An audit has raised concerns over council spending on Aberdeen International Youth Festival (AYIF).
A report from auditors PwC said Aberdeen City Council’s relationship with the event was “high risk”.
The report comes after former festival chairwoman, Council Jennifer Stewart, quit her role last August after voicing concerns over the finances of the annual cultural event.
The PwC report criticises the council for failing to have an “arms length” relationship with the organisers of the annual event, which prevented it from being objective when considering investment in the festival.
Aberdeen City Council pledged £122,393 of funding for the festival in 2013/2014 and has agreed to spend the same amount during this financial year.
The auditor warned the festival is being run as an “extension” of the council rather than an external body, given high level of support the festival has within the authority.
According to PwC, this is compounded by the fact there is no service level agreement (SLA) between the two bodies and, as a result, no clear set of responsibilities.
The auditors advises that in financial arrangements of over £75,000, it is “best practice” for an SLA to be in place.
In the absence of an SLA funds may be invested “inappropriately”, the report said.
The report also found the council had failed to properly scrutinise the festival’s financial position.
According to PwC, the festival organisers do not currently have a business plan in place for the next year, or a summary plan for the next three years.
Again, the report warns this could result in funds being invested “inappropriately” and also damage the council’s reputation should the festival run into financial difficulties.
The report calls for council to request that AIYF prepare a formal business plan ahead of funding for 2015/16.
There are also questions over the financial management of AIYF given the organisation’s financial statements for 2012/13 were submitted late and not signed off by auditors until August 2014.
In addition, four of the six councillors who are listed as trustees of the festival failed to declare their interest until after a review in October 2014.
The final issue identified by auditors is that the council’s guidance on funding external bodies could potentially be outdated, as it was last reviewed in October 2012.
Aberdeen City Council declined to comment on the report at this stage but confirmed it would be discussed by the Audit, Risk and Scrutiny committee on Thursday (Feb 26).