Robert Black, Auditor General for Scotland, has reported that the Scottish Qualifications Authority has “successfully re-established confidence in its work and is demonstrating an ongoing commitment to making improvements”.

His report shows, however, that the organisation’s efforts to regain customer and public confidence have not come cheap.

The SQA’s expenditure since 2000 - the year when processing problems meant that 2.7 per cent of exam results were inaccurate and incomplete, affecting 17,000 candidates - has risen by 69 per cent. As a result, the Scottish Executive’s funding reached a peak of pound;23.8 million in 2003-04; by 2005-06, it had dropped to pound;17.5 million. But the authority also generated pound;33.8 million in revenue last year, helped by exam fees which have increased by up to 48 per cent in the last four years.

The report acknowledges that the SQA is developing a deeper understanding of the link between its costs and activities, although there is concern that falling pupil numbers could widen the gap between income and expenditure.

But SQA initiatives, such as benchmarking its activities against other organisations and efficiency savings from moving to e-assessment, could pay dividends, according to Mr Black. He now wants to see the authority develop more “strategic-level thinking”.