The Scotsman (p1) reports that the council's ruling Labour group met yesterday to debate the running of its commercial operations department after last week's demand by the Scottish secretary, Donald Dewar, for a full account of its operation within three weeks.
An East Ayrshire official statement issued last night said the director of finance had identified a defecit of£3.5m in the commercial operations department for the last financial year.
Because of what the council called a 'potential flaw' in the accounting process a final figure was not yet available.
'Although I don't believe the status quo is an option, I am positive the council can still deliver quality services that are efficient, effective and provide value for money locally.'
The Scottish Office will now wait for a full report from the council and the Audit Commission before deciding on further action, which could include closing the DLO or forcing the council to put all building work out to tender.