MPs denounce 'poor' college audits

September 10, 1999

Financial audits at one in five colleges are so poor they "cannot be relied upon", the House of Commons' Committee of Public Accounts has warned, writes Phil Baty.

In its long-awaited report on the financial scandal at Halton College, the PAC last week detailed how Pounds 14 million was wrongly claimed for courses and hundreds of thousands of pounds squandered by managers on junkets, bar bills and extravagant purchases. But it warned that the weaknesses that led to the Halton scandal "might also exist at many other colleges".

Committee chairman David Davis said that Halton, where 114 staff will lose their jobs at a further cost to the taxpayer of Pounds 1.8 million, was just "the latest in a succession of horror stories from the further and higher

education sectors that have cast serious doubt on the management ability of these sectors and their arrangements for governance".

Controversially, the PAC named 17 colleges that it found to have "weak financial controls" during Further Education

Funding Council audits since 1997-98.

These include Melton Mowbray College, Bolton College, Suffolk College, East Yorkshire College, Broomfield College, West Thames, and Keighley College, as well as several colleges already named as "failing" by ministers.

The committee said it was a matter of "great concern" that a National Audit Office report had found that 40 per cent of colleges did not have a formal strategy for procuring goods and services and that there were wide variations in the acceptable level of overseas travel.

The PAC was particularly

concerned about audit procedures. Halton had been "let down" by its auditor, Deloitte and Touche, which acted as both internal and external auditor, and which failed to raise concerns about financial controls. The committee said it was "deplorable" that Deloitte and Touche tried to deny the NAO access to information during its investigations.

The committee welcomed improvements to management and governance to be introduced next year by ministers. These include plans to separate internal and external audit, financial training for governors, the compulsory declaration of expenditure on overseas travel, and a new qualification for college principals.

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