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The committee will now take evidence on the Audit Scotland report entitled the National Fraud Initiative in Scotland, external from:

• Russell Frith and Owen Smith from Audit Scotland.

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That ends the higher education evidence session.

Committee convener Jenny Marra suspends the meeting for a change in witnesses.

Ross Thomson says there is 6% reduction in real terms funding for universities.

The Tory MSP asks if the inability to fund our universities sustainability is allowing the erosion of the institutions.

Paul Johnston  says there are overall restrictions in public finance and the auditor general has recognised the tough decisions that follow from that for the Scottish government.

Universities Scotland director Alastair Sim says he wants to see a recovery of sustainable funding and research funding for universities in the forthcoming budget.

Mr Sim says he is optimistic following discussions with the SFC and the government.

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Conservative MSP Ross Thomson asks if the new Widening Access Commissioner will be able to challenge the Scottish government.

Paul Johnston from the Scottish government says the commissioner will have to hold the whole system to account.

SNP MSP Gail Ross says there are still a lot of students form around Scotland that access a city university. 

Ms Ross asks if students from poorer backgrounds are given enough support to access the university of their choice.

Paul Johnston from the Scottish government says it is something that is being looked at and the results of that research should come to the government next year.

Paul Johnston says the government is working with SFC and Universities Scotland to protect the current diversity in the workforce in the higher education sector.

SNP MSP Gail Ross says we don't know the implications of Brexit and we accept that.

Ms Ross says we do know, in cash terms, R&D funding is going down which is worrying.

She asks if Dr Kemp can make an "educated guess" as to what will happen.

Dr John Kemp form the SFC says, although some things are unknown, the SFC are trying to find out if they will still have access to some of the funding.

The Director of Universities Scotland, Alastair Sim, says "it is one of the great unknowns", he says it particularly affects staff and institutions are trying to assure those from EU countries that they are valued.

"Beyond that we can't give an answer," to staff says Mr Sim.

He says it is important to also find out how it will affect students from other countries. 

Universities Scotland director Alastair Sim says SMID is not enough on its own to widen access.  

Paul Johnston says the government has accepted the recommendations of the Commission for Widening Access and they are done in SMID.

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What is SMID? The Scottish Index of Multiple Deprivation.

The Scottish Index of Multiple Deprivation (SIMD) identifies small area concentrations of multiple deprivation across all of Scotland in a consistent way. 

It allows effective targeting of policies and funding where the aim is to wholly or partly tackle or take account of area concentrations of multiple deprivation.  

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Concerns have been raised about the centralisation of funding for Scottish universities, BBC Scotland has learned.

Critics have warned that the abolition of the Scottish Funding Council could pose a threat to academic independence.

The concern follows a decision two weeks ago to put the Scottish government's economic agencies under a single national board.

It has since become clear that the four boards of directors running the agencies face abolition.

Enterprise Minister Keith Brown ordered the review of Scottish Enterprise, Highlands and Islands Enterprise, Skills Development Scotland as well as the Scottish Funding Council.

He concluded that a national board should be created to oversee the different agencies and ensure their work was "aligned".

Dr John Kemp the Scottish Funding Council say it is a merger of the boards.

Dr Kemp says enterprise and skills are very important, education and research are arguably quite a bit wider and it is important the governance structure reflects that.

Scottish Labour MSP Jenny Marra says it has not been confirmed to parliament whether or not the new board will be chaired by a minister.

Ms Marra asks what Universities Scotland take on it would be if there was a ministerial chair.

Mr Sim says he thinks it would be a real risk because of the heightened involvement from the government. 

Ms Marra asks if Paul Johnston from the Scottish government can confirm whether or not the board would have a ministerial chair.

Mr Johnston says he cannot speak for ministers on that and he is not sure of everything that has been said in parliament. 

The Director of Universities Scotland, Alastair Sim, says the role of universities is much wider than enterprise and skills.

Mr Sim says it is about education, an out of that comes enterprise and skills.

He says education is the fundamental and universities need to be able to do excellent research. 

He says it is important to have a board that can question universities and the government but the relationship between universities and government should not be damaged.

"That would be catastrophic," he says. 

Dr John Kemp from the Scottish Funding Council says he accepts there other sources of funding for the higher education sector.

He says he is not sure a wider review of funding is needed.

Conservative MSP Liz Smith says Audit Scotland and Mr Sim are making it clear that something radical needs to be done.

Dr Kemp says we have to make best use of the money we have in the system.

Committee convener and Labour MSP Jenny Marra says at Dundee University when research grants come in there is not enough money from the SFC to sustain them.

Ms Marra asks how universities can continue to punch above their weight when they are under-funded. 

Paul Johnston from the Scottish government cites other sources of funding as being crucial.

He says it is essential to look at the overall picture and the Audit Scotland report does that.

Universities Scotland director Alastair Sim says universities are having to make difficult decisions under financial constraint.

Mr Sim says he hopes the sector will return to sustainable funding levels.

Paul Johnston from the Scottish government says public money must secure the best possible value and impact.

Scottish Labour MSP James Kelly says a picture has been painted of the financial challenges institutions face and asks Mr Sim to expand on it.

The Director of Universities Scotland, Alastair Sim, says the system is under real stress because institution costs are not being covered.

Mr Sim says difficult decisions have to be made because there is not enough money to run an "excellent university". 

He says this has an impact on the wider economy.