 The report calls for better financial monitoring |
Concerns over the way Scottish councils manage their financial relationships with outside organisations have been raised in a report. The Accounts Commission for Scotland said councils provided about �200m to about 12,000 external organisations.
Following the report, auditors will now be asked to clarify how much money is involved and where it goes.
The Accounts Commission report was based on a survey carried out by public efficency watchdog Audit Scotland.
The survey sought to assess the amounts of money involved, and the monitoring arrangements by councils, when they provide funds to external organisations such as companies, trusts and voluntary groups.
The survey, published on Thursday, said some councils may not be complying with "best practice" principles. It was found that councils were not always able to identify the purpose - or the legal justification - of funding to the outside bodies.
The report said councils needed to improve their monitoring.
While councillors or officials often formed part of the governing boards or management committees of funded bodies, the report said there was often no obvious link between council membership and the significance of the money provided.
In 2001, Henry McLeish hit the headlines when he stood down as first minister in the so-called "Officegate" affair.
One of the organisations which rented space in his Central Fife constituency office was the Third Age Group, a voluntary organisation which received funds from Fife Council to run lunch clubs for the elderly.
'Matter of priority'
The case of the Third Age Group was highlighted in the survey as an illustration of the problems that can arise when there are "weaknesses" in councils' monitoring arrangements.
The commission said it has asked Audit Scotland "as a matter of priority" to study the action being taken by local authorities to conform with a code on council funding and the effectiveness of monitoring arrangements.
Accounts Commission chairman Alastair MacNish said: "As councils become more involved in partnership working and find innovative ways of delivering services, it will become increasingly important that they maintain control and accountability over public funds.
"This review suggests that there are a number of areas where councils are not complying with good practice guidance in their relationships with external organisations and raises a number of unanswered questions.
"The commission remains concerned about this so we have asked Audit Scotland to carry out further work.
"We will make a further public report when that work has been completed and in the meantime we are asking auditors to follow up the initial results with councils."
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This review suggests there are areas where councils are not complying with good practice guidance in their relationships with external organisations 
