An investigation into the now defunct Quantum Education shows they took students fees for courses that were never completed.
The Tertiary Education Commission investigation, undertaken by Deloitte, revealed that Quantum retained the fees of students who had withdrawn from courses.
Quantum retained newly enrolled students on its books until they were no longer entitled to a fees refund but without officially recording those students' enrolments, the report found.
TEC chief executive Tim Fowler said that because the affected students had not been enrolled red flags weren't raised by government agencies.
"This wasn't illegal but we need to note it was entirely unacceptable. The business deliberately sought to bring in student fees and not have to either train the students or report enrolments."
That it did this should have been inconceivable to professional educators, Mr Fowler said.
No further action was being taken against the defunct Quantum or its parent company Intueri (now in liquidation) after an investigation by the Serious Fraud Office was dropped in April.
The Ministry of Education and Studylink would be aligning reporting procedures so that all student enrolments had to be reported.