Police launched an investigation centring on Hereward College, Coventry, a year ago following allegations of misuse of European funds. However, the West Midlands fraud squad this week ended inquiries at the college after finding no evidence to suggest involvement in criminal activity.
The college, which caters mainly for students with disabilities, scored the lowest possible grade - grade five - for its management in a Further Education Funding Council inspection last year. Four other aspects of provision, including the college's residential education programme, were awarded a grade four.
Shortly after the inspection began, Hereward principal Rees Williams took long-term sick-leave before retiring last July and all but two members of the original governing body resigned.
Following a reinspection of management and residential education in March, both scores have been pushed up to a grade three, and inspectors noted "improved morale, collaboration and planning".
Among the weaknesses originally identified by inspectors were variable quality of care for students, a lack of personal and social education and too few opportunities for recreation.
The reassessment found evidence of improved care, a "24-hour curriculum" ensuring skills for living are included in students' residential experience, and more staff training.
However, the report said more needed to be done to ensure cover was provided for absent staff, to clarify learning goals in care plans and to boost recreational activities for students.
New Hereward principal Cath Cole said many more improvements had been made since the reinspection. Accommodation had been improved and staff training developed.
She said: "We are recovering and things are now really positive, there is a superb atmosphere in the college."
* Governors at a college hit by staff claims of bullying have launched an internal inquiry into its governance and management.
A team of five governors at Stoke-on-Trent College will invite staff to give their views without fear of retribution. A survey carried out in July by the lecturers' union NATFHE revealed concern over an allegedly "dictatorial" management regime.
Last week, Stoke chairman of governors George Mardle was ousted by fellow corporation members amid claims that he had failed to act forcefully enough over staff complaints - a charge he strongly denied.
Kevin Farrell, acting chairman, said: "The governors feel that there are matters of sufficient concern to necessitate taking this action. They wish to resolve these issues in an objective way."
The speed of change in further education colleges since they left local authority control in 1993 had been dramatic, he said, and governors had a duty to examine the impact on staff.
The investigation into bullying is expected to take around one month. Its findings will then be put to the whole corporation. Stoke chief executive Neil Preston is on sick leave and could not be reached for comment.