THE quango which is supposed to oversee Scotland's new single police force and manage its £1.7 billion budget failed to keep adequate financial records in its first year, it was revealed yesterday.

In a damning report, Auditor General for Scotland Caroline ­Gardner said numerous aspects of the Scottish Police Authority's accounting records, including bank records, were of "poor quality".

Her report was issued to accompany the Scottish Police Authority (SPA) accounts for 2013-14.

Gardner described the ­findings of the SPA's annual audit as "unusual".

The SPA was set up to oversee the governance and budgeting of Police Scotland when the country's eight regional police forces were merged into one on April 1, 2013, in order to save £1.1bn by 2026.

However, the early months were plagued by a high-profile turf war between SPA chair Vic Emery and Police Scotland chief constable Sir Stephen House over who should control key backroom functions, such as finance and human resources.

Gardner noted that this "protracted discussion" meant the issues were not settled until four months after Police Scotland came into effect.

This "left finance staff in both the SPA and Police Scotland uncertain of their future and permanent roles and responsibilities".

During the critical time when the SPA and Police Scotland were trying to merge the forces, their staff and IT systems, the SPA had no permanent finance director in place, but instead had three temporary ones, Gardner noted.

It was not until May 2014, more than a year after it started work, that the SPA "finally" appointed a permanent finance director, she said.

Besides causing uncertainty for staff, this ultimately "delayed the development of a long-term ­financial strategy for the decade to 2025-26".

Although the SPA's auditors did not "qualify" their opinion of the 2013-14 accounts - the technical terms for attaching a health warning about their accuracy - they said they felt obliged to report some failings.

"Aspects of the accounting records and access to information in the areas of property, plant and equipment, bank and cash, and for the computation of certain accruals were of poor quality.

"In my opinion, therefore, adequate accounting records have not been kept in respect of these areas for the 2013-14 financial year."

Gardner's report concluded "certain aspects of certain accounting records were not adequate and difficulties were encountered in conducting the audit. This is an unusual conclusion from an auditor and reflects the need for SPA and Police Scotland to make significant progress in improving their accounting records."

SPA chief executive John Foley was last year paid the equivalent of a £110,000 salary, while Emery was on £90,000 and his 12 fellow board members shared a further £450,000 between them.

LibDem justice spokeswoman Alison McInnes called on Justice Secretary Michael Matheson to act.

She said: "The new Justice Minister must get to grips with what is a very worrying report.

"It is unacceptable that the SPA has kept records which make public scrutiny difficult.

"There was a clear move away from transparency on Kenny MacAskill's watch.

"The new Minister must reverse that trend."

In a statement issued in response to the Auditor General's report, Foley said: "SPA and Police Scotland successfully delivered an effective legal, financial and operational merger at the beginning of 2013-14 and by the end of that year had delivered all the efficiency savings [some £64 million] expected of it.

"Both organisations acknowledged at the time, and subsequently to [Holyrood's] Public Audit Committee, that not every aspect of this, the largest public sector reform since devolution, had been perfect.

"We are in no doubt however that it has been effective."