Dundee University’s auditors wrote to bosses in April saying they had been misled and that laws and regulations may have been broken.
The letter – kept secret until it was published by parliament on Friday – sets out audit firm Ernst and Young’s serious concerns about financial mismanagement.
As well as being non-compliant with laws and regulations, it suggests executives submitted inaccurate responses during the audit process.
The independent auditor – one of the “big four” accounting firms – also says the university had misrepresented its financial status and future prospects.
We previously revealed how former principal Iain Gillespie boasted in unpublished accounts that the university was “blooming” – months before the £35 million financial crisis was revealed.
‘High-risk’
It resulted in the institution being classed as “high-risk” by its auditor, a rare status used only in cases where there is a real threat of misstatements.
“Receipt of a letter such as this from your external auditor, along with the issues detailed therein, are very serious,” the letter, sent to the university court in April, says.
In a bombshell summary of its main concerns, Ernst and Young list:
- Incomplete or inaccurate responses to governance inquiries, lack of disclosure on material matters regarding going concern, and non-compliance with laws and regulations
- Inaccurate or incomplete responses from management during the audit process concerning issues highlighted in point 1
- Possible misrepresentations by management regarding the financial status and future prospects of the university, including negotiations with lenders about covenants attached to
the university’s revolving credit facility with Bank of Scotland - Submission of an inaccurate going concern assessment that could not be reconciled with internal evidence available to management at the time of drafting, or supported by
management evidence during the initial audit challenge - Evidence suggesting that senior management was aware of the aforementioned issues but
did not take appropriate or timely action to address them - Information showing that other issues have been raised to senior management and those charged with governance, but not addressed, which may affect our assessment of the
governance body’s integrity and necessary financial statement disclosures, in particular with respect to going concern disclosures, governance statement disclosures and compliance with the HE Code of Good Governance, and wider consideration of the appropriateness of the consistency and balance of the financial statement’s narrative. - Several individuals have publicly stated their belief that information pertaining to the financial position of the University has been suppressed, including by certain senior
management members.
Interim finance director Helen Simpson, who is leaving on June 30, is singled out and thanked for her co-operation after she joined in November 2024.
The letter was published by the Scottish Parliament’s education committee on Friday after a copy was requested by committee convener Douglas Ross.
It comes ahead of evidence sessions next week with former principal Iain Gillespie.
Amanda Millar, former chair of court, Jim McGeorge, the former chief operating officer, and ex-finance chief Peter Fotheringham are also scheduled to give evidence.
Shane O’Neill has also been recalled but has not responded.
Conversation