Dundee University chiefs overspent as the institution’s financial woes worsened and failed to highlight the true scale of the crisis, a new report reveals.
The accounting review, seen by The Courier, found that bosses did not set out its economic picture in “adequate detail”.
From August 1, 2019, to October 31, 2024, the institution’s hierarchy is also accused of omitting key information from documents.
And the report states the institution continued to spend money even as its financial outlook deteriorated, which had a “pronounced impact” on cash balances.
The new revelations come days before the findings of a major independent probe into the crisis at the University of Dundee – by former Glasgow Caledonian principal Professor Pamela Gillies – are due to be published.
Last month the institution submitted a £100 million rescue plea to the Scottish Government.
Dundee Labour MSP Michael Marra alleges senior management sat on the report, thus keeping crucial information about the crisis from key figures giving evidence to the Gillies investigation.
The university strongly disputes these claims.
Mr Marra says: “This report was given to me by a member of the University of Dundee community who strongly believes honesty and transparency is the only way of dealing with the crisis that continues to beset the most important institution in our city.
“I strongly agree.
“This report points to the rapid deterioration in the cash position of the university and a culture of conspicuous and profligate expenditure.
“The taxpayer is now set to bail out the university to the tune of more than £100m – we all have a right to know why.”
The report, produced by AAB Audit & Accountancy Limited, delivers a damning verdict of how the institution’s cash position was reported.
It says: “[It was] inconsistent throughout the period under review with most of the papers omitting any form of cash reporting.”
It adds: “The university elected to continue significant capital expenditure during a period of difficult operational challenge which had a pronounced impact on cash balances.
“There was also a high level of unbudgeted operating expenses throughout the period under review.
“We consider that internal financial reporting documentation presented to the University Executive Group (UEG) and the finance and policy committee in 2023/24 was not of adequate detail to set out the financial challenges and financial position.”
The report was commissioned by University of Dundee chiefs after a deficit of more than £30 million emerged last November.
University court, committee and executive papers, as well as accounting records and procurement information, were examined as part of the review.
‘Inadequate financial reporting’
It found that key information regarding the institution’s cash position being below its “£20 million minimum” was not passed to the University Executive Group.
The report says: “Failing to report the cash position to the UEG is inadequate financial reporting as cash flow is a fundamental indicator of financial health.
“The UEG and court rely on accurate and complete financial information to make informed strategic decisions, assess liquidity risks and ensure the organisation can meet its short-term obligations.
“Without visibility of cash balances, the UEG may be unaware of liquidity issues, leading to poor decision-making.”
The review also found that the university broke procurement rules for three separate contracts between 2019 and 2024.
But it states there is no evidence of any fraudulent activity.
Labour MSP Mr Marra added: “The focus of much of the analysis to date has been on the collapse in income from foreign student markets.
“This story is now one of a university that is unable to ride the storm like the rest of the sector because it had spent the significant reserves it had previously held.”
Meanwhile, the findings of Ms Gillies’ independent investigation, commissioned by the Scottish Funding Council (SFC), are expected to be published on Thursday.
They will be made available to the SFC, Scottish Government and university court today.
Her probe, carried out by international professional services firm BDO, is expected to analyse why the university’s funds were mismanaged and will ask if there was a cover-up among the senior leadership.
Earlier this month we revealed the institution had opened a voluntary redundancy scheme as it tries to axe 300 full-time roles.
The university initially proposed cutting up to 700 jobs to plug the black hole, which now sits at £35m.
A spokesperson for Dundee University said: “The university has commissioned various external reports related to the circumstances leading to the current period of financial challenges.
“These have been shared with the university court or its relevant committees.
“We have acted in accordance with our governance structures, and engaged fully with the Gillies investigation team, sharing with them all relevant internal and external investigation reports.
“Our priority throughout has been to help preserve the integrity of the Gillies investigation, and allow it to view things in the round and deliver its independent view.
“We will not be commenting on the contents of these reports or other material submitted to the Gillies investigation ahead of its publication on Thursday, when staff will be the first to be informed publicly of its findings.”
Conversation