The future of the Edinburgh Mela is in question with funds yet to be found for the late summer festival.
It comes after boardroom ructions that ended with chief executive Chris Purnell leaving with five of the 15 directors quitting after him.
Police are also investigating claims of financial irregularities relating to an individual who is understood to be connected to the two-day event.
READ MORE: Edinburgh Mela festival director quit after vice-chair probe row
Main backers Edinburgh City Council and Creative Scotland said talks are ongoing with remaining Mela organisers.
In 2015 the Mela ran at a loss of about £23,000 with a £518,000 income, against a £35,000 profit on £481,000 the year before, however, police said the festival is not part of its investigation.
A Creative Scotland spokeswoman, said: "There are no current funding applications being considered for the 2016 Edinburgh Mela festival.
READ MORE: Edinburgh Mela festival director quit after vice-chair probe row
“As with everyone that we fund any future funding to the festival will depend on our satisfaction that robust governance procedures are in place.
"We expect and require appropriate controls to be in place across all organisations in receipt of public funding.
"We continue to have conversations with the festival, and its funding partners, during this period of change.”
READ MORE: Edinburgh Mela festival director quit after vice-chair probe row
A spokesperson for the City of Edinburgh Council said it "remains in discussion with the Edinburgh Mela board" adding: "Council funding for the 2016 event is yet to be confirmed.”
It was reported the Office of the Scottish Charity Regulator is also investigating claims connected to the Mela, but an OSCR spokeswoman said: "We will not confirm whether an individual charity is the subject of an ongoing inquiry."
No one was available for comment at the Mela.
A spokesman for Police Scotland said: “We have been made aware of claims relating to financial irregularities involving an individual.
"As this is forming part on an ongoing inquiry, which includes establishing whether a crime has been committed, it would be inappropriate to comment further at this time.”
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