Part A: Roles and responsibilities

A1.1 Proprietors and schools are responsible for compliance

Schools and school proprietors are responsible for ensuring they comply with the not for profit requirements under the Education Act. This means all the schools asset's and income can only be used to operate the school (including to meet the school’s educational purpose). School assets and income cannot be used to generate profits for individuals or other entities. 

Schools are expected to maintain transparent and effective financial practices, properly manage their assets, and implement good governance practices to help ensure they meet the not for profit requirements. 

Under the Education Act schools may be required to: 

• respond to a direction issued by NESA (on behalf of the Minister)
• participate in an audit of financial affairs. In exceptional circumstances schools may be required to pay for the reasonable costs associated with an audit (see C1.2)
• participate and provide reasonable assistance in an investigation
• comply with conditions imposed on funding (in circumstances where a school is declared a non-compliant school and conditions are imposed)
• repay funding paid to the school when it was a for profit or non-compliant school (in circumstances where the Minister has decided to recover funding).

A1.2 Responsibilities of the Minister

The Education Act authorises the Minister to provide funding (or other assistance) for non-government school students. However, this is subject to the requirement that the Minister must not provide financial assistance to, or for the benefit of a school that operates for profit (see B1). 

The Minister undertakes a range of regulatory functions to ensure that funding is not provided to schools that operate for profit including: 

• issuing written directions to a school or proprietor to:
  • undergo an audit of its financial affairs (and to pay the reasonable costs of the audit in exceptional circumstances)
  • provide specified information about the affairs of the school or proprietor
  • cease any specified conduct that is in breach of the obligation not to operate for profit
  • take specified action to remedy a breach of the obligation not to operate for profit
• investigating a school or proprietor if it is suspected of operating for profit or being non-compliant (this can include deferring funding while the investigation is happening)
• declaring a school for profit because of current or previous activity (funding cannot be provided to a school that is currently declared to be operating for profit)
• declaring a school non-compliant and reducing, suspending or imposing conditions on financial assistance
• revoking for profit or non-compliant declarations
• recovering funding paid to or for the benefit of a school when it operated for profit or was a non-compliant school
• appointing members of the Advisory Committee
• issuing guidelines to explain how schools can comply with the not for profit requirements and how compliance is assessed.

Note: NESA issues directions and carries out investigations on behalf of the Minister.

A1.3 Responsibilities of the Non-government Schools Not-for-profit Advisory Committee

The Advisory Committee provides advice and makes recommendations to the Minister on school compliance and other matters related to regulating the not for profit requirements of the Education Act. 

This includes: 

• providing advice in relation to an investigation before an investigation is carried out
• providing advice on issuing directions to schools or proprietors in some circumstances
• making recommendations on the making of for profit declarations
• making recommendations on the making of non-compliance declarations and on suspension, reduction, or imposition of conditions on funding
• providing advice on revoking for profit and non-compliance declarations
• providing advice on the issuing of guidelines before they are published. 

The Advisory Committee works closely with NESA to communicate with schools and help raise awareness and understanding of the not for profit requirements.

A1.4 Responsibilities of NESA

NESA carries out delegated functions of the Minister under the Education Act including: 

• issuing written directions to schools and proprietors
• coordinating audits of financial affairs
• carrying out investigations
• issuing notifications of Advisory Committee recommendations to schools and proprietors
• managing any litigation on behalf of the Minister and the Advisory Committee. 

NESA also: 

• advises the Minister on regulatory policy and regulatory decision making
• provides advice and publishes guidance materials on the not for profit requirements
• monitors the compliance of schools with any conditions imposed on financial assistance by the Minister
• monitors and reports on its own performance against key performance indicators
• provides secretariat support to the Advisory Committee to support its operation.