The First Minister has said she is "appalled" by the revelation that a college principal and senior managers received an £850,000 pay-off against the advice of the Scottish Government's official paymaster.
Former Coatbridge College principal John Doyle, a member of his staff and five managers shared half of a £1.7 million severance pot between them, according to auditors.
Nicola Sturgeon backed a proposal to compel those involved in the decision to appear before MSPs.
Holyrood's Public Audit Committee heard last week how the staff colluded to "feather their own nests" and "deliberately withheld" advice from the Scottish Funding Council (SFC) which called the payments into question.
Auditor General Caroline Gardner described the episode as one of the most serious failures in governance she has ever encountered.
MSPs last week called for the staff involved to be "named and shamed" amid universal outrage at the committee when they heard that the SFC was powerless to stop them under previous rules, and that they cannot be prosecuted nor compelled to pay back the money.
Ms Gardner suggested the committee may want to explore the Scottish Government's process for "identifying individuals as being unfit to hold public appointments in future" amid MSPs' calls that they "never again hold public office".
Speaking at First Minister's Questions, Ms Sturgeon said: "I am appalled at the way in which decisions involving hundreds of thousands of pounds of public money were made by the college.
"These events took place before the colleges were reclassified by ONS and stronger financial controls came into effect.
"Nonetheless, Coatbridge College was required at the time to comply with Scottish Funding Council guidance and it did not do so.
"Of course, the rules have changed since April last year. Colleges must seek prior approval from the SFC on both severance and settlement arrangements, and there are now enhanced ministerial powers to intervene in such circumstances.
"I know the Public Audit Committee wants to explore the issue further. The convener is prepared to exercise powers under the Scotland Act to compel any reluctant witnesses to co-operate and I think that is entirely appropriate.
"As a government, we will also look at what can be done in the future to avoid situations like this happening again."
Holyrood's Public Audit Committee decided at last week's meeting to seek written evidence on the severance payments at Coatbridge College.
It is then expected to call former post-holders who were "decision-makers" in relation to the severance arrangements and payments to appear before them at an early opportunity, and may also call other witnesses who can assist them in their inquiry.
The decision-makers were the chair, the person who took over as chair, principal, vice-principal and members of the remuneration committee.
The committee has written to these nine people seeking written evidence and has advised them that they are likely to want to hear from them in person.
A Scottish Parliament spokesman said: "The initial focus is on the decision-makers at the college but nobody else has been ruled out.
"If necessary, the committee will compel witnesses to appear."
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