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Governance and financial management at Moray ... - Audit Scotland

Governance and financial management at Moray ... - Audit Scotland

ContentsExecutive

ContentsExecutive summary and conclusions 1Introduction 7Roles and responsibilities 10Investigation into allegations of 14misconductAction to improve financial control and 16governanceThe financial health of the college 19Appendices 22Governance and financial management at Moray CollegeA report to the Scottish Parliament by the Auditor General for ScotlandAuditor General for ScotlandThe Auditor General for Scotland is the Parliament’s watchdog for ensuringpropriety and value for money in the spending of public funds.He is responsible for investigating whether public spending bodies achieve the bestpossible value for money and adhere to the highest standards of financialmanagement.He is independent and not subject to the control of any member of the ScottishExecutive or the Parliament.The Auditor General is responsible for securing the audit of the Scottish Executiveand most other public sector bodies except local authorities and fire and policeboards.The following bodies fall within the remit of the Auditor General■ departments of the Scottish Executive eg the Health Department■ executive agencies eg the Prison Service, Historic Scotland■ NHS boards and trusts■ further education colleges■ water authorities■ NDPBs and others eg Scottish Enterprise.Audit ScotlandAudit Scotland is a statutory body set up in April 2000 under the Public Finance andAccountability (Scotland) Act 2000. It provides services to the Accounts Commissionand the Auditor General for Scotland. Together they ensure that the ScottishExecutive and public sector bodies in Scotland are held to account for the proper,efficient and effective use of public funds.AGS/2001/4

Executive summary andIntroductionconclusions1. In February 2001 the chief executive and accountable officer of the ScottishFurther Education Funding Council (SFEFC) reported to the council on anumber of issues of serious concern relating to governance and financialmanagement at Moray College. The college’s financial position had beendeteriorating over a number of years. Although it worsened significantly duringthe 2000/01 financial year the college had not produced a robust financialrecovery plan. The college also needed substantial improvement in itsgovernance arrangements to comply with the good practice SFEFC had set forcolleges in its Financial Memorandum and Code of Audit Practice. Many ofthese weaknesses in governance and financial management had been evidentsince allegations of misconduct at the college were investigated by the ScottishOffice with the assistance of the National Audit Office in 1999. Thatinvestigation formed the basis of a report by the chief executive and accountableofficer of SFEFC in 2000.2. The concerns highlighted to the SFEFC Council indicated that there weresignificant weaknesses in governance and financial management within thecollege. One purpose of my report is to record these weaknesses and the actionwhich has been taken or is planned to overcome them. Secondly, my reportraises issues for the college, for SFEFC and for governance and accountability inthe FE sector as a whole. These issues arise because progress to resolve theweaknesses at the college has been too slow although SFEFC was diligent inpursuing matters within its existing powers.Background3. Moray College is one of the 43 incorporated further education colleges inScotland, which between them received some £365 million of grant in aid fromthe Scottish Further Education Funding Council in 2000-01. Colleges areindependent corporate bodies governed by boards of management who arerequired to provide suitable and efficient further education to students. In July1999 SFEFC assumed responsibility for securing the adequate and efficientprovision of further education, primarily through the distribution of grant inaid funds to colleges in accordance with Ministerial policy guidance and bypromoting the value for money delivered by the sector.4. Scottish Ministers have a duty to secure adequate and efficient provision offurther education in Scotland. They may establish, merge or close colleges and,in exceptional circumstances, they may remove and replace members of collegeboards of management. Normally, new board members are appointed byexisting board members, with specific nominations reserved for college staffand the student body. Certain of the Ministers’ duties are delegated to SFEFC,including the power to do all that is necessary or expedient to exercise the dutyto secure adequate and efficient provision of further education.Governance and financial management at Moray College 1

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