It now appears that Education Minister Brian Wilson agreed an pound;800,000 revenue grant to Donaldson's last November without a detailed knowledge of its daily operation. The college is Scotland's only residential grant-aided school for deaf children.
One insider claimed unsubstantiated allegations against staff had been circulating for some time. A child protection inquiry four years ago failed to find any evidence.
Elizabeth Maginnis, Edinburgh's education convener, has stepped into the crisis because of the council's legal requirements under the Children Act. She said previous claims had been too ephemeral to act upon, but fresh allegations were surfacing daily.
The school has around 60 day and residential pupils, including a nursery. Edinburgh and Midlothian account for some 30 per cent of pupils and are advising governors about child protection and staff disciplinary procedures. Headteacher David Scott and a female teacher have been suspended while a police inquiry proceeds.
The revelation of the lack of scrutiny confirms recent evidence from the Centre for Residential Child Care at Strathclyde University that residential schools tend to escape inspection. A spot survey found some schools had not been inspected for 16 years. The shortest gap was six years.
The centre's report, published in February, also criticised the HMI for lacking skills in assessing the welfare of young people. Although they were excellent in judging academic performance, pupils' views of care were often overlooked. But at Donaldson's a routine investigation unearthed the serious allegations when pupils complained directly to the inspector.
The final HMI report on the college has been brought forward to June from September.
Meanwhile, the National Deaf Children's Society has set up a helpline for young people and their parents.