essential guide - the learning community · viii the essential guide to rto compliance why we are...

THE ESSENTIAL GUIDE

TO

RTO COMPLIANCE

What Every Registered Training Organisation Should Know About Compliance

to Build a Better Business

Gillian Heard and Karen Sell

First published 2014 for The Learning Community by

PO Box 205 Haberfield NSW [email protected]. 02 9362 8441

Copyright © Gillian Heard and Karen Sell 2014All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording or by any information storage and retrieval system, without the prior permission in writing from the authors.

For the National Library of Australia Cataloguing-in-Publication entry please see www.nla.gov.au ISBN: 978-0-9870570-8-2

Praise for The Learning Community

“After a decade of working with RTOs in the VET sector, Gillian Heard and Karen Sell are experts in their field. They are to be commended for tackling the why, what and how of compliance for RTOs. They have been able to demystify a complex and challenging area for anyone with an interest in vocational education in Australia. Well done.”

Robyn Alexander, Alexander Toohey Pty Ltd

“Karen and Gillian at The Learning Community approach compliance with the right mix of theory and practical business sense that suits all types of operations in an RTO. Their models are tried and tested with clients with big picture thinking that makes their approach very good for your business. I recommend their book as a great resource for owners and managers of Registered Training Organisations.”

Robyn Maher, Managing Director, RTOhelp

“Gillian and Karen are great writers who combine a depth of knowledge with on-the-ground business experience. This combination makes them worth listening to. They make it easy to apply best practice to everyday business activity.”

Dr Philip SA Cummins, Managing Director – CIRCLE, Adjunct

Associate Professor, Faculty of Education, University of Tasmania

“Karen and Gillian at The Learning Community have supported my RTO for many years. They have helped me implement a proactive and integrated approach to compliance in my business. I recommend their book as a great resource to get on top of the stress and challenges of compliance in the VET sector.”

Wynn McGufficke, CEO, SECTA Training Academy

About the authors

Gillian HeardBefore The Learning Community Gillian worked in the university sector as a Research Academic and Senior Staff Development, providing organisational and professional development programs. Gillian also has a wealth of experience in the analysis, design, and delivery of custom learning and development solutions. She currently serves on the Board of The Scots College Sydney. Gillian has worked in the RTO (VET) sector since 2005 and has developed expertise in training, assessment, and compliance.

Karen SellKaren has worked in both private and public sectors in Human Resources and Training and Development. She has a sound understanding of the complexities of organisational structures and has experience working with a diverse range of staff. Karen has particular expertise in the analysis, design, and delivery of learning and professional development solutions. Before starting The Learning Community, Karen held leadership positions at St.George Bank and The University of New South Wales. Karen has also worked in the RTO (VET) sector since 2005 and has expertise in training, assessment and compliance.

The Learning Community Based in Sydney Australia, The Learning Community helps training organisations, businesses and non-profits get smart with their systems, people, and brand strategy.

Contents

Acknowledgements vi Get Smart and Build a Better Business vii1. Governance, Compliance Management, and Continuous Improvement 12. Getting Started 73. Compliance Obligations 394. Putting the Compliance Management System Together 475. The Compliance Management Policy 516. Compliance Obligations Register 637. Documentation and Processes 758. Annual Compliance Monitoring, Reporting, and Improvement Cycle 899. Structured Continuous Improvement 9310. Structured Continuous Improvement: Checking and Acting 111

vi THE ESSENTIAL GUIDE TO RTO COMPLIANCE

Acknowledgements

We would like to thank Robyn Maher, Managing Director RTOhelp. Thank you, Robyn, for the privilege of working alongside you for five years, for sharing your expertise and wisdom, and giving us an opportunity to gain more exposure across the VET sector.

We would also like to acknowledge the contributions of our wonderful business partner at The Learning Community, Darryn Altclass, for his tireless efforts to build our business and reputation in the marketplace. Thanks.

CONTENTS vii

Get Smart and Build a Better Business

From years working in the industry, we know Registered Training Organisation (RTO) compliance can be a time-consuming task and a real source of stress. We have heard that so frequently over the past 10 years of consulting with RTOs. It can certainly feel like a hindrance rather than being helpful for your business.

In this book we will show you how to remove your compliance headache, once and for all. But not only that, we want to help you use compliance to improve and grow your business. This is why we wrote this book, to help to grow your business by getting smart with your compliance.

The words ‘compliance’ and ‘risk’ can evoke powerful emotions. You may be someone who looks forward to the challenge of managing

compliance and risk. If you are, then this book will be a delight for you to read.

On the other hand, if you are one of the many who find compliance management something to be feared then this book should bring you hope with headache-free compliance solutions. Let us walk beside you and help you overcome this fear so you can grow your RTO and get smart about compliance at the same time.

viii THE ESSENTIAL GUIDE TO RTO COMPLIANCE

Why We are Well-positioned to Help

We have worked side by side with RTO owners and staff for more than 10 years, helping set up their RTOs, manage their day-to-day compliance, prepare for audits and solve problems – both big and small. So we have a lot of first hand, on-the-ground experience in this area.

You might ask why there is a need for consultants like us, and books like this.

Simple – the RTO world is full of jargon. Setting up an RTO requires careful navigation of the legislation and standards. And the bureaucracy surrounding the RTO business can be overwhelming, not just to newcomers but also for veterans.

Good for Business

As an RTO owner or manager you must be able to demonstrate significant and ongoing commitment to the operation of your business. This commitment can be demonstrated through your approach to governance, management philosophy, systems, policies, communication, and actions. Of course you should also be committed to the delivery of quality training and assessment. So the most obvious place for you to start when thinking about compliance is going to be with the standards or legislation for the Vocational Education and Training (VET) sector. These will vary depending on which state you are in and where you plan to operate as an RTO. But they are either the AQTF Essential Standards and Conditions for Continuing Registration, or the VET Quality Framework Standards for Continuing Registration. However, these frameworks may be set to change because at the time of writing

CONTENTS ix

this book a new set of proposed standards for RTOs and VET Regulators has been released.

You can read more about these standards by using the following links:

• http://www.asqa.gov.au/verve/_resources/standards_for_continuing_registration.pdf

• http://www.vetreform.industry.gov.au/publication/draft-revised-rto-and-vet-regulator-standards

If you would like to stay on top of these changing requirements, we update our website regularly. Please visit:

• http://thelearningcommunity.com.au/

The best way to stay informed is to join our email list and you will receive regular updates. You can sign up on our website.

Whatever the regulatory framework is, you must align closely with all the requirements. But one of the biggest problems we see in RTOs is that owners are so focused on meeting these compliance obligations that they forget that they are also running a business.

Managing compliance is just a part of running a good business and we believe that you should develop a ‘good for business’ approach rather than a ‘have to’ approach to compliance.

What do we mean by this? You should encourage proactive and systematic monitoring of all

components of your business operations in a way that engages staff and managers, and incorporates the sharing of quality data and information across the RTO. Compliance management is really just good business

x THE ESSENTIAL GUIDE TO RTO COMPLIANCE

management and this is what we are all about, and hence also the focus of this book.

We have designed this publication to support you as you develop, implement, and maintain your RTO compliance systems, with a focus on good governance and management of your business operations. We will explain the concepts of governance, compliance management and structured continuous improvement in the RTO context and why you should know about them.

We will also outline the steps for developing and implementing a compliance system to reflect the core values of your organisation. The book content is consistent with the Australian Standard Compliance Systems AS3806-2006 and we have woven an RTO story throughout the book to help you see how easy it can be to adopt the ‘good for business approach’ to compliance and grow your business at the same time.

So let’s get started.

GOVERNANCE, COMPLIANCE MANAGEMENT, AND CONTINUOUS IMPROVEMENT 1

CHAPTER 1

Governance, Compliance Management, and Continuous Improvement

What is Governance?

Governance is a system of rules, practices and processes by which an organisation is directed and controlled. The system must include decision-making processes, allocation of power and accountability, verification of performance, and reporting cycles and protocols.

Rules and Processes

Good Governance

Framework to Achieve

Stakeholder Interests

2 THE ESSENTIAL GUIDE TO RTO COMPLIANCE

A good governance system enables management to achieve the vision and goals of the organisation and at the same time ensure that the needs of the many stakeholders are met.

In an RTO, these stakeholders may include owners, students, funding bodies, staff, community members, employers, and accrediting bodies. The governance system must be tailored to the size and purpose of the organisation so that it can achieve strategic business, compliance and risk objectives.

The system should incorporate clear policies and processes, information about your organisational structure, and systems to manage students, customers, human resources, finances, and risk and compliance. You also need a structured continuous improvement system in place to stay on track with improvement of your operations.

Given that definition, what does compliance management involve?

What is Compliance Management?

• Compliance is defined in the Australian Standard Compliance Programs, AS3806-2006, as “Adhering to the requirements of laws, industry and organisational standards and codes, principles of good governance and accepted community and ethical standards”.

• A compliance management program is a series of activities that when combined are intended to achieve compliance (Australian Standard Compliance Programs, AS3806-2006).

• Management of compliance is an obligation of all organisations and a basic skill for managers so that they can achieve good business outcomes. Implementation of a compliance management system provides an opportunity to not only improve an organisation’s performance, but also to manage risk and reduce the cost of failing to


meet legal and other obligations. To be successful with compliance management there must be a whole organisation commitment to achieving compliant operations, effective communication channels, training and support, and a continuous improvement ‘good for business’ approach to monitoring and managing the system.

An RTO must ensure it delivers quality training and assessment for individual students, industry, and the vocational education and training (VET) sector. RTO management must establish an effective governance, risk and compliance system that enables the organisation to demonstrate commitment to provision of quality training and assessment. The systems must include clear management philosophy, systems, policies, and communication channels. The regulatory frameworks for RTOs (both AQTF and VET Quality Framework) promote a very strong continuous improvement approach to management.

Who is Responsible for Governance and Compliance Management in an RTO?

The Chief Executive of an RTO holds the responsibility for governance and compliance risk for the organisation. In other words they are accountable for governance and compliance. All RTOs are required to comply with a governance standard. If, at the time of a regulator audit you are found to be non-compliant in any standard, no matter how small the issue may be, you will be assessed as being non-compliant against the governance standard. For this reason, it is essential that the person who is responsible for governance and compliance is equipped for the task. That person must develop and implement a comprehensive management system that spans the depth and breadth of the RTO and incorporates compliance management.


Continuous Improvement in an RTO

The cycle of improvement is also an essential part of the compliance management system in an RTO.

The following table lists the standards that focus on improvement. Systematic and continuous are the two words to reflect on as you prepare to either develop a new quality management system or review an existing system in the RTO context. We will explore the type of system that you will need to ensure a good for business approach to RTO and compliance management.

VET Quality Framework

AQTF Proposed New Standards

The RTO collects, analyses, and acts on relevant data for continuous improvement of training and assessment

15.1 1.1

The RTO continuously im-proves client services by col-lecting, analysing, and acting on relevant data

16.2 2.2

The RTO uses a systematic and continuous improvement approach to the management of operations

17.2 3.2

The operations of the RTO are quality assured

2.1–2.4

The RTO has effective gov-ernance and administration arrangements in place

18.1–18.2, 20.1, 20.2, 21.1

COR 1, 3, 4

7.1–7.4


Case Study: The International Hotel

Introducing The International Hotel

The International Hotel was established as a boutique style hotel in Sydney, Australia, 15 years ago. The hotel includes 25 exclusive rooms. The hotel employs cultural specialists and prides itself on its multicultural expertise that assists with its success in welcoming guests from all regions of the world.

The International Hotel has developed a reputation for outstanding personalised service to both the corporate customer and middle-aged tourist. It is a founder driven organisation and has retained all of its initial management team; however, it has focused on service and reputation at the expense of some other very important aspects of the business, such as staff support, maintenance of systems and the like. Risk management systems are still not implemented completely and Human Resource strategies and systems require updating and coordinating. The hotel brand needs strengthening to ensure consistency across all advertising and promotions.

The vision for The International Hotel is to expand geographically and open a number of additional properties to provide a quality boutique alternative in key locations across the Australasian region, while maintaining its reputation for exceptional personalised service.

Hotel management is also considering a new project to establish the hotel as a Registered Training Organisation. The purpose of the RTO is to provide accredited training, firstly to its own staff but also potentially to staff from other hotels.


As you read this book, you will see how this idea is developed and what steps the hotel management has to take to ensure that the RTO is set up as an effective part of the existing business and that it meets compliance requirements.

STRUCTURED CONTINUOUS IMPROVEMENT: CHECKING AND ACTING 111

CHAPTER 10

Structured Continuous Improvement: Checking and Acting

Checking

At this stage of the cycle, your focus is on reviewing or checking that the business is functioning effectively and according to plan. Check that the system of records management is suitable for the size of the organisation. Use your plan to ensure that the correct data is being collected, that it is being analysed and presented in the correct format to the right people. For example, if you have collected feedback on training on a monthly basis, the information must be analysed, summarised, and reported to management along with recommendations for action.

If you have planned your yearly cycle well, to cover all of the key result areas you must ensure that all of the tasks are completed and that you are collecting the appropriate data to enable the checking stage to be completed.

Here are some tips to ensure that the data is collected on time:• Responsibility for reporting on daily activities is allocated to all

staff• Establish ways for data to be reported that are part of daily

operations – for instance, you may have weekly staff meetings,


so information can be shared or reported across staffing teams during these meetings

• Develop reporting templates, checklists and templates for meeting agendas and minutes that can be shared and added to by individuals

• Include standing agenda items such as HR, risk and compliance, student feedback and complaints and appeals

• Make clear the consequences of not meeting deadlines. Maintaining a proactive and systematic approach to business and compliance management benefits the individual as well as the organisation.

• Align data collection and reporting to performance management appraisal, clearly, linking to position descriptions.

Reviewing the Compliance Management System

Even if you take this ‘Plan-Do-Check-Act’ approach to management of your RTO operations, it is easy to forget to check on the effectiveness of the system itself. This requires you to take a step back and review your policies and controls. To review the effectiveness of the system, you should access your stakeholders and request a range of data collected from routine monitoring to establish adherence to policies and processes.

Monitoring of the program itself typically includes review of the effectiveness of the training programs in place across the organisation, adequacy of controls at critical points in processes, effective delegation of responsibilities to ensure that compliance responsibilities are met, the currency of the recorded compliance obligations, and the effectiveness of the organisation in addressing issues identified as problematic and


in rectifying breaches of compliance. We outline a few ways to do this in the next sections.

Meeting agendas

Build into your meetings the criteria that will enable you to check in on a regular basis with the effectiveness of the system, such as effectiveness of communication, frequency of compliance breaches and treatment of issues, and awareness of the program across the organisation. Use the agendas supplied in Chapter 7 of this book to enable systematic checking of compliance. This way, the issue of compliance is always present and talked about by staff across the organisation.

Audit processes

An audit is a planned and documented process used to investigate and examine compliance with legislation and established policies and procedures, and the effectiveness of implementation of these policies and processes. During an audit the auditor determines the compliance obligations through reference to identified standards, legislation, codes of practice, and organisational documents and processes, and collects evidence that will help evaluate compliance with these identified obligations. A report is prepared to give an opinion on the adequacy of controls within the environment audited. The information provided in that audit report can subsequently be used to evaluate and improve the effectiveness of compliance and risk management, control, and governance processes. Audits can be used to correct compliance issues, to deter organisations from breaching compliance and risk requirements and to encourage the development of a preventative approach to compliance


management, as we are describing in this Guide. Three different types of audit are described in the following. It is recommended that organisations use a combination of approaches to audit as part of the overall compliance management program to ensure regular monitoring and evaluation and adoption of the ‘good for business’ approach to managing operations.

1. Internal Audit: Schedule regular internal audits that address

key compliance issues. Add to your schedule a review of the compliance management program itself. You may choose to use the ASQA self-assessment tool to assist you in this process. The following link is to the ASQA forms page – there you will find the self-assessment template for those of you who are setting up an RTO (initial registration and the template for continuing registration: http://www.asqa.gov.au/forms.html). Remember though that this self-assessment template will take you through the VET Quality Framework. You must assess your compliance against other legislation and compliance obligations, within the context of the Framework.

2. Second-Party Audit: A second-party audit is one where the organisation invites another party into the organisation to conduct an audit. As a management team, you will need to agree on the frequency of second-party audits. Your decision will depend on many factors, including the size and scope of the organisation, the complexity of the compliance obligations, the framework that you have implemented to monitor and manage compliance and the external factors that influence your compliance management activities – for example, your organisation may be required to undergo a third-party financial


audit on a yearly basis so the voluntary second-party audit would not be required.

3. Third-Party Audit: Organisations who are subject to external regulation of their operations will be subject to third-party audits. This may occur on a yearly basis, such as financial auditing or on a longer cycle. For example, Registered Training Organisations and Independent Schools in some states of Australia are audited on a five-year cycle. Other regulators might audit on a needs basis while conducting spot checks with very little warning to the organisation.

Just as you schedule your compliance management process around a regular cycle, ensure that you schedule and communicate audit processes to all relevant stakeholders. However, the element of surprise is powerful in encouraging ongoing compliance. Communicate that there will be a series of unannounced audits over the cycle and keep those dates guarded.



Getting the RTO Started

The International Hotel developed a continuous improvement cycle and completed the documentation for application to become an RTO. An internal audit based on the ASQA self-assessment document was completed for this application and the document was sent to ASQA. Following this internal audit a regulator audit was scheduled. The RTO was approved and commenced operations.

During the following year, internal audits were used to check on different aspects of the business. The Key Result Areas were all audited by the Compliance Manager. Unfortunately a number of middle managers left the organisation during this time because they were unhappy with the increased level of scrutiny of compliance matters. The level of documentation of activities and reporting had increased and they did not comply.


Acting

How will you know that the system is working? In essence, you should see improved results.

Right people/Right task

Follow up Embed into daily work

Share information

Management buy in

Monitoring and reporting

Improved results

Once you have checked that your cycle is working you should ensure that you continue to have:

• The right people working on the right tasks and that everyone is involved in continuous improvement

• An embedded proactive approach to continuous improvement• Effective sharing of information across the organisation• An effective management cycle and endorsement of compliance

by the board/senior management team• The required monitoring reporting and recording systems in place• Clear accountabilities and real consequences for not complying

with proactive improvement practices.



Dealing with Non-Compliances

Following a successful year of operations the RTO conducted a second party audit – the original consultant was asked to review compliance across the organisation. The scope of the audit focused on the business systems of the RTO and the training and assessment function. A number of non-compliances were identified regarding the staff of the organisation. It was found that the compliance management system was not fully embedded and that many staff members were not fulfilling their duties. This was found to relate back to the changes in staffing. A training plan was put into place to improve compliance awareness and cooperation and a review of the documentation system recommended streamlining of some processes. The recommendations were implemented and the next cycle of monitoring and review was approved by senior management and put into place.


Stay Compliant and Stay Competitive

Compliance management in an RTO should be structured and informed by your business objectives and embedded in your governance systems. It’s smart to be proactive in the way you manage the RTO, using a continuous improvement approach to ensure you stay on track and competitive. The result will be that you deliver high quality training and assessment and student outcomes.

Make sure to:• Focus on all aspects of the business • Underpin practice with comprehensive policies and procedures

across all business areas• Continually improve using a proactive and systematic continuous

improvement approach.We hope that this book has helped you get smart and compliant so

that you can remove your compliance headache for good and in the process build a better business.

We also have a range of products available to support compliance in RTOs. Visit our website and follow the links to the products page to view the range of products available:

http://thelearningcommunity.com.au/ For more information, please contact us at The Learning Community

by email ([email protected]). We’d love to help out.

essential guide - the learning community · viii the essential guide to rto compliance why we are...

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