Financial Analysis of Universities' Financial Statements, 1993-1996

INTRODUCTION

The 1996 Budget Statement announced changes in policy settings relating to financing and funding higher education. These changes will bring more diversity in financing sources and a more competitive environment in the higher education sector. While this will present enhanced opportunities, it may also heighten exposure to financial risk.

In order to gain a greater understanding of the financial position of universities, the Department of Employment, Education, Training and Youth Affairs (DEETYA) engaged Deloitte Touche Tohmatsu to analyse universities’ audited and published financial statements.

The analysis revealed:

• The majority of universities, particularly the older, larger and well established ones, have a surplus of net assets and traditionally low borrowings.
• Financial risks exist across the sector—meeting cash flow, working capital, capital and long term development projects.
• ‘Whole of sector’ financial averages improved during 1995 and 1996 financial years.
• Revenue and expenditure profiles were relatively stable over the review period.

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