Providers and partners

Audit of student fee protection arrangements

Private training establishments (PTEs) using a standard, static or bank bond trust mechanism are required to submit an annual audit opinion to NZQA (see the Student Fee Protection Rules 2013 and the Education Act 1989).

Requirements for 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.

The audit is required to be completed within five months of a PTE's financial year-end, and should comment on the PTEs compliance with the Education Act 1989, the Student Fee Protection Rules 2013, and the relevant Trust Deed.

What if the trustee is Public Trust?

PTEs that use Public Trust as a trustee are not required to submit an audit opinion for the trustee's compliance. Public Trust is separately audited by external auditors.

Examples of the required documentation

For examples of these documents see the SAE 3100 (Revised) standards, available on the External Reporting Board website.

  • Auditor engagement letter - see Appendix 5, Example 3: Engagement Letter for a Direct Engagement for Reasonable Assurance on ABC’s compliance with the [compliance requirements] as evaluated against the [suitable criteria].
  • Audit opinion - see Appendix 6, Example 2: Reasonable Assurance Report on ABC’s compliance with the [compliance requirements] as evaluated against the [suitable criteria] (Direct engagement).

If you have any questions about the Student Fee Protection Audit, email

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 drawdowns, not taken separately at the beginning of the course.
  • Are the drawdowns paid out as follows?
    • 20 per cent of the tuition fees, to a maximum of $3,000, after the expiry of the refund period.
    • The balance paid out in arrears over the life of the course, unless the course is ‘conditions-dependent’, in which case the fees should be drawn down as tuition is delivered. 
    • A lesser drawdown arrangement is also permissible, but a greater drawdown arrangement is not allowable under the Education Act.
      (NB: Up to 31 December 2012 the allowable drawdown was 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 drawn down over the life of the course.)
  • 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 where applicable.
  • 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?

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