The Further Education Development Directorate (FEDD) delivered its report two weeks ago, but it was brought into sharp focus by the Scottish Parliament’s audit committee, which on Tuesday grilled two members of the board of management for two and a half hours in Inverness.

The committee accused them of failing to fulfil past promises of overcoming a persistent funding deficit which had spiralled to more than pound;5.3 million by 2000.

Deficits have continued since then and a forecast small surplus this year is likely to become a deficit of at least pound;100,000 by the end of the financial year in July.

It was also revealed that John Little, the principal, who was reported two weeks ago to be moving to a new job with the University of the Highlands and Islands, is still in his post but on sick leave.

The FEDD report exposes a catalogue of faults in management. It details a “benign executive management style which offers little leadership to the staff and which is perceived as being distant, disconnected and indecisive . . .there is a lack of an articulation of a clear set of strategic aims .

. . linkages between finance, curriculum and HR (human resources) are poor and require major development.

“Overall the college has fundamental weaknesses within all of the key strands critical to its operation: leadership, strategic and operational planning, curriculum management, finance, HR, marketing and management information.

“A significant failure in any one of these would represent a problem for any organisation; failure in all of them is almost catastrophic.”

It emerged during the meeting that the board of management had been given the report two weeks ago, but that it had not been passed on to Niall MacArthur, the finance director.

Ken Mackie, who chairs the board of management, said he had considered circulating the report among senior management, but the board had decided to take action without informing members of the senior management team.

Mr MacArthur said the college was projecting a deficit in July of Pounds 144,000, but hoped this could be pulled back. The board of management has started consulting on 17 job losses among teaching staff, and redundancy costs will have to be included in the final figures.

He also disclosed that there were 50 budget holders among college staff at present, which he felt was too many.

John Dunthorne, chairman of the college finance and general purposes committee, said: “My principal area of concern was the overspend on staffing costs. Employees were taken on by human resources on short-term contracts without the finance department being notified. This was identified earlier this year and corrected, and staff costs are now more in line with budget.”

Mr Mackie said he had formed a committee of chairmen of college committees to drive forward change, as suggested by the report. “We are also in discussion with the director of FEDD, and we have taken in a HR specialist from another college to develop our HR department. We have had offers of assistance from FEDD to help change our management structure and these offers will be taken up,” he said.

Brian Monteith, the Tory MSP who chairs the audit committee, said it expected to hear in future from the college principal who was the accountable officer for the period concerned.

Following the meeting, Mr Mackie said: “There will be questions about my position, but I’m a non-executive chairman of a board and we can only operate to the levels of knowledge that we have and we have been doing that.” He said the board would not resign.

Linda Martin, Educational Institute of Scotland branch convener, said the college’s ills were being blamed on staff, but this wasn’t the case.

Roger McClure, chief executive of the Scottish Funding Council, told the committee: “This is not a failing college, but it has had difficulties with aspects of management. Its retention of students, its number of part-time students, the numbers completing their course and the number of credits achieved by students are all above average.”

Ms Martin said: “The functional areas aren’t working and they are being undermined by a hostile management. We have lost a director of marketing, a director of finance and an HR manager and these support services have been completely emasculated. But the lecturing staff are going to pay for this.

“Seventeen lecturers will be made redundant but no one else is. They will achieve this by cutting the curriculum next year, so if we get small classes, we will have fewer hours to teach the course. There’s no educational thought put into this, it is just a knee-jerk reaction. We will be in the same position next year.”