The Registration Standards 2025 (2025 Standards) specify the expected outcomes that Registered Training Organisations (RTOs) must demonstrate in Quality Area 4 - Governance in relation to leadership and accountability, risk management and continuous improvement.
Quality Area 4 states: Effective governance and a commitment to continuous improvement supports the quality and integrity of VET delivery.
Good governance is crucial for all RTOs as it establishes systems, policies and practices that ensure accountability, transparency and integrity. It provides a clear framework for decision-making, promoting efficiency and effectiveness in achieving quality VET outcomes, and fosters trust among stakeholders, including staff, students, regulators, and the broader community. Good RTO governance demonstrates a commitment to ethical practices and compliance with laws and regulations, while proactively mitigating risks to protect student wellbeing and the RTO’s reputation and sustainability.
This Fact Sheet focusses on Leadership, Accountability and Risk Management. Other aspects of Quality Area 4 are covered in separate TAC Fact Sheets:
- Continuous Improvement (Outcome Standard 4.4);
- Third Party Arrangements (Outcome Standard 4.2c); and
- Child Safe Organisations (Outcome Standard 4.3d).
Governance
Governance involves leading and managing an organisation through the establishment and application of policies, processes, and organisational structures, and the management of resources to achieve organisational outcomes. The 2025 Standards define governing persons as “any person responsible for overseeing, directing, or exercising a degree of control or influence over the management or operation of a registered training organisation”.
Good governance is essential for achieving objectives, driving improvement, maintaining legal and ethical standing, and upholding credibility with students, industry, regulators, and the wider community. Well-governed businesses are more sustainable, attract more customers, and are more competitive in the long term.
Good governance is usually defined in terms of principles or pillars with the 2025 Standards focusing on:
- Leadership (Outcome Standards 4.1a & b, 4.2d);
- Integrity and compliance (Outcome Standards 4.1c & d);
- Transparency, fairness and accountability (Outcome Standards 4.1d, 4.2a & b);
- Impartial and informed decision-making (Outcome Standards 4.1c); and
- Risk management (Outcome Standards 4.3a, b & c).
Leadership
(Outcome Standards 4.1a & b, 4.2d)
Firstly, governing persons must be “Fit and Proper Persons” in terms of compliance with the law, management history, financial records, provision of information and previous conduct. These qualities are evaluated through the Fit and Proper Person Declarations made by governing persons on initial registration and throughout the registration of the RTO (4.1a).
Secondly, the governing persons must be in positions where they can exercise authority and influence the organisation’s policies and practices. This can be identified through organisational structures, lines of responsibility and job/role descriptions (4.1b & 4.2d).
Fit and Proper Person Requirements (FPPR) identify the need to ensure the integrity of RTOs operating and seeking to operate in the VET sector. The range of matters VET Regulators may have regard to, aim to reduce the risk of inappropriate RTO behaviours that negatively impact the integrity of Australia’s VET sector.
Compliance with the FPPR needs to be demonstrated at initial registration and on an on-going basis to ensure that governing persons continually meet requirements. Visit the TAC website to access more information on the:
- Fit and Proper Person Requirements
- Fit and Proper Person Declaration
- Fit and Proper Person Requirements Policy
- Fit and Proper Person Requirements for TAC Regulated RTOs webinar
The RTO must have processes in place to demonstrate ongoing compliance with the FPPR. The specific process design is up to the RTO, but it needs to achieve the following:
- Identify who needs to meet the FPPR;
- Ensure these individuals meet the FPPR;
- Empower them with sufficient authority to ensure the RTO complies with the 2025 Standards at all times; and
- Monitor their ongoing compliance with FPPR while in their roles.
The FPPR apply to the following persons:
- an executive officer of the registered training organisation;
- a high managerial agent of the registered training organisation; or
- any person which exercises a degree of control or influence over the management or direction of the registered training organisation.
Further guidance on who must meet the FPPR is available in the TAC Declaration and Policy.
The suitability of governing persons is expressed through the ‘chain of command’ of an organisation and the competence of the governing persons. It is necessary that the organisational structure clearly shows the responsibilities of key personnel, and the competencies required to exercise those responsibilities. These would usually be demonstrated through an organisational structure and job/role descriptions, which indicate required skills and knowledge, reporting relationships, lines of communication and accountabilities. It is important that each person occupying a job or role within that structure has a clear understanding of the ‘chain of command’, and how accountability ultimately rests with the governing persons.
Integrity and compliance
(Outcome Standards 4.1c & d)
The exercise of authority and influence by governing persons must reflect both integrity and compliance. Integrity encompasses honesty and ethical behaviours, which are essential for maintaining trust and credibility. Compliance, on the other hand, is relatively straightforward to assess, as it is based upon a set of requirements, such as the 2025 Standards. Outcome Standard 4.1c. requires the governing person to assess whether the decisions made are diligent and facilitate RTO compliance with the Standards. To do this the RTO might instigate:
- Compliance Reports: regular reports demonstrating adherence to the Outcome Standards and Compliance Requirements. (Compliance Requirement 15)
- Audit Trails: clear audit trails showing how compliance is monitored and maintained over time (Outcome Standard 4.4)
- Ongoing professional development. (Outcome Standard 3.1 b)
- Policies and Procedures, and Codes of Practice: establish policies and procedures to guide ethical behaviour and compliance.
- Internal Audits: regular internal audits to ensure policies and procedures are being followed and are effective.
Transparency, fairness and accountability
(Outcome Standards 4.1d, 4.2a & b)
Transparency is always cited as a fundamental principle of governance. Key stakeholders, including students and staff, need to be able to see how the organisation operates, supporting fairness and accountability. These principles are reflected in the Outcome Standards such as an accessible feedback, complaints and appeals processes (Outcome Standards 2.7 & 2.8) that contribute to fairness and accountability. Transparency is a proactive process through which the organisation reveals its policies, procedures, and performance (Outcome Standard 4.1d).
Transparency is also supported through clearly defined roles and responsibilities (Outcome Standard 4.2a & d) so that each person understands how decisions are made and by whom. Additionally, keeping staff members informed of any changes to the regulatory environment that might impact on the RTO’s services (Outcome Standard 4.2b) further enhances transparency.
The following examples illustrate how transparency, fairness and accountability can be effectively implemented within an organisation:
Transparency
- Accessible Information
- Publicly available RTO policies: policies and procedures should be easily accessible to students, staff, and other stakeholders, often through the RTO's website or internal portals.
- RTO performance data: regularly published performance data, including student outcomes, enrolment statistics, and feedback summaries on the RTO’s website.
- Clear Communication Channels
- Regular internal updates: regular updates to staff and students about organisational changes, regulatory updates, and other relevant information.
- Stakeholder engagement: mechanisms for continuing engagement with stakeholders, such as surveys, forums, and feedback sessions.
Fairness
- Complaints and Appeals Processes
- Documented procedures: clearly documented and accessible feedback, complaints and appeals processes.
- Timely resolution: evidence of timely and fair resolution of complaints and appeals, with records of outcomes and actions taken.
- Equitable Treatment
- Non-discrimination policies: policies ensuring non-discrimination and equitable treatment of all students and staff.
- Support services: availability of support services for students and staff, including counselling, academic support, and career advice.
Accountability
- Defined Roles and Responsibilities
- Organisational chart: an up-to-date organisational chart clearly defining roles and responsibilities.
- Job descriptions: detailed job descriptions for all positions, outlining duties, responsibilities, and reporting lines.
- Regular Monitoring and Reporting
- Performance reviews: regular performance reviews for staff, with documented feedback and development plans.
- Compliance audits: records of internal and external compliance audits, including findings and corrective actions taken.
- Governance and Oversight
- Board meetings: minutes of board and committee meetings showing oversight and decision-making processes.
- Risk management: evidence of risk management practices, including risk assessments and mitigation strategies.
Decision-making
(Outcome Standards 4.1c)
Decision-making is a fundamental role of governance, best described as impartial and informed decision-making. This type of decision making is evidence-based, objective, ethical, and responsive to changing circumstances and needs (Outcome Standard 4.1c).
Decision-making is a cyclic process that:
- recognises the need for a decision;
- identifies alternatives;
- gathers and analyses information from systems and stakeholders;
- selects a course of action;
- communicates the decision to relevant stakeholders;
- implements the decision;
- reviews outcomes; and
- reconsiders choices.
This cycle can occur over a brief or extended period of time, but each step is important for impartial and informed decision-making.
Decision-making also involves managing risk, especially when decisions require agility and responsiveness to changing circumstances.
Risk management
(Outcome Standards 4.3a, b & c)
Managing and minimising risk is a primary responsibility of governance, as reflected in Outcome Standard 4.3. This Outcome Standard encompasses various types of risks, including those to the RTO, the credibility of VET, and individuals within the organisation (students, staff, and visitors) (Outcome Standard 4.3a).
Types of Risks:
- Organisational: financial risks (Outcome Standard 4.3b), such as potential losses due to mismanagement or fraud, reputational risks from negative publicity or unethical behaviour, and conflicts of interest (Outcome Standard 4.3c) where personal interests could improperly influence professional decisions.
- Credibility: the community losing trust in the VET system and industry doubting the value of VET qualifications.
- Individual: physical hazards, psychological stress, social issues like bullying, reputational damage, and environmental impacts on well-being.
Compliance with the 2025 Standards significantly reduces these risks by ensuring suitable facilities, resources, and equipment, skilled trainers and assessors, supported students, engaging and relevant training, valid assessment materials, equitable practices, and legal compliance.
Governance involves the active identification, assessment, management, and communication of risk, as well as anticipating potential risks (Outcome Standard 4.3a). This process includes designing, implementing, evaluating, and continuously improving risk avoidance strategies, integrating them into the organisation's fabric and ethos.
During an audit, auditors will expect to see evidence that an RTO has identified and is actively managing risks. While each RTO is unique, this evidence could include a comprehensive risk management framework encompassing risk registers, policies and procedures, training records, incident reports, and continuous improvement plans.
Effective risk management practices might involve implementing robust financial controls, establishing a code of conduct for reputational management, regularly updating compliance policies, and conducting safety audits to ensure a secure learning environment.
By addressing these areas, RTOs can demonstrate their commitment to maintaining compliance with the 2025 Standards and minimising risks, thereby protecting the integrity of the VET sector.
Case Study: Managing Compliance Risk in an RTO
Background:
ABC Training Institute, a medium-sized RTO, faced significant compliance risks due to frequent changes in regulatory requirements. These changes posed challenges in maintaining up-to-date policies and procedures, risking non-compliance and potential penalties.
Challenges:
- Regulatory changes: keeping up with frequent updates to VET sector regulations.
- Policy updates: ensuring all policies and procedures are current and compliant.
- Staff training: regularly training staff on new compliance requirements.
Risk Management Systems Implemented:
- Policy Management System: ABC Training Institute implemented a policy management system to ensure that all policies and procedures were consistently updated and easily accessible to staff. This system automated the review and approval process, keeping policies current with regulatory changes.
- Document Control System: a document control system was introduced to manage and track all compliance-related documents. This system ensured documents were up-to-date and accessible, with version control to track changes and ensure staff used the most current documents.
- Regular audits: the institute conducted regular internal audits to identify and address any compliance gaps, ensuring continuous adherence to regulatory requirements.
- Staff training programs: regular training sessions were held to keep staff informed about the latest regulatory requirements and compliance practices, ensuring they were well-prepared to meet compliance standards.
Conclusion:
ABC Training Institute's proactive approach to managing compliance risk highlights the importance of having robust risk management systems in place. By staying current with regulatory changes and ensuring staff are well-trained, the institute was able to mitigate compliance risks and maintain its integrity in the VET sector.
The benefits of effective governance
There are many benefits to RTOs from effective governance including:
- Trust and credibility with all stakeholders: students, staff, industry and the community;
- Equity and inclusiveness of access and opportunity in VET will encourage a more diverse group of potential students;
- Sustainability, efficiency and improved performance. Strong financial management and effective risk management will facilitate the RTO’s prosperity;
- Customer engagement, satisfaction and repeat business. Students will feel comfortable and confident with the RTO and its management;
- Stakeholder reputation and support. Industry will be more eager to cooperate with work placements, and governments more amenable to funding support;
- Staff satisfaction and retention: staff will feel more secure and see a longer-term career with a well-run RTO;
- Responsiveness and flexibility. A well governed RTO will be more responsive to systemic issues and external pressures; and
- Protection from scandal, fraud, corruption, mismanagement, reputational damage and possible litigation.
Demonstrating compliance
To assist with demonstrating compliance with Governance requirements in the 2025 Standards, visit and review the information on the Online Guidance Hub for the Governance Quality Area. Consider the reflective questions for each Outcome Standard and evaluate how well your current practices are working. Identify any changes you could make to improve these practices.
In respect to Outcome Standards 4.1, 4.2 and 4.3, auditors will look for policies and procedures, as well as evidence of their implementation and effectiveness. Examples of evidence that auditors might use to assess compliance include:
- Fit and Proper Persons Declarations: signed current declarations for governing persons, along with an organisational structure and associated job descriptions to show that that governing persons are suitable and capable of performing their governance responsibilities (Outcome Standard 4.1a & b).
- Decision-Making Evidence: documentation of decision-making strategies, reviews, and outcomes to demonstrate that governing persons have acted diligently, and their decisions are informed and have contributed to compliance with the 2025 Standards (Outcome Standard 4.1c).
- Staff and Student Satisfaction: evidence of staff and student satisfaction with the RTO’s management and ethos, reflecting a culture of integrity, fairness and transparency (Outcome Standard 4.1d).
- Defined Roles and Responsibilities: well-defined roles and responsibilities for staff, incorporating their obligations with regard to the 2025 Standards (Outcome Standard 4.2a).
- Regulatory Updates: evidence that staff are routinely informed of changes to regulatory or legislative requirements. This could include through bulletins, emails or meetings (Outcome Standard 4.2b).
- Third Party Agreements: examples of third party agreements indicating that require compliance with the 2025 Standards, how compliance is monitored, and evidence of the outcomes of that monitoring (Outcome Standard 4.2c).
- Job Descriptions: evidence that decision-making responsibilities are incorporated into job descriptions (Outcome Standard 4.2d).
- Risk Management Policy: an RTO risk management policy and process for managing risks to students, staff and the RTO, along with examples of identified, managed and mitigated risks (Outcome Standard 4.3a).
- Financial Management: evidence of financial planning and management processes, procedures for reporting financial status and risks to governing persons, and example reports to the governing body (Outcome Standard 4.3b).
- Conflict of Interest Policy: evidence of a policy and procedure to identify and respond to real or apparent conflicts of interest amongst governing persons and other RTO staff (Outcome Standard 4.3c).
A Case Study: RTO Excellence
Background:
RTO Excellence is a prominent vocational education and training provider dedicated to delivering high-quality services with a strong emphasis on integrity, transparency, and accountability. The organisation aims to demonstrate compliance with Outcome Standards 4.1, 4.2 and 4.3, which mandate that RTOs operate with integrity, maintain accountability, manage risk and ensure effective governance and leadership.
Approach:
RTO Excellence ensures that all information provided to prospective and current students is transparent and accurate. They meticulously review their marketing materials, ensuring that every detail about the RTO and its courses, fees, and potential outcomes is clearly communicated. This transparency extends to the comprehensive student handbook, which outlines all RTO policies, procedures, and available support services, enabling students to make well-informed decisions about the suitability of the RTO as a provider of their training.
To foster a culture of ethical behaviour, RTO Excellence has implemented a strict code of conduct for all staff members. This code promotes honesty, integrity, and ethical decision-making in every interaction. Regular training sessions are conducted to reinforce these values, ensuring that staff are well-versed in ethical practices and compliance expectations.
Accountability is a cornerstone of RTO Excellence's operations. The organisation holds regular board meetings, meticulously documenting discussions and decisions in detailed minutes. This practice ensures that governance is transparent, and that accountability is maintained at the highest levels. Additionally, annual performance reviews are conducted for all staff, including trainers and assessors. These reviews provide an opportunity for feedback and continuous improvement, ensuring that everyone is held accountable for their roles, responsibilities, decisions and actions.
Compliance monitoring is another critical aspect of RTO Excellence's approach. The organisation conducts regular internal audits to ensure adherence to all regulatory requirements. Any findings from these audits are promptly addressed, with corrective actions implemented to maintain compliance. Furthermore, RTO Excellence completes and submits the Annual Declaration on Compliance, demonstrating their commitment to meeting the 2025 Standards.
Stakeholder engagement plays a vital role in maintaining accountability and transparency. RTO Excellence uses robust feedback mechanisms, including surveys and forums, to gather input from students and staff. This feedback is invaluable in identifying areas for improvement and addressing any issues promptly. The organisation also has an accessible complaints and appeals processes in place, ensuring that any grievances are documented, investigated, and resolved in a fair and timely manner.
Governance and Leadership:
Under Outcome Standard 4.1, RTO Excellence ensures that its governing persons are not only fit and proper but actively engaged in leading the organisation with integrity and diligence. The governing board is composed of individuals with extensive experience and a deep understanding of the vocational education and training sector. They are committed to continuous professional development, regularly attending training sessions and industry conferences to stay informed about best practices and regulatory changes.
The governing persons at RTO Excellence are provided with comprehensive reports that include key data on student enrolment, progression, completion rates, and feedback from various stakeholders, as well as the financial status of the RTO. This information enables them to make informed decisions that aligned with the organisation's strategic goals and compliance requirements. Regular risk assessments and management plans are also reviewed by the board to ensure that potential risks are identified and mitigated effectively.
By fostering a positive culture focused on integrity, fairness, and transparency, the governing persons at RTO Excellence have set a benchmark for the entire organisation. They lead by example, ensuring that all staff members understand their roles and responsibilities and are kept informed of any changes to the regulatory environment that might impact the RTO's services.
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