Auditor names colleges behind financial report delay

The Herald Scotland

23-05-2025

In a subsequent letter to the convener of the committee, Auditor General for Scotland Stephen Boyle advised that the colleges in question are Forth Valley College and Lews Castle College. He explained that both had failed to submit audited accounts on time, and that the SFC had therefore been 'unable to complete its financial sustainability report for the college sector'.
Stephen Boyle also confirmed that he was preparing statutory reports on both organisations. The report on Forth Valley College, which explores a serious procurement breach that led to the involvement of Police Scotland, has since been submitted to parliament.
During a committee session on 7 May, the SFC Chief Executive was asked to explain why reports on the financial sustainability of colleges and universities, which were due to be published in January, have in fact been delayed. The sectors are currently facing major financial challenges, with a number of universities seeking to reduce staff numbers.
SFC Chief Exec Martin Boyle told committee members that the reports would be published 'in the autumn', and explained that his organisation had been unable to provide the reports in January as planned after 'a couple of colleges delayed the publication of their accounts.'
Asked by Labour's Pam Duncan-Glancy MSP if he could 'put at least some information in the public domain on the financial state of the sector', Martin Boyle suggested that his organisation wanted to wait so that it could 'publish a report that covers all the colleges and universities.'
Scottish Liberal Democrat MSP Willie Rennie pointed out to Martin Boyle that committee members had previously been worried that SFC 'staff were not being frank with ministers about the dire situation in universities.' Mr Rennie then asked if the delay to the financial sustainability reports might 'feed into our anxiety that you are not being frank with ministers?'
Martin Boyle insisted that information is provided to ministers, although conceded that some of this is kept private.
Asked by committee convener Douglas Ross MSP to confirm the original and new planned dates for publication of the report, Martin Boyle advised that it would typically have been release by the end of January but will now not be available until September.
He then explained that Audit Scotland's involvement in the process was 'part of the reason' why the colleges were late in submitting their accounts.
Martin Boyle confirmed that accounts have now been submitted, and was pressed to explain why the report was being delayed until September if all the necessary information is available in May. He replied: 'I will go back and speak to my colleagues, and we will have a discussion about whether we should publish the report now.'
An interim report has now been published.
Commenting after the release of the names of the two colleges in question, Willie Rennie told the Herald:
'Scotland's colleges are facing deep financial problems and the delay in the Scottish Funding Council publishing the financial sustainability report is a clear indication of that situation. The explanation of the reason for the delay being two colleges, Forth Valley and Lews Castle, provides little confidence that the situation is under control.
'The lack of clarity from the Scottish Funding Council and also the lack of urgency to the extreme financial environment needs to change if we have any hope of overcoming this challenge.'
A spokesperson for the Scottish Funding Council said:
'As Scotland's tertiary education and research authority, the Scottish Funding Council has a role in monitoring institutional sustainability to enable the best outcomes for students.
'In addition to our regular financial returns, we work closely with institutions regarding a range of issues, including their financial health. We engage with colleges and universities as soon as financial issues are identified. We then ensure they continue to fulfil their duty to learners and staff as we work alongside them to return to a position of financial health in line with a recovery plan designed to create future sustainability.
'Although we report on a sector-wide level, our interventions are on an institutional basis where, for reasons of commercial confidentiality, we are limited on the details we are able to publish'
A spokesperson for Forth Valley College said: 'I can confirm that the delay in submitting the relevant accounts was linked to the College's external auditors carrying out additional scrutiny on the College's accounts related to a wider audit. This has resulted in Audit Scotland submitting a Section 22 report which was released this week. The College's 2022/23 accounts, which are now available, also outline the reasons for the delay.
'The Audit Scotland report also recognised the significant progress we have made in strengthening the processes for college-run projects. These improvements are designed to minimise the risk of similar issues arising in future, and we remain fully committed to regularly reviewing these arrangements to ensure they remain robust and fit for purpose.
'The external auditor's Annual Report for 2022/23 also concluded that with the exception of a stand-alone net zero project - the College has effective arrangements in place for financial planning, governance, and performance management.
'For clarity, the stand-alone project is no longer connected to the College and has been operating as a separate entity since June 2023.'
A spokesperson for UHI North, West and Hebrides said: 'There have been significant delays to the external audit process, which resulted in late submission of our year-end accounts for 2022-23. The college do not accept the appointed auditor's view 'that the delay was due to a lack of responsiveness and staffing challenges at the college.'
"UHI, as the Regional Strategic Body, submitted a formal complaint to Audit Scotland in December 2023 regarding concerns over the performance of the Audit Scotland appointed external audit provider. These matters continue to be discussed with Audit Scotland and the Scottish Funding Council.
'The basis of the Section 22 report into the 2022-23 accounts of the former Lews Castle College solely relates to a difference of opinion between the college and the appointed auditor on the college's prudent approach to the valuation of a joint venture capital asset.'