The NSW Auditor-General’s Universities 2025 report, tabled in Parliament on 11 June 2026, gave all ten NSW public universities clean audit opinions on their financial statements.1 For governance teams, that is where the comfortable reading ends. The substance of the report is a detailed account of integrity control weaknesses across the sector: incomplete conflict of interest frameworks, heavy use of procurement exemptions, and a $217 million contingent workforce that most universities cannot centrally see.2 The lessons are useful for governance teams across the board who are seeking to drive pro-integrity practice.
The report also marks a methodological shift that every governance team should register. The Audit Office did not wait for self-reported declarations. It matched university employee and vendor data against ASIC’s register of companies and officeholders to surface undeclared interests directly.3 The results were significant, and the technique is repeatable. Universities should assume it now forms part of the annual audit toolkit.
Data matching found what the registers did not
The Audit Office identified more than 790 instances of university employees holding directorships in companies that appear on their university’s vendor master file. Of the instances sampled for review, 30% could not be located on the relevant conflict of interest register. Ten of the undeclared interests related to senior executives.4
Some matches have innocent explanations. The report acknowledges that a number relate to affiliated or related entities where the directorship exists because of the employee’s university role, and the largest single example, $41.8 million paid to an affiliated health research entity, appears to fall into that category.5 But the explanation itself exposes the policy problem: where a conflicts policy is unclear about how role-based directorships in affiliated entities are to be treated, the register cannot distinguish a benign structural relationship from a genuine undisclosed conflict. Over 450 matched entities transacted with universities in 2025, with total payments of $353 million.6
The Audit Office referred its matched results to universities’ governance and internal audit units for further review.7 In our experience, that referral is rarely the end of the matter. Unresolved matches involving senior decision-makers sit squarely within the corrupt conduct concepts in the Independent Commission Against Corruption Act 1988 (NSW),8 and NSW public universities are public authorities within the ICAC’s jurisdiction.9 A register gap that would once have surfaced, if at all, through a complaint can now surface through routine audit analytics.
The declaration framework is the weak point
The data-matching findings landed on a declaration framework the report found wanting. Four universities did not require annual conflict of interest declarations from all employees, and the same four did not update their central register of declared interests annually. Three universities did not require senior executives to lodge nil returns, and one did not require updated declarations when an executive moved into a new role.10 Eight of the ten universities had audit findings on their management of conflicts of interest.11
Annual declarations, nil returns and a current centralised register are not gold plating. They are the baseline controls that make a conflicts framework auditable, and they are precisely what the Auditor-General has now recommended: annual declarations of interests, potential conflicts and secondary employment from all employees, including nil returns; clear guidance on the types of interests to be disclosed; and an up-to-date centralised register covering all employees.12
Procurement: exemptions are doing a lot of work
Universities spent $139 million on consultants in 2025, with a third of that, $46.2 million, paid to just two firms.13
Of the top five consultancy engagements at each university, nearly 24% were directly sourced outside standard procurement processes.14 All but one of those sat within approved policy exemptions, typically justified by time-critical need, specialist expertise or continuity with incumbent providers.15 The Auditor-General’s caution is one we would echo to any public sector client: those reasons are common in procurement, but it does not follow that every circumstance qualifies for an exemption. Routine exemption use erodes competitive tension and elevates conflict of interest risk.16
The surrounding controls showed strain. Conflict of interest declarations were not performed for 12% of the top engagements reviewed. Four universities had no formal procedure requiring the conflicts register to be checked before awarding contracts. Most procurement policies left public tenders to discretion rather than setting mandatory dollar-value triggers, and over a quarter of completed engagements were never formally assessed against their objectives.17
Transparency pressure is building from another direction.
Universities are currently exempt from the consultant spending disclosure rules that bind NSW state agencies, and a NSW parliamentary inquiry has recommended removing that exemption.18
A $217 million workforce without a register
Spending on contingent labour and contractors reached $217 million in 2025, up 6.9% on the prior year. Only three universities had formal policies governing its use, six did not maintain a register of current contingent workers, and five could not say how long their contractors had been engaged. One contractor had been engaged continuously for eight years, and the highest paid contingent worker earned over $515,000 in the year.19
From an integrity standpoint, long-tenured, highly paid contractors engaged through decentralised processes with no central register are an identifiable corruption risk: they combine procurement discretion, payroll-scale payments and weak visibility. The Auditor-General recommends policies that define when contingent labour should be used, maximum engagement periods, a central register and central reporting on numbers, tenure and pay rates.20
The wider accountability context
This report does not arrive in isolation. The NSW Legislative Council’s inquiry into the university sector found in its April 2026 interim report that existing internal governance and reporting mechanisms are not sufficient to ensure transparency and accountability, and the Commonwealth Senate inquiry into higher education governance made 20 recommendations across its interim and final reports.21 The Auditor-General’s six recommendations, covering climate disclosure readiness, consultant engagement, contingent labour, conflicts of interest, controlled entity governance and AI governance, will be measured for implementation in next year’s report, where 2024’s recommendations were tracked with a 60% adoption rate.22
What governance teams should do following the NSW Auditor-General’s Universities 2025 report
- Treat the ASIC data-matching exercise as a preview: Run the same match internally against your vendor master file before the next audit cycle, and resolve or document every hit.
- Close the declaration gaps: Move to annual declarations for all staff, including casuals in higher-risk roles, with mandatory nil returns for senior executives and refresh on change of role.
- Clarify the treatment of affiliated-entity directorships: Role-based directorships should be expressly addressed in the conflicts policy and recorded on the register, even where they are uncontroversial.
- Audit your exemption practice: Review the last two years of procurement exemptions for patterns of repeat suppliers or repeat justifications, and hard-wire a conflicts register check into contract award.
- Build the contingent labour register: Capture worker numbers, tenure, pay rates and engaging business unit, and set maximum engagement periods with escalation for renewals.
- Check your code of conduct attestation cycle: Only three universities require annual attestation; an annual cycle materially strengthens the disciplinary and integrity framework when issues arise.23
McCullough Robertson’s Employment and Integrity team advises universities and public sector bodies on conflicts of interest frameworks, procurement probity, workplace investigations and engagement with integrity agencies. If you would like to discuss what the Universities 2025 report means for your institution, contact Kate Peterson or Nathan Leivesley.
[1] Audit Office of NSW, Universities 2025 (tabled 11 June 2026), p 1.
[2] Ibid pp 1, 3, 9, 14–15, 41–45.
[3] Ibid p 42.
[4] Ibid pp 4, 42.
[5] Ibid p 42.
[6] Ibid p 42.
[7] Ibid p 42.
[8] s 8.
[9] The ICAC’s jurisdiction – Independent Commission Against Corruption.
[10] Audit Office of NSW, Universities 2025 (tabled 11 June 2026), pp 4, 41.
[11] Ibid p 36.
[12] Ibid pp 6, 42 (Recommendation 4, p 6).
[13] Ibid pp 1-2, 12.
[14] Ibid 13.
[15] Ibid 2.
[16] Ibid 13.
[17] Ibid p 13.
[18] Ibid 13 (see also p 39); NSW Legislative Council Standing Committee on Social Issues, interim report, 8 April 2026.
[19] Ibid 14-15.
[20] Ibid p 15 (Recommendation 3, p 6).
[21] Ibid p 39.
[22] Ibid pp 1, 63 (Appendix 1).
[23] Ibid p 38.