Scottish Enterprise and its chief executive have been heavily criticised by a committee of MSPs for mishandling the organisation's budget.

The Scottish Executive has provided £50m to cover the agency's financial shortfall following its £34m overspend last year.

The Scottish parliament's enterprise committee said it did not understand why Scottish Enterprise had managed its budget in such a way.

However, when giving evidence to the committee, the chief executive of the agency suggested he thought there was some flexibility in terms of a relaxation or relief from the resource budget shortfall.

Jack Perry said he believed the door "was still ajar" for such budgetary help during the 2005/06 financial year.

But in its report, published on Thursday, the committee says there is no evidence that backs up the optimism shown by Perry.

It also says he did not follow Scottish Executive guidance on the financial management of a non-departmental public body, despite continued warnings of a likely budget overspend.

"The Scottish parliament should have been told of problems that were arising within Scottish Enterprise when the Scottish Executive was made aware of them in January 2006," the report says.

The committee's convener, Alex Neil, said the recent management of Scottish Enterprise's budget was "wholly dissatisfactory".

He told BBC Radio Scotland: "Jack Perry as the chief executive is the chief accounting officer and, as we have said in our report, we do not believe his performance as chief accounting officer has been very satisfactory.

"He has not done what a chief accounting officer should do."

However, a spokesman for first minister Jack McConnell said: "He has absolute confidence in the chief executive."

Enterprise minister Nicol Stephen is also criticised in the committee's report for creating confusion over the agency's restructuring plans.

Stephen had created "the worst of all possible worlds", the report says, after he overruled Scottish Enterprise's initial plans for restructuring.

The result was the "confusing compromise" now proposed which, "in an attempt to please everybody, runs the risk of pleasing no-one".