There was a lack of “open and transparent governance” in the financial management of a scandal-hit health board, a report has found.

In April, this newspaper revealed that NHS Tayside had been using endowment funds to prop up general running costs, prompting the resignation of its then chairman.

The board had agreed to use £3.6 million from its endowment fund, which is made up of donations from the public or bequests in wills, to help it break even in 2013-14.

Now an independent review by accountants Grant Thornton has identified a “number of weaknesses” in the beleaguered health board’s financial management arrangements. The Grant Thornton review said the decision-making process related to the retrospective £3.6m use of endowment funds was “not subject to fully open and transparent governance processes”.

It said: “Based on our review it would appear that the NHS Tayside Board historically did not have full visibility of the NHS Tayside financial position, and in particular in 2013/14 when the optimism of achieving in-year financial balance declined.

“Our review identifies a number of

weaknesses in NHS Tayside’s financial management arrangements alongside a lack of open and transparent governance which may have evolved based on NHS Tayside’s organisational culture and historic working practices.”

The report added: “In the case of the decision to retrospectively apply endowment money of £3.6 million we have evidenced examples within NHS Tayside where the anticipated financial controls, particularly across management; scrutiny; and assurance were either not in place or did not

operate as effectively as intended.”

The revelations in April prompted the resignation of NHS Tayside chairman Professor John Connell, although he had only been in post since 2015, with the Greater Glasgow health board boss John Brown now installed in the job on an interim basis.

Lesley McLay, the chief executive in charge at the time the charity funds were transferred, was signed off sick by her GP on the morning of Friday April 6 - less than 24 hours after she was told she was being stripped of her "accountable officer status" in the wake of the scandal.

Scottish Conservative shadow health secretary Miles Briggs said the report “further hits home just how chaotic things had become at NHS Tayside”.

He added: “It’s a complete disgrace funds set aside for charity were used in this way.

“The auditors are right to criticise the lack of transparency and accountability at the health board.

“What’s worse is the SNP government sat back and let it happen.”

In recent years NHS Tayside have had to be bailed out with £45.3m of Scottish Government loans.

The report, commissioned by the Scottish Government, makes a number of recommendations including that the health board’s finance department should review how it forecasts the likely future financial position and how robust this is.

Health Secretary Shona Robison said: “All the recommendations in the report have been accepted in full and progress is already being made towards them.”

NHS Tayside said its new leadership team had already implemented a number of reviews and improvements in their first weeks at the helm.

These include an agreement by board members to repay the endowment money which had been retrospectively applied in 2013/14 and an overhaul of the way that financial reports are presented.

Chief executive Malcolm Wright said: “This independent review reinforces our position of transparency first and we will now relentlessly pursue improvements to our financial reporting and governance to ensure all recommendations are implemented.”