.

The review recommended amongst other things, a “wholesale review of internal policies and staff codes of conduct found to be deficient, inconsistent, and out-dated”.

The need to change corporate culture, enforce respect and accountability were found to be “critical”.

The commissioner found that a number of current and former Institute staff described corporate culture in negative terms.

The comments of the NT Auditor-General closely mirror those of the NT corruption commissioner.

In a damming assessment of the financial management systems of the institute, the Auditor-General refused to sign off on the institute’s 2021 financial statements.

The Auditor-General refused to sign off on the financial report again, for the year ended December 31, 2022, indicating that financial management failures previously identified had not been corrected.

In a major potential breach of Commonwealth and Territory regulations, this included an inability to substantiate student numbers studying at the institute.

Such numbers are used to claim federal and Territory funding.

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The Auditor-General found “significant deficiencies” in “governance policies and practices, risk assessment and management, monitoring processes, internal controls over financial reporting processes, general information technology controls, and an absence of controls over student records”.

Despite the requirements of the ICAC and the Auditor-General in 2021 and 2022, serious problems remained such that the Auditor-General was forced to issue a qualified report on the financial statements for the institute for the year ended December 2023, which is in the last annual report available.

This would appear to be unacceptable for an organisation so heavily dependent on taxpayer funding from the Commonwealth and NT governments.

One is left wondering how this proves acceptable to regulatory bodies such as ASQA and TEQSA.

With regard to the qualified report for 2023, the Auditor-General pointed out that the audit was not designed to specifically identify problems but to point out those that were found.

She therefore could not guarantee there were no other serious issues that existed within the financial and management systems that need to be addressed.

The Auditor-General reported that an audit of the financial statements for year ended December 2022, confirmed that deficiencies identified had not been attended to by November 2023.

These serious issues included an inability by management to substantiate revenue from the Australian and NT governments, a lack of evidence to substantiate employee expenses, delays in implementing ICAC’s recommendations and misalignment of ICAC recommendations and actions taken by the institute, and a lack of governance and financial management arrangements.

During the year 2023, the Auditor-General indicated that management had by now, addressed some issues identified during audits conducted at the end of 2021 and 2022.

Substantial management issues identified by the Auditor-General in the 2021 audit were also not fully attended to by February 2023. These included “pervasive weaknesses in the institute’s internal control environment”, incorrect recognition of revenue, and discrepancies in the fixed asset register of the institute.

Important matters that needed to be discussed by the Auditor-General with senior management of Batchelor Institute following the 2023 audit, included inaccurate recognition of income and expenses in the accounting period, and that the whole method of preparation and review of financial statements by management required improvement.

The council, chaired by Ms Anderson, is responsible for the preparation and oversight of the Institute’s financial report so that it gives a true and fair view in accordance with Australian accounting standards, and Commonwealth and Territory legislation, in a manner that ensures the financial statements are free from substantial misstatement, whether due to fraud or error.

Given the on going serious concerns of the Auditor-General and the ICAC with regard to financial management and governance arrangements at the institute, it is clear that management is having serious difficulties in leading and managing a tertiary institute such as Batchelor Institute in a professional manner and at the standards required by ASQA and TEQSA.

There has been a particularly high turnover of chief executive officers at Batchelor Institute, with eight different CEOs since August 2017.

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Ms Anderson has to accept a high degree of responsibility for the disarray that has continued to characterise this organisation.

Batchelor Institute finds itself joining the line of Aboriginal organisations unable to meet required levels of governance and financial management standards. These include the North Australia Aboriginal Justice Agency and Northern Territory land councils.

While senior management at Batchelor Institute often talk about the need for students to study in a culturally safe space, this becomes irrelevant if the organisation is so fragile staff do not feel safe, and are unable to continue to deliver the necessary courses in a professional manner, nor manage the organisation in a safe and appropriate manner.

It seems to be an unreasonable delusion and unacceptable to other tertiary institutions in Australia, required to meet the necessary financial and governance standards, that the chair of the Batchelor Institute can claim in a statement in the latest annual report that Batchelor Institute is to pursue university status.

As mentioned previously, it seems inexplicable to many that this organisation has been able to gain re-registration with ASQA and TEQSA given the serious, ongoing failures in governance and financial management.

It appears it has not even been in a position to offer any under graduate higher education courses since 2019.

If the organisation is to continue, it is now time it was placed under the overall umbrella of an organisation with the necessary governance and financial management and control competence and experience. Ordinarily this would be a local university, such as Charles Darwin University.

However, this organisation is also experiencing difficulties with management and internal control systems.

Given its importance to the wider Aboriginal community, it is necessary that Batchelor Institute be placed under the organisational control of an appropriate Commonwealth government department to ensure that it can continue by reaching the appropriate levels of governance and financial standards required of an organisation so heavily dependent on taxpayer funding.

Dr Don Fuller was involved with the establishment of the first NT medical school under the leadership of Flinders University vice-chancellor Professor Ian Chubb, 27 years ago. He holds a first class Honours degree and a PhD in economics from the University of Adelaide. Don worked as Professor of Governance and head of the schools of law and business at Charles Darwin University. He grew up in Darwin and attended Darwin High School.