Accounting for RTO’s (Registered Training Organisations):

Accounting for Registered Training Organisations (RTO) are complex in nature due to the technicality of accounting activities and the mandatory compliance regulations.  The Victorian Registration and Qualifications Authority (VRQA) is the Victorian regulatory body providing an oversight function for RTOs; whom are nationally recognised and quality-assured training providers.  To qualify as an RTO, stringent compliance is required with the Australian Qualifications Training Framework (AQTF) to ensure eligibility for state and territory funding.   The purpose of this article is to explore the fundamental accounting and compliance requirements for any effective RTO.

Income Statement and Balance Sheet

These are the two fundamental financial statements for any business wishing to monitor their financial position to assist with the decision making of the organisation.  The income statement monitors the cash inflows and outflows, determining the profitability for the period in question while the balance sheet gives an overview of the financial position calculating the equity the RTO has at a particular date.


Aged Debtor Report

An aged debtor report is a useful tool in determining the amount owed to you and the duration of time the amount has remained unpaid.  The likelihood of an amount being collectible from the debtor decreases as the debt ages.  In the context of a RTO, if an account receivable remains unpaid from a prior student, the longer it remains unpaid, the less likely that it will be received.  Hence an aged debtor report assists a business in identifying overdue payments and subsequently collecting them.  Trends in non-payment are easily identifiable through the use of an aged debtor report and collection methods can be adjusted to offset the risk of providing services which remain unpaid.

Cash-flow Forecasts

At different stages of the business cycle, you could experience either a cash surplus or deficit.  During periods of cash surplus it is advisable to pay debt down or reinvest, while during stages of cash deficit you need to assess your options of collecting outstanding debts, taking out a bank loan or staggering payments made to creditors.  Cash flow forecasts enable users to analyse the cash position of the business and manage their operations accordingly.

Bank Reconciliations

Bank reconciliations are an effective internal control used to cross check the amount of money in the internally generated cash ledger account with the business bank statement at a specific date.  This procedure highlights misstatements due to human error or fraud. For example, if an amount paid to the business was $89, but recorded as $98, the $9 difference will be detected during the bank reconciliation process, increasing the reliability of the underlying accounts produced.   Likewise, if fraudulent or inappropriate payments were being made with business funds, these would be uncovered during the reconciliation process.

Additional Compliance to be considered

The above provisions apply to training institutions within Victoria, educating domestic students.   Victorian RTOs providing courses interstate through physical or online services must comply with additional requirements outlined by the Australian Skills Quality Authority (ASQA) who are responsible for RTOs through-out the Australian Capital Territory, New South Wales, Northern Territory, Queensland, South Australia and Tasmania.  RTOs endeavouring to provide vocational training to international students must also be registered with the Commonwealth Register of Institutions and Courses for Overseas (CRICOS).  As can be seen, due to the complex environment an RTO must operate under, it is advisable to consult with an accounting professional to ensure your operations meet the vast compliance requirements and can achieve long-term financial feasibility.