The QCA is looking at the activities of the external training unit, a commercial offshoot of the college, established three years ago to sell courses and qualifications to businesses.

College principal Marilyn Hawkins has admitted that there have been “housekeeping” problems within the unit but said that these were being remedied. She said that fewer than 10 students were affected and the amount of funding involved was less than Pounds 10,000. The college said that because it had “uncovered some issues” in the area of NVQ assessment, it “would not be claiming funding for much of this activity on NVQs”.

In a statement, Ms Hawkins said: “At this stage it is too early to give a figure. The amount of money involved in the current allegations we believe to be relatively small.”

The QCA’s inquiry follows the college’s own investigation, which began several months ago, sparked by a complaint from an unnamed individual. The college said that following their internal inquiry “we have introduced additional control procedures and have appointed independent auditors to check their validity”.

The college confirmed that two members of staff have been disciplined, although the principal refused to say whether this action was related to the investigations, adding: “It is not college policy to discuss personnel matters of a confidential and sensitive nature.”

The external training unit, which changed its name from the commercial unit in 1997, is understood to have claimed payment for training army personnel and staff from companies including Nestle, McVitie’s and KP Foods. The college refused to confirm this and would only say that the unit delivered a “significant number” of NVQs each year, some of them to internal members of staff.

The unit was the brainchild of the previous principal, Alan Gothard, who saw commercial opportunities in retraining staff due to be made redundant when KP Foods closed down its plant in the town. Mr Gothard, who took early retirement 18 months ago, is not being investigated by the QCA.

The college was inspected in May of this year by the Further Education Funding Council whose report noted that it had “a wide range of external partners, and has established successful links with both large and small businesses.” Quality assurance and management were both graded as “good”.

A team of three QCA officials are looking at the college’s procedures for assessing and awarding NVQ’s. They will also be investigating systems for the accreditation of prior learning and the training of assessors. Their investigation is expected to last at least another fortnight.

A spokesperson for the QCA said: “It is very difficult to be definitive because the investigation has only just begun. At the moment it is only a handful of cases and the totals that are involved are quite small. Until we complete the investigation it is a case of how long is a piece of string. ”