Financial and performance monitoring of industry training organisations

Te aroturuki ā-pūtea i ngā whakahaere whakangungu ahumahi

Last updated 10 December 2019
Last updated 10 December 2019

This page sets out our requirements for financial reporting by industry training organisations (ITOs) , and the performance monitoring of ITOs. 

Financial reporting by ITOs

Each ITO must provide financial information each year via a template. The information:

  • helps with monitoring ITOs
  • meets our obligations under the Education Act 1989 (section 159YD) to monitor the financial performance of ITOs to ensure that funding is spent in accordance with the purpose for which it was allocated
  • fulfils our obligations under the Industry Training and Apprenticeships Act 1992 (sections 7a and 7b) to monitor the extent to which ITOs are funded by industry, and their capability.

This information helps to ensure that ITOs that receive government funding are financially viable and are able to fulfil their statutory role.

This information is collected at least once a year.

Financial performance guidance for ITOs (PDF, 859 Kb)

Industry Cash Contribution

The Industry Cash Contribution (ICC) is calculated in the template. From 2014 the ICC rates are:

  • 30% for trainees 
  • 20% for apprentices

The template still calculates just one rate and we will review the result for each ITO against the proportion of its trainees and apprentices.

ITO Financial Monitoring Framework

We have worked with sector representatives to develop a formal financial monitoring framework (FMF) for ITOs. The FMF provides clarity and transparency for the sector about the financial monitoring assessments made by us. The FMF assessments also inform reporting and engagement for the coming year.

A detailed outline of the FMF can be found in the ITO FMF guidelines. 

Industry training organisation financial monitoring framework guidelines (PDF, 635 Kb)

Performance monitoring of ITOs

We monitor a range of ITO activity that links to both funding and performance. The performance monitoring framework sets out what we look at and why, and covers both regular and ad hoc monitoring.

The outcomes of monitoring inform conversations between investment managers and ITOs, with a view to improving activities and outcomes if needed. The information also informs Investment Plan rounds and in-year Plan amendments, and contributes to operational policy changes, such as funding conditions.

Performance monitoring framework for industry training organisations (PDF, 536 Kb)

Changes from 2019 onwards

From January 2019, your fees-free payment should be included in the ICC.

Previously fees-free was not considered as a government contribution for ICC purposes; but was accounted for by ITOs as Government revenue, rather than fees paid by trainees (either to the ITO or directly to other educational providers).

This change in accounting has reduced the amount of industry contribution declared by ITOs, and as a result, reduced the ICC percentage.

ITOs should consider fees-free payments as part of ‘industry revenue’ in the ICC calculation.

This is on the basis that:

  • fees-free payments are payments on behalf of the trainee;
  • these payments have replaced amounts that were previously paid by employers or trainees; and
  • this is consistent with the wording of the funding condition which acknowledges that some of the ICC may be met through fees-free payments.