Decisions by the chief executive of the Higher Education Funding Council for Wales, Steve Martin, and Welsh Assembly education minister Jane Davidson were called into question this week after a damning report from the auditor general for Wales.
Sir John Bourn's report condemns "a serious and fundamental breakdown" in financial controls at the National Council for Education and Learning in Wales (Elwa) in 2001-02 when Mr Martin was its chief executive, as well as being head of the funding council.
HEFCW announced this week that Mr Martin, who opted to leave Elwa this year to devote his time to higher education after an inquiry recommended each council should have its own chief executive, is to stand down in December as part of a management restructure. He took this decision before publication of Sir John's report.
Roger Williams, HEFCW's chairman, confirmed there was no connection between the auditor general's report and Mr Martin's departure. The restructuring followed an internal review of the council's needs, which recommended its top two posts should be replaced by a chief executive with a high level of higher education experience, something that Mr Martin did not have.
But he said: "It is inevitable that the connection with what has happened at Elwa will be on people's minds."
Sir John's report identifies major failings in the management of 18 projects funded through Elwa's innovation development fund in 2001-02, most notably the £4 million "pop centre MP3 cafe" initiative intended to bring accessible learning opportunities to the deprived Rhondda valley.
The report says that the management and financial controls applied during the application and approval process of these projects were inadequate and contravened the council's own guidelines. There were also significant deficiencies in monitoring projects. A Welsh Assembly audit report earlier this year said mismanagement of the projects had cost the taxpayer £2.2 million.
Sir John concludes: "These audit findings demonstrate a serious and fundamental breakdown in the controls that should have been operated by the National Council."
Ms Davidson came under fire from opposition politicians after the report revealed that civil servants had alerted her at an early stage to concerns that the pop cafe project might present too great a risk to public funds.
Tory audit committee member Alun Cairns said: "It will be difficult for her to survive such a damning adjudication."
Mr Martin, who is due to give evidence to the Welsh Assembly's audit committee when it considers Sir John's report next week, declined to comment on the auditor general's conclusions.
He said the problems identified in the report had not influenced his decision in April to leave Elwa and remain as chief executive of HEFCW.
Even though he had relatively little experience and had previously devoted about 70 per cent of his time to Elwa, he said he felt higher education "was where I could make the best contribution at the time". He added: "I was enjoying both jobs, but it was impossible to do justice to both."
* Elwa has made good progress in taking forward its recovery plan to address weaknesses highlighted by the auditor general, according to an independent report published this week. Consultants PricewaterhouseCoopers say most of the recovery plan has been completed