THE Scottish Further Education Funding Council has called for its powers to be strengthened after a hard-hitting report highlighted weaknesses in the financial running of colleges.
The inquiry and report from Audit Scotland into the governance and financial management of Moray College in Elgin were sparked by allegations of misconduct which led to the departure of Robert Chalmers, the principal.
But Robert Black, the Auditor-General, commented: "The problems at Moray College point to wider risks for the sector as a whole. It is important therefore to ensure that governance and accountability within the sector are made increasingly robust."
The report noted that the FE funding council had carried out two separate inquiries into Moray College, one of which found significant weaknesses in the performance of Dr Chalmers and the college board. It made 24 recommendations for improvement, including action to recover sums of money paid to the then principal.
This was against the background of a deteriorating financial position which had reached a deficit of pound;1.9 million by last year.
Mr Black said that, despite these inquiries and the efforts of the funding council, "the college has not made the changes necessary to ensure improvements in its financial management. This raises doubts about the effectiveness of the accountability framework within which SFEFC and the colleges operate."
The funding council first demanded a college recovery plan in February last year but, according to the Audit Scotland report, "a robust plan has yet to be produced".
The report condemned "these persistent weaknesses" which it called on the college management to rectify if students in the area were to receive an adequate education. It suggests the Executive should review "governance and accountability in the further education sector".
In a statement, the funding council acknowledged the criticisms and welcomed the Auditor-General's call for existing arrangements to be strengthened. "The council has had long-standing concerns about governance and financial management at the college. We have done everything in our power to ensure that the board of management addressed these serious issues.
"Colleges are run by their board of management and this report acknowledges that SFEFC has limited powers to intervene in their affairs."
One of the "wider risks" the report highlights for the rest of FE stems from the responsibility of college boards to appoint their own members. It comments: "This arrangement may not comply with the general expectation that there should be open, transparent and impartial procedures for making public appointments.
"The power of Scottish ministers to remove or replace members of college boards is currently limited. There are also limits to the powers of the chief executive of the SFEFC, in his capacity as accountable officer, to ensure propriety and value for money in the stewardship of funds allocated to individual colleges."
One of the shortcomings uncovered by one of the funding council's inquiries was that the board had allowed a contractual relationship to be established between the college and a company owned by a board member.
Dr Chalmers had paid himself mileage allowances to which he was not entitled and money also had to be recovered in connection with work he had undertaken as part of the college's involvement with the University of the Highlands and Islands project.