Brindabella Christian College reported a loss of $3 million in 2020, newly released financial documents show.
The 2020 financial report was published on Monday evening after the first day of a hearing in the Administrative Appeals Tribunal, where it was revealed the school's tax debt has mounted to $4.8 million.
Brindabella Christian Education Limited, the charity which operates the school, is appealing a 2021 decision from the federal Education Minister which found the school was not fit and proper to receive Commonwealth funding.
Tom Brennan, the lawyer representing the school, said the school was not making enough money in 2020 and 2021 because of a drop in school enrolments, an increase in costs and reduced attendance at the early learning centre because of COVID-19.
Mr Brennan said in 2021, the school spent $350,000 on legal fees unrelated to the current tribunal proceedings and spent $500,000 on workers' compensation for staff members.
He said the school's tax debt was "going quickly down" and was at $3.1 million on the last closing balance.
Mr Brennan said the school had made some changes to its governance and financial management after KPMG and Saward Dawson made separate recommendations.
"I accept that we're on notice for financial management," he said.
"We're on notice that our governance was not adequate by way of board size and composition."
He said the enrolment numbers had since increased and the early learning centres at the Charnwood and Lyneham campuses would offset losses incurred by the school.
In opening, Mr Brennan said a body of aggrieved ex-parents and staff had formed as a "secret society" supported by Adero Law to generate litigation against the school.
BellchambersBarrett partner James Barrett told the tribunal he was involved with preparing an audit report which was commissioned by the federal education department in 2020.
The firm was given background from the department on several unfair dismissal cases, conflicts of interest, related party transactions and high turnover of key staff at the school.
Mr Barrett went to the school from October 6 to 16, 2020 to conduct field work and produced a report in November that year.
He said he formed the opinion the school should be producing general purpose financial statements which disclosed related party transactions, rather than the special purpose financial statements the school had been producing.
Meanwhile, the 2020 financial report shows the school reported a $3,050,621 deficit for the 2020 financial year after reporting a $1.8 million profit in 2019.
At the end of 2020, the company's current liabilities exceeded its current assets by $17.4 million and it owed a tax debt of almost $1.5 million.
Revenue from tuition fees declined from $6.5 million in 2019 to $5.4 million in 2020. Revenue from enrolment application fees and early learning centre fees also declined.
Government funding from the territory and federal level declined from almost $10 million in 2019 to $7.6 million in 2020.
The report said the directors were confident government funding would continue throughout 2021 and student enrolment numbers would increase.
The directors were in negotiations to extend a bank loan and overdraft of $13.7 million for another term.
The school built additional classrooms in 2021 but due to the uncertainty caused by COVID-19 the board decided to defer any significant capital spending in 2022, the report said.
Auditors Saward Dawson said in the report they were unable to reach an opinion on whether the company was a growing concern as it was unable to gather sufficient evidence.
The statement appeared on the Australian Charities and Not-for-profits Commission website on March 27, 2023, which is almost two years after the due date of 30 June, 2021.
The Education Minister imposed conditions on the school in 2021, including that it reviews its governance arrangements and have an independent professional examine its financial position. The school has been appealing this decision.
The tribunal hearing is expected to continue until Friday.
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