Clause 7.2—Assessment of financial viability risk

Clause 7.2

The RTO satisfies the Financial Viability Risk Assessment Requirements.

What clause 7.2 means for your RTO

Your RTO is required to present an acceptable level of financial viability risk at all times (this includes considering any parent entities). ASQA assesses each RTO’s financial viability risk to evaluate the likelihood of business continuity and the RTO’s capacity to achieve quality outcomes, as outlined in the National Vocational Education and Training Regulator (Financial Viability Risk Assessment Requirements) Instrument 2021. ASQA considers this against the potential for adverse consequences if your entity collapses or becomes unviable, and makes a judgement about whether the level of risk is acceptable, unacceptable, or requires additional controls.

When you apply to become an RTO, and under certain conditions, ASQA requires you to demonstrate financial viability by submitting the Financial Viability Risk Assessment Tool. This tool requires you to provide information on your organisation’s financial viability, including your financial history and projections. 

A guide to compliance

Evidence that shows compliance will vary depending on the structure of the organisation and its business.

• A small RTO that enrols students on pay-as-you-go, fee-for-service arrangements and receives no government funding would have low financial viability risk exposure. This RTO would be likely to be allowed a high level of tolerance by ASQA.
• A large RTO that relies largely on public funding—or other demand-driven narrow revenue sources—would present as higher risk. This RTO would require more in-depth consideration and ongoing scrutiny.

ASQA may require you to provide evidence of acceptable financial viability risk. This evidence may include:

• financial statements and tax records
• business plans or projections
• Australian Securities and Investments Commission (ASIC) reports
• dependency statements
• independent financial assessments or audit opinions
• government contracts.

ASQA may request this evidence with applications for initial registration or renewal of registration, or at any other time.