Adam Smith College has been ordered to pay back £5.5 million of European funding as a police probe into its financial dealings continues.
A report, made public for the first time this week, shows the Scottish Government has told the college to hand back the money. Police Scotland confirmed investigations are continuing into allegations European cash was obtained fraudulently.
The 2011-12 Audit Scotland report into the college’s accounts showed the Kirkcaldy institution has set aside a further £1.168m, which may have to be repaid for other European grants administered by Fife Council.
Noting that “significant failures in both its governance and financial stewardship arangements” had led to a change in leadership at the college, the report by auditors Grant Thornton also revealed the Scottish Government has de-committed the balance of grants not yet paid, amounting to a further £2.6m.
The report stated the college faced an “acute financial position” as a result of having to repay the “significant” European funding, reporting a deficit in 2011-12 of £767,000.
The report also stated that the repayment would “significantly reduce the cash balances” in advance of the merger with Carnegie College to form a new Fife College on August 1.