Audit of student fee protection arrangements

PTEs are required to submit an annual audit of the operation of standard, static and bank bond trust operations as detailed in the trust deed. PTEs that use student fee protection insurance are required to provide an audit opinion confirming that they are operating their insurance arrangement and withdrawal trust appropriately. The audit is required to be completed within 90 business days of a PTE's financial year-end.

Items to be considered in the audit

The audit must be completed by a chartered accountant holding a practising certificate, who is independent of both the PTE and the trustee. The auditor cannot provide any other services to the PTE, apart from audit of the PTE’s financial statements.

Questions the auditor should consider

• Are all student fees deposited directly into the trust account, or if deposited with the PTE, are they transferred to the trust account by close of business the next day?

• Are ALL fees protected in the trust account, including course and material fees, registration fees, and/or administration fees? These fees should be included in the regular draw downs, not taken separately at the beginning of the course.

• Are the drawdowns calculated as 10 per cent, to a maximum of $500 at course start, 15 per cent of the balance on day nine, if the student is still attending, and the balance drawndown over the life of the course? A lesser draw down arrangement is also permissable, but a greater draw down arrangement is not allowable under the Education Act

• Does the PTE top up the trust account for agents' commissions and/or incentives which are deducted from the student fees before they are paid over by the agent?

• Does the course length covered in the trust account include any holiday time the student takes during the course, including but not limited to, any Christmas holiday leave?

• Does the PTE obtain signed schedules from the student, acknowledging who the trustee is, and the payment details to the PTE from the trust account? (Examples are included as schedules 3 and 5 of the trust deeds). If the student is under 18 years, are the schedules co-signed by a parent or legal guardian? Does the PTE only draw down fees as per the payment schedules?

• Does the PTE have clear withdrawal and refund procedures? Are they available for the student to obtain, and does the PTE follow them? Does the PTE’s refund policy comply with the Trust Deed and Education Act?

• Does the trustee refund directly to the student, or is the refund paid to the PTE to transfer to the student? If the latter, is all the refund passed on to the student?

• Does the PTE complete all required student fee protection obligations on time? The PTE cannot be student fee protection-compliant if it is not completing quarterly attestations to its trustee

• Do accommodation and living expenses go to the student immediately the PTE receives the money? Accommodation and living expenses should also be protected in the trust account. Accommodation can be paid up to one month in advance if agreed in writing with the student, and living expenses can be paid as agreed in writing with the student
• If insurance is used as the student fee protection supplier, are all students covered for the full length of their course, and is a withdrawal trust used to cover the withdrawal period.

Click on the links below to download approved NZQA forms for audit opinion and auditor engagement letters: