Adam Smith College in Kirkcaldy is currently being investigated by police amid allegations of fraud after it was told to repay £5.5 million in EU funding.
That inquiry followed two separate probes by KPMG and the Scottish Government. Details have now been released by Audit Scotland.
The investigations uncovered voluntary severance payments made to two individuals which were not in line with college policy, as well as a lack of documentation around a number of decisions, including the personal use of college facilities and suppliers.
According to a report by accountancy firm Grant Thornton, which has been made public, KPMG found the college’s financial regulations had not been adhered to when it came to hiring two companies for a marketing strategy review.
KPMG also found evidence the college had submitted claims to grant funding bodies which were “inaccurate, unsupported by evidence and overstated” since at least 2007.
A later investigation by Scottish Government auditors found “significant irregularities”, including the apparent systemic overclaiming of staff time, according to the report.
The inquiry into the college’s finances began after an earlier investigation by the Scottish Funding Council (SFC) into bullying at the institution, which was carried out last year.
Former principal Dr Craig Thomson resigned in March last year, a week after he had been suspended indefinitely when the SFC launched its investigation into allegations of bullying, intimidation and the misuse of funds.
His replacement, Ian Harrington, was then suspended as interim principal on the orders of the college board while the investigations into the misuse of funds were carried out. He has since left the college.
The Grant Thornton report states: “The (Scottish Government) auditors found significant irregularities, including the apparent systemic overclaiming of staff time. The Scottish Government has subsequently required the college to repay the full value of EU grants received (£5.5m).” The report goes on to say that the college’s financial position has been “significantly affected” by the requirement to repay the European grants.
The college is currently in the process of merging with Carnegie College.
A spokeswoman from Adam Smith College said: “This is a retrospective review of the college which relates to its position 12 months ago.
“The senior management team and board have actively been working together to address the issues in collaboration with the Scottish Funding Council and Scottish Government.”