A COMPANY run by the Association of Colleges collapsed with debts of pound;1 million because its managers could not prove to customers that it had done any work.

Forensic accountants appointed by the AoC to examine the failure of its Workforce Development business said there were no adequate contracts with clients and when they challenged its invoices, the company had to back down.

Meanwhile, the board failed to understand the losses the company was amassing, partly because the reports it was given lacked detail.

The investigators, Walton Dodge Forensic, concluded in a report to the AoC that the company’s board was unsure of its role and complacent in assuming that the executives were managing it properly.

Workforce Development was originally created by Deeside College in Wales and sold to the AoC three years ago.

Initially it provided skills training for employers and won contracts with companies such as Sony and Iceland.

But it failed to find enough clients and switched tack in April 2005, working as a brokerage service, connecting colleges and businesses in need of training. Colleges were supposed to pay for leads to companies that would hire them.

When they disputed the charges the company realised it did not have supporting documentation to collect debts. Eventually it closed in July last year, with the loss of eight jobs and debts of pound;922,000.

John Brennan, the chief executive of the AoC, said: “We didn’t have the necessary evidence to support debt claims. In the face of people indicating that they didn’t believe debts were due, we couldn’t enforce that so it had to be written off.”

But he said they were completely satisfied that there was no fraud. “The report has gone into those issues in considerable detail and there is no evidence that false accounting or anything of that kind was going on,” he said.

He said the collapse of Workforce Development did not necessarily mean the association should withdraw from commercial activities.

AoC Management Services, the association’s consultancy, training, recruitment and conference company, continues to operate.

John Bingham, the chairman of the board, said: “AoC Board very much regretted that it proved impossible to make a success of the WFD business.

But we are determined to learn the lessons from its failure.”