Damning report into former college

Years of financial mismanagement and allegations of bullying at a college named after a renowned economist and moral philosopher have been criticised by the public spending watchdog.

Audit Scotland found “significant failures relating to corporate governance and financial stewardship” at the former Adam Smith College, which was recently merged into Fife College.

“Inaccurate and overstated” claims to funding bodies, allegations of bullying, and misappropriation of funds have cost the college £5.5 million in EU grants, wiped a fifth off its bank balance and saw the resignation of most of its senior staff.

Auditor general Caroline Gardner has issued a report to the Scottish Parliament, drawing attention to the failures.

In particular, the college has had to repay £5.5 million of EU grants, and has provided for up to £1.2 million more in potential repayments of other grants.

The report recounts allegations of bullying and mismanagement, including the potential misuse of college funds, irregular voluntary severance payments to two individuals, irregular commissioning of two companies to undertake a marketing review, and a lack of documentation around decisions, including the personal use of college facilities and suppliers.

Evidence was also found of inaccurate and overstated claims to grant funding bodies dating back to at least 2007.

The auditors found “significant irregularities” including claims for staff costs that were much higher than those actually incurred by the college, and other costs that were not eligible.

The college principle resigned in early 2012 and the acting successor was subsequently suspended later that year.

The chairman of the board, its secretary, two board members, two senior managers also resigned and three members of staff were suspended.

The report states: “The various reviews and investigations into the culture and European funding issues at the college threaten its financial security and stability, potentially harm its employee relations, and damage the reputation of the college.

“The board and senior management of the college are aware of these risks and have in place controls and plans to mitigate these risks.”

It added: “The decision to repay EU grants could cost the college up to £6.7 million.

“£5.5 million of this relates to European Social Funds claims administered directly by the college which had been identified for repayment and has been reflected in its accounts through an adjustment to income and expenditure reserve account. This amount has now been repaid.

“The accounts also provide for up to £1.2 million relating to claims administered by Fife Council based on information supplied by the college which cannot be fully substantiated.

“The college remained a going concern with sufficient funds in place to support its operations up to the point of its merger with Carnegie College in August 2013.

“However, its financial position deteriorated as a result of the reduction in income associated with European projects and the forecast was for a deficit position of £380k, rather than the £430k surplus that the college budgeted for.”

The colleges reserves fell by around £4.5 million, to £18.5 million as a result of the mismanagement.

Adam Smith College merged with Carnegie College and parts of SRUC Elmwood Campus to form a new Fife College on August 1.

The college was named after Kirkcaldy-born Adam Smith (1723-1790), a moral philosopher often called “the “father of modern economics”.

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Damning report into former college