A report into The Gathering  - a high-profile event held in Edinburgh in July 2009 as part of the Homecoming Scotland programme - has found that a number of measures should be taken in the future when public sector bodies work with the private sector.

The report by public spending watchdog Audit Scotland found that there are lessons that can be earned by all public bodies about using the private sector to help deliver their objectives following the losses the event incurred.

The Gathering took place on July 25 and 26 2009, and involved a clan gathering, highland games and a pageant. It was a key part of the Year of Homecoming programme - a Scottish Government initiative based on the 250th anniversary of the birth of Robert Burns - aimed at people around the world with Scottish ancestry and an affinity for Scotland.

It was developed and organised by a private company, The Gathering 2009 Limited, which was set up by Lord Jamie Sempill.

The event had a total budget of £2.4million, and made a loss of over £500,000. The company also owed £675,000 to public and private sector organisations following the event. The company went into liquidation after no buyers could be found willing to take on its financial liabilities.

There was £670,500 of public sector investment in the event, with grants and loans going to the company that delivered the event.

Grants of £100,000 were given by EventScotland, City of Edinburgh Council, Scottish Enterprise and the Scottish Government. There was also a Heritage Lottery Fund grant of £10,500, a Homecoming Scotland grant of £80,000 and a Scottish Government interest-free loan of £180,000.

Auditor General for Scotland Robert Black said: "It has been widely reported that the private company delivering The Gathering event ran into financial difficulties. Despite public sector support and attempts to save the company, it has gone into liquidation with outstanding public and private creditors.

"The public sector invested £670,500 into the event, in the form of £490,500 worth of grants, and a Scottish Government loan of £180,000.

"There are important lessons to be learned from this about using the private sector to help deliver public sector objectives, and in particular how best to protect the public investment involved.

"There needs to be a clear understanding of the relationship between all parties. This includes clarity about the roles and remits of each partner and the expectations about reporting and financial monitoring. All of this needs to be underpinned by clear and regular communication."

The report says that it is important that public bodies protect their interests and taxpayers’ money when public sector bodies work with each other or with the private sector.

Measure to ensure this include improved communication between joint funding bodies, consideration of the circumstances when due diligence checks on private sector companies should be undertaken before funding offers are made and measures to ensure that the accountability for spending public money is always clearly understood, with each partner getting an explicit statement of the degree of financial risk involved.