THE University of Sydney has a risky reliance on foreign students in business, IT and masters programs, an official audit has warned.

More than half the 6500 enrollments in management and commerce are internationals, according to an Australian Universities Quality Agency report.

"There is reluctance by the university to consider imposing any limits on the numbers of international students that faculties may enrol in a program,'' says the report.

"Among some faculties there may be complacency about the risks associated with dependence on the continued stability of international student demand.''

The report, published by the Tertiary Education Quality and Standards Agency, says Sydney's reliance on China Asia also is risky.

The university has a heavier dependence on North-East Asia than comparable institutions but is less reliant than the sector average on South-East Asia or internationals generally. China is Australia's No. 1 higher education market.

A spokesman for Sydney said the university already had taken steps to get a better balance of local and overseas students. The latest figures in the AUQA are from 2009, when international numbers were peaking before a downturn.

"At undergraduate level, in 2012 we increased the domestic targets for bachelor of commerce significantly to provide increased access for local applicants,'' the spokesman said.

He said the Sydney Business School had reviewed its postgraduate courses with one aim being "a sustainable balance'' of domestic and international students.

And the university was pitching new programs to local students, including a bachelor of project management this year and an MBA next year.

The AUQA audit panel generally endorsed Sydney's internationalisation strategy to turn out students who are "global citizens" and to encourage researchers to bring their expertise to bear on global problems through collaboration.

The panel formed the impression that "the university has substantially enhanced its approach to internationalisation and is now taking on a role commensurate with its standing by consolidating international
partnerships and building its international profile".

Meanwhile, Sydney has announced it will allow direct entry to academic programs for students who get top results in China's university entrance exam, known as Gaokao. Previously, such students would have had to begin with foundation studies and might have opted for a US institution without this requirement.

Education researcher Alan Olsen has argued that allowing entry via Gaokao could be a solution to the Australian university syndrome of less capable Chinese students clustered in business courses.

The AUQA report says English language proficiency "remains an issue'' for international students at Sydney, especially where there are many grouped together.

"Despite their acceptable IELTS [English language test] scores, there are still international students who struggle with the types of communication skills needed to give oral presentations,'' the report says.

"In some faculties there appears to be pressure on academics to accept a level of written English below that which would generally be expected in professional settings, provided it is clear to the reader that the student understands the key concepts.

"Evidence from the audit visit also indicates that for international students soft skills such as presentation skills and communication practice need improvement.''

The panel cited a 2010 review carried out by Sydney, which pointed to a lack of correlation between IELTS scores and the capacity to write in English "owing to immersion study practices just prior to the test''.

As well, the review found "an apparent decline among some students of English language abilities during their studies, owing to the tendency to associate with students from the same cultural background,'' the panel says.

One recommendation from the Sydney review was for the creation of an English for academic purposes unit, with academic credit, to be taught in faculties with high concentration of internationals.