THE Scottish Government's £9m international development policy has suffered a blow after the grants process for overseas projects was judged to be "not fit for purpose".
A critical internal report also revealed that civil servants lacked "in depth" knowledge of international affairs and found no due diligence checks were done on applicants.
In 2005, the Scottish Government developed its own strategy for alleviating global poverty by funding projects in Malawi.
An International Development policy was unveiled in 2008 and dozens of projects are currently being supported in the African country.
Rwanda, Zambia, Tanzania and the Darfur region of Sudan were also helped, while projects are also being funded in Pakistan, India, Bangladesh and Sri Lanka.
Over half of the £9m fund focuses on Malawi.
In a recent funding round, various projects were supported, including £57,600 to the CIFA Trust for strengthening marginalised rural communities in North Malawi, and £39,609 to Big First Aid for developing a health app in Tanzania.
However, an internal audit completed last year has flagged up concerns with how the policy has been run behind the scenes.
On "governance", the Government report noted that the team had produced no annual business plan and found that "risks are not identified against project funding rounds".
It also noted: "Team lack in depth knowledge regarding international issues."
The audit concluded that a "rounded and informed" awareness of the issues faced by developing countries would help the civil servants spot funding risks.
The "due date" for taking action to address this weakness was listed as July this year.
On grant funding and monitoring, the report was even more blunt:
"Controls over grant management arrangements are currently not fit for purpose".
It found that the Small Grants Scheme was "working very well", but highlighted that "no due diligence" checks were carried out on applicants.
Organisations in receipt of grants are supposed to submit mid and end-year reports, along with details of claims, but the report stated there was a "lack of action" in relation to scrutiny of these documents.
In addition, "little or no checks" were being carried out against the claims from the public purse, such as random checking of the expenditure declared by organisations.
The audit warned there was a risk of outcomes not being met, poor value for money, inappropriate use of funding by the grantee, and exposure to reputational damage.
A small number of suspected fraud cases had been reported to the International Development team in the last two years.
Scottish Conservative enterprise spokesman Murdo Fraser said: "It's no secret that the Scottish Government lack direction on international development issues.
"It's particularly concerning that no current plans exist to drive international development forward and it's disappointing to hear that staff lack awareness on the fundamental issues.
"Clearly, more needs to be done to improve funding mechanisms - with particular emphasis on grants and funding.
"The SNP government need to look into these failings as a matter of urgency."
A Scottish Government spokesman said: "Many of the areas for improvement had already been identified by the International Development Team and action was already being taken, working closely with Internal Audit and Financial Management colleagues. Externally, we worked with our international development grant holders and independent assessors to improve our monitoring and evaluation processes.
"The Scottish Government is confident that it has tightened its international development grants processes, and we are committed to continuing to improve."
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