AN INTERNAL inquiry into the financial crisis at Matthew Boulton College of Further and Higher Education in Birmingham is under way. It is looking at previous management and governance.
In an internal memo, Christine Braddock, principal of the college since April, said "something has gone wrong within the internal processes, which has resulted in our current financial problem".
Ms Braddock confirmed that the governors have initiated an inquiry, by consultants Bentley Jennison, "to establish how the college finds itself in this financial position". The results are expected later this month, but the move has already seen the resignation of the chair of governors, Barry Seager.
The investigation follows claims from union Natfhe, which is demanding a public inquiry, that the college management is planning redundancies of up to 59 posts, but has done little to curb a crisis of governance and has ignored financial problems, despite being aware of impending disaster for years.
Ms Braddock has written to all staff and warned, in a memo, that she will take "the firmest disciplinary action on anyone unauthorised commenting on behalf of the college". She insists that "we will still be here and still be delivering in September", and adds that "other colleges are on our doorstep waiting to pick up the pieces".
But Natfhe is angry that they knew nothing of a 1996 report on the college from the National Audit Office, which surfaced this week. It makes serious criticisms of the college's governance and financial planning.
Just four months after the NAO report, the governors' remuneration committee appraised the former principal, Tony Colton. It recorded: "The corporation recognise the effective leadership and sound management."
Vice-principal Alan Smith is similarly commended, and both men are suggested for pay rises for 1996-97.
But the NAO report criticises the college management for:
* "Over-optimistic" financial forecasts. A 1995 forecast predicted Pounds 29,000 of reserves by 1997-98. After NAO criticism, these were modified to a deficit of Pounds 184,000, but the NAO said the deficit would realistically be more than three times higher, at Pounds 630,000. The college "needs to significantly improve its approach to financial forecasting"
* giving poor financial information to governors
* failing to provide a "clear audit trail" for capital projects
* "low level of attendance at meetings of the corporation"
* "inquorate" meetings of governors' committees
* inadequate minutes of governors' meetings, with unclear policy on access to them.
Mr Smith was not authorised to comment, and Mr Colton was unavailable.
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