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23 March 2016, 14:19
College leaders responsible for a third of Scotland's further education students have demonstrated significant failings in governance and financial management, the public spending watchdog has said.
Audit Scotland found "significant issues'' at Glasgow Colleges' Regional Board (GCRB), Glasgow Clyde College (GCC) and Edinburgh College.
Students suffered as leaders argued about their own positions while hundreds of thousands of pounds were lost on lawyers, media consultants and financial mismanagement, it said.
GCRB has yet to demonstrate it is capable of managing its own finances nearly two years after it was formed, auditors said.
Its three colleges are responsible for a fifth of all college spending in Scotland, distributing £119 million between them last year, but GCRB only managed £278,617.
Glasgow Clyde alone spent almost as much on lawyers after it suspended its principal.
Meanwhile, Edinburgh College faces "significant financial challenges'' after it "failed to meet its targets for learning activity''.
Auditors found "tensions in the relationships between the assigned colleges and, in particular, their principals and GCRB's chair and advisor to the board''.
When the chief executive of the Scottish Funding Council (SFC) criticised GCRB's governance, the board made a formal complaint about his conduct.
In the next few weeks, two board members resigned amid "concerns about its leadership'', two student board members resigned and the chair ultimately resigned in May 2015.
Audit Scotland said: "It is now 22 months since GCRB formally began operation. It has failed to establish itself as a new organisation and to become the focal point for the college sector in Glasgow.
"It has not secured operational fundable body status from the SFC, which means it is not able to act fully as the regional strategic body.''
Auditors noted that relationships with the SFC and colleges have improved recently but GCRB has yet to show sufficient process to receive operational fundable body status and "start adding value to the Glasgow college sector''.
The auditor also raised "significant concerns about governance at Glasgow Clyde College during 2014/15''.
The college suspended its principal in February 2015, then Scottish ministers removed board members and appointed an emergency board, and the principal returned in December.
Ministers said the board "had committed repeated breaches of terms and conditions of a grant made to them ... and had mismanaged the affairs of that board''.
Audit Scotland said the board spent more time debating their internal troubles than focusing on college strategy while student board members were excluded against official guidance.
"The suspension of the principal and the SFC governance review dominated discussion at board meetings from February - September 2015,'' it said.
"Other strategic items of business were not adequately considered at board meetings, eg the corporate plan, the regional outcome agreement and GCC's International Strategy.''
The board then spent £213,850 on advisers after suspending its principal, including over £3,000 on a media consultant and nearly £1,200 on bookings for meeting rooms that were never used.
It appointed Simpson & Marwick without a competitive process and handed them £90,956 - nearly four times the SFC limit for awarding a contract without competition.
It then asked the SFC for retrospective approval but the SFC ordered them to cease using the firm.
Auditors said the emergency board appointed in October 2015 has taken action to address some of the failings and "lay the foundation in starting to address the significant concerns relating to governance''.
In January 2016, a former board member launched a petition for a judicial review into ministers' decision to remove the board.
Finally, auditors found "significant financial challenges facing Edinburgh College''.
It stated: "Anticipated reduction in forecast cash resources of 3.3 million for 2015/16 would leave the college with severe financial challenges.
"The college approached the Scottish Funding Council (SFC) to secure additional financial support for 2015/16 in order to meet its operating expenses.''