Scottish Enterprise said it had already made improvements

A report into the economic development agency's performance found its achievements were not clear because of inadequate data and poor evaluation.

The auditor general cast doubt over the agency's previous performance claims.

However, Scottish Enterprise said its impact was regularly monitored and it would continue to drive improvements.

Auditor General Robert Black said he accepted that measuring the impact of any economic development agency was hard to quantify.

However, his report found flaws in the way Scottish Enterprise evaluated its projects.

In 40% of those looked at, the rationale behind the project was not backed up with factual evidence and in many cases other options had not been fully considered.

How to measure the impact of economic development activities is a question that economic agencies across the world have been struggling with Jack Perry Scottish Enterprise

Mr Black questioned claims in 2003 that the agency had added �1.6bn to Scottish Gross Domestic Product over three years as a result of its activities in 2001/2.

He said: "It remains difficult to assess well the contribution that the agency makes to Scotland's economy and to the objectives of a smart, successful Scotland.

"If Scottish Enterprise is to demonstrate clearly the value it adds then it needs to improve the way it evaluates the impact of its activities."

Jack Perry, Chief Executive of Scottish Enterprise, said it had introduced a more rigorous approval process which had already brought improvements.

"How to measure the impact of economic development activities is a question that economic agencies across the world have been struggling with for some time and it is something we take very seriously," he said.

Organisation size

Speaking on BBC Radio's Good Morning Scotland programme, Deputy Auditor General Caroline Gardner agreed that there had been improvements, but said these needed to be taken further and a "culture change" was required across the organisation.

She said: "Scottish Enterprise is a big organisation with a lot of staff across Scotland and there is a danger that evaluating the impact of what you do can looks like paperwork rather than something that's really central to the organisation."

She also called on the agency to focus less on short-term outputs, such as the number of business start-ups, and concentrate more on how these measures actually impacted on the Scottish economy.