Athabasca University (where I studied last), has proctored online examinations for undergraduate courses, via a commercial service, ProctorU. There were no examinations for the postgraduate program I took, this having assignments, quizzes, peer assessment, and a live online capstone presentation with Q&A.
It should be kept in mind that an examination is not required at the end of every course, nor is it a good way to assess real-world skills. Many Australian universities, supplement assessment with non-supervised assessment under the category of "take home examinations".
The usual approach with online course is to have regular small, assessment tasks. This is to keep the students engaged, provide feedback, and allow staff to check student progress. Some think this assessment should not count towards the final result and some do. I lean towards the latter, but the small tests should not count for much. It is possible to use an assessment scheme which encourages, or requires, students to do the small stuff, but so that it either doesn't count to their final result, or much. For example, you can make this a hurdle: the student has to do the small stuff, but it doesn't change their final grade.
For some versions of the course ICT Sustainability I set small assessment tasks which only count for a Credit, not a Distinction or High Distinction. This is described in the course notes (but keep in mind that is a graduate course):
- Assessment strategy: http://www.tomw.net.au/ict_sustainability/assessment.shtml
- Tutor's Guide: http://www.tomw.net.au/ict_sustainability/tutors.shtml
With online courses there is always the worry that students had someone else undertake the assessment for them. That worry can be lessened by having assessment spread out through the course, making it harder for students to simply contract out a few big tests. An approach frequently also used is to have the student give a presentation and answer questions. The presentation can be face-to-face, or live online.
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