Wales' further education body spent �2.2m in public money without approval from the Welsh Assembly, an official audit has revealed.

A highly critical report said Education and Learning Wales (ELWa) was responsible for a series of failures in financial management, meaning it issued 21 contracts in 2000/01 without permission.

The Auditor General for Wales, Sir John Bourn, blamed the use of five differing financial systems inherited from the training and enterprise councils (TECs) which ELWa unified on its creation in April 2001.

What is ELWa?

Budget of �500m from Welsh Assembly Government Runs all post-16 education and training Aims for 36,000 more students in education by 2003 Answers to Cardiff Bay administration

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The organisation - which has a �500m budget - has trumpeted its performance in its own report, also published on Tuesday, which shows it exceeded targets last year.

ELWa has responsibility for planning, funding and promoting school leavers' education and training.

It is charged by the Welsh Assembly Government with greatly increasing the number of people involved in learning - a key pledge.

But the audit report found ELWa's decision to retain the regional TECs' financial systems and not introduce its own during the handover period meant it had not given "adequate consideration to some risks of these differing practices".

There was also a risk from operating dispersed functions from several different offices across Wales.

As a result, the new body issued 21 contracts for services in the financial year ending 31 March, 2002 - without telling its masters at the Welsh Assembly.

ELWa targets exceded

Students in FE (+1%) Modern Apprentice qualifications (+20%) Modern Skills Diploma for Adults workers (+29%) 'Investors In People' employers (+29%) Individual Learning Accounts opened (+17%) Teachers on industry placements (+16%) Source: ELWa annual report

It later sought retrospective permission, but Education Minister Jane Davidson refused to pay out for 14 of the deals.

"It is a matter of concern that a body charged with conducting public business should demonstrate these shortcomings," Sir John Bourn said.

"These weaknesses were matters which management should have addressed from the outset."

He even pointed to a later independent report, which found staff lacked awareness of procedures and sometimes wrote letters to arrange contracts without making a fee clear.

Performance claim

ELWa has now sought to tighten up its financial dealings.

Its first annual report shows it exceded targets including those for students in further education and Modern Apprenticeship qualifications.

"We had the task of delivering the inherited plans of six very different organisations from the public and private sectors, each with their own working practices and systems," said chief executive Steve Martin.

"At the same time, we had to shape radical change to improve learning and lay the plans which have enabled us to reduce staffing from the 623 posts we inherited to fewer than 500 now."