KPMG report critical of Scottish Enterprise

In its report into the financial situation of Scottish Enterprise, the main
economic development agency, funded by the Scottish Executive, KPMG has made a
number of key recommendations to improve its internal audit process.

The firm primarily looked at the resource allocation process during the
course of 2005/2006 and found that overspend was impacted upon by little or no
increase in the resource budget and the inability to utilise cash reserves
without impacting on the reported overspend.

KPMG made the following recommendations and observations:

– Scottish Enterprise’s budget should be prepared on a total resource basis,
that is including non-cash items

– There was no clear responsibility and accountability around the new
resource allocation process

– Management information was not produced on a timely basis

– No prioritisation of projects was in place during the year

– More timely action was required following the Quarter 2 review

– Only in January 2006 did a clear message to ‘reduce expenditure by 15%’ go
to business units.

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