ASQA’s Risk Assessment Framework
When assessing applications for registration and monitoring the compliance of registered training organisations (RTOs), ASQA uses a risk assessment approach based on the Risk Assessment Framework as set out in the section 190 of the National Vocational Education and Training Regulator Act 2011.
This framework sets out a risk assessment process for ASQA in making decisions about:
- Assessing and responding to the risk of non-compliance by applicants against the VET Quality Framework,
- Assessing and responding to the risk of non-compliance by RTOs against the VET Quality Framework, and
- Monitoring the compliance of RTOs against the VET Quality Framework.
For initial registration, factors considered in determining the level of risk and appropriate responses include financial management and governance arrangements.
For continuing registration or change of scope, factors considered in determining the level of risk and appropriate responses include financial management, governance arrangements and the RTO’s past performance.
The specific operating context may also affect risk management. For example, qualifications that lead to licensed outcomes may be assessed as high risk, resulting in higher levels of intervention from the VET Regulator, irrespective of the RTO’s performance outcomes.
Applicants assessed as having a lower risk of non-compliance, and RTOs that are delivering high-quality training and assessment services, will receive less monitoring by ASQA. Applicants or RTOs assessed as higher risk in terms of the likelihood of negative impacts on quality outcomes for clients, and potential impact on the vocational education and training (VET) system more broadly, will receive more regular monitoring and attention through audit, with the aim of improving their performance outcomes.
Risk assessment process
The risk assessment process can be triggered by any of the following circumstances:
- application for initial registration
- application for renewal of registration
- application for extension to scope of registration
- the receipt of information on an RTO’s operations or performance that may change the outcome of a risk assessment process and assist the VET Regulator determine a schedule for monitoring audits.
The risk assessment process outlined in this framework is based on the Australian Standard for Risk Management (AS/NZS ISO 31000:2009), which defines risk as ‘the effect of uncertainty on objectives’. For ASQA, risk relates to the potential impact on the delivery of quality training and assessment services.
Effective management of risk in the VET Quality Framework context involves four key steps:
- 1.Identification of indicators of risk to be used in the risk assessment process
- 2.Risk assessment, which involves consideration of the potential impact if quality training and assessment services and outcomes are not delivered and the likelihood that this will occur, to determine a risk rating for the applicant or RTO
- 3.Response: assessment of applications, audits andAssessment of applications, audits and monitoring of RTOs are sources of risk information. The risk rating is used to determine the scheduling and scope of audits and other monitoring mechanisms
- 4.Ongoing review: the assessment of applications, audits and monitoring of RTOs performance are sources of risk information. The VET Regulator will review any information that may change the outcome of a risk assessment.
For initial registration, factors considered in assessing risks include the applicant’s financial and governance arrangements, and supplementary risk indicators associated with the proposed scope of operations. Where relevant, an applicant’s past performance as an RTO will also be used to inform a risk rating.
For renewal of registration or change of scope, factors considered in assessing risks include the RTO’s financial and governance arrangements, and past performance including quality indicators and complaints history. Supplementary risk indicators associated with specified operating contexts also apply.
Based on the requirements of the VET Quality Framework, this risk assessment framework suggests four groups of risk indicators for consideration in the risk assessment process: performance, financial management, governance and supplementary risk indicators.
Performance risk indicators
Performance risk indicators contribute to the risk rating for an RTO at continuing registration. Performance risk indicators focus on the performance of each RTO in delivering quality skills outcomes. The performance risk indicators are:
- history of audit compliance
- data from quality indicators
- history of complaints.
Performance risk indicators are indicators of the likelihood that quality skills outcomes will not be achieved.
Performance risk indicators are particularly relevant to the RTOs risk rating, as at initial registration there will commonly not be any performance information or data available to inform a risk assessment services and outcomes. Performance risks should be reviewed when new information on the performance of an RTO becomes available (e.g. through complaints or audits).
Financial risk indicators
Financial risk indicators contribute to the risk rating for an applicant / RTO at initial registration and renewal of registration. Financial risk indicators focus on the financial viability of an applicant / RTO and the potential impact on the delivery of quality training and assessment services and outcomes.
Financial risk indicators are indicators of the likelihood that quality skills outcomes will not be achieved.
Governance risk indicators
Governance risk indicators contribute to the risk rating for an applicant / RTO at initial and throughout the registration period.
Governance risk indicators focus on ensuring that an applicant / RTO has sufficient governance structures in place to deliver quality training and assessment services and outcomes.
The governance risk indicators are:
- Quality of business planning
- Transparency of ownership and management structure
- Skills and experience of senior officers and directors
Governance risk indicators are indicators of the likelihood that quality skills outcomes will not be achieved.
Quality of business planning
In assessing the quality of business planning undertaken, ASQA considers the following information:
- Evidence of market research and budget projections, including details of assumptions underlying projections (revenue, student enrolments etc.)
- Clarity and realism of objectives and strategies for achieving the objectives
- Demonstrated understanding of the VET Quality Framework
- Appropriate consideration of financial resources, staffing and assets required to deliver the plan
- A comprehensive risk plan and appropriate mitigation strategies
- Appropriate governance structure with clear and transparent roles and accountabilities.
Transparency of ownership and management structures
In assessing the quality of transparency of ownership and management structures, ASQA considers the following information:
- Complexity of ownership structures – i.e. can the ultimate business owners be easily identified and held accountable (this may include whether or not they are based in Australia)
- Transparency of management responsibilities/reporting lines
- Adequacy of management controls in place
- Whether the organisation has any existing domestic operations
Skills and experience of senior officers and directors
In assessing the skills and experience of senior officers and directors who are in a position to influence the management of the organisation, ASQA considers the following information:
- Level of educational expertise and background of senior officers
- The extent of prior experience of senior officers in managing an RTO
- The extent of prior experience of directors in the business of an RTO
- The level and quality of independent educational expertise available to senior officers and directors
- Extent to which control of the RTO/applicant is based in the jurisdiction of registration
- Evidence of involvement of senior officers and directors in business planning
Supplementary risk indicators
Supplementary risk indicators apply to the operating context of each RTO, and particular regulatory contexts. Supplementary risk indicators contribute to the risk rating for an applicant / RTO at initial and throughout the registration period. They may also influence the scope of an audit or monitoring activity.
The supplementary risk indicators include:
- the scope of the registration application
- the delivery of training that leads to a licensed or regulated outcome
- the RTO delivering training to overseas students studying in Australia
- the RTO having multiple sites
- the delivery of training offshore
- partnering or subcontracting arrangements
- the RTO accepting fees in advance from students
- the RTO delivering training to students under the age of 18
- the mode of delivery
- compliance with and value of government training contracts.
Supplementary risk indicators are indicators of the potential impact if quality skills outcomes are not delivered.