The Victorian auditor-general says Federation University could struggle to remain viable.

Federation University has campuses in Ballarat, Gippsland, the Wimmera and Berwick, but went into financial deficit in 2017 following two years of declining results.

The Victorian auditor-general has conducted a review of the state's eight public universities and recommended that two of them, Federation University and Victoria University, review their operations to ensure their long-term viability.

“While the overall sustainability of the sector continues to be strong, the indicators for Victoria University and Federation University Australia are starting to show that they may face financial sustainability issues in the longer term,” the report noted.

“It would be prudent for these two universities to assess the relevance and financial sustainability of their current course offerings, as well as their staff profile.

“This may help them address any issues early.”

Federation’s problems mainly relate to the accuracy of its financial report, its long-term financial sustainability and its asset maintenance policies.

The university has reportedly accepted the findings and provided details on how it will address them.

Federation University's vice-chancellor Helen Bartlett said new measures should help address the short-term financial strain.

“Those measures include new strategic plans, restructuring of our academic staffing portfolio, a lot of business development around our products, our courses and investments into the future,” Professor Bartlett said.

“It came as no surprise to us.

“The university, over the course of the last couple of years, has already been working on investments for the creation of that long-term sustainability and the future's actually looking very promising.

“So it's short-term stress but the long-term prospects are looking very positive to us.”

Long-term financial sustainability risks were revealed at Victoria University too.

The Melbourne-based university’s deputy vice-chancellor Rhonda Hawkins says it has an institution-wide plan to improve its financial position.

“We began a major transformational program in 2017,” Ms Hawkins said.

“As part of the implementation of this program, the university incurred major restructure costs.

“The university also invested in the necessary one-off costs to develop a future-focused campus master plan.

“These two domains of strategic costs were a major factor in determining our deficit.”