ILAs were administered by learndirect Scotland

The Auditor General for Scotland said the Scottish Executive had failed to do enough to prevent fraud in the operation of Individual Learning Accounts (ILAs).

Robert Black also raised a question mark over �4.5m of claims.

ILAs entitled people to a grant of up to �200 towards educational courses to tackle skills shortages.

Learning providers

However, it soon emerged that the system which delivered them was open to abuse.

Allegations surfaced in England that some registered training providers were manipulating the system to pocket the money while providing sub-standard courses or no courses at all.

It also emerged that tricksters operating on the street and door-to-door had been convincing people to sign-up for courses which turned out to be either "bogus" or worth substantially less than the �200 discount.

Mr Black said ILAs were innovative and popular with genuine learners and learning providers but suffered from many administrative errors and failings.

It was a complicated scheme introduced in a hurry and involved several - perhaps too many - public bodies in Scotland Robert Black Auditor general

He added: "It was a complicated scheme introduced in a hurry and involved several - perhaps too many - public bodies in Scotland."

ILAs were launched in Scotland in July 2000 and some 266,000 accounts were opened, well above the target of 100,000.

But the scheme was shut down 18 months later amid fears of fraud.

The authorities involved in administering the scheme have identified 28 learning providers with the highest risk of fraudulent activity, the auditor general's report said.

The report concluded that the executive's Enterprise and Lifelong Learning Department (ELLD) could have been more involved in the design and implementation of the scheme.

No clear guidance

It said ELLD did not fully appreciate the risk of fraudulent activity and pointed out that there was an absence of robust checks, including a lack of formal accreditation.

It said there was no clear guidance for the operation and administration of the scheme and responsibilities for monitoring it were unclear.

The executive accepts it made mistakes but said lessons have been learned.