Scottish FA head of refereeing Willie Collum admits Rangers should have been awarded a penalty in their League Cup final against Celtic.
Celtic defender Liam Scales brought down Vaclav Cerny in the first half of extra-time but referee John Beaton adjudged the incident to have taken place outside of the box.
VAR Alan Muir and assistant Frank Connor did not overrule the on-field decision, with the score level at 3-3, before Rangers went on to lose the shootout.
However, Collum told the SFA's VAR Review Show: "The holding [of Cerny's shirt] begins outside the penalty area and then it continues on the line and arguably beyond the line and fully into the penalty area. Regardless, the fact it's on the line this should be considered as a penalty kick.
"The referee has awarded a free-kick on the field because he sees the pulling. He's correctly judged the incident in terms of the foul play but then the VAR team need to go into a check, they need to decide whether the incident is inside or outside and ultimately they failed to come to the correct conclusion which is this should have been a factual overturn, no need for the referee to go to the monitor. A factual overturn for a penalty kick to be awarded."
Following the game, Gers boss Philippe Clement described the non-intervention by Muir and Connor as "really weird", while new Rangers CEO Patrick Stewart then asked the SFA for an explanation over the non-award of the penalty.
Rangers have since described the incident as "damaging for the credibility of Scottish football more widely".
A Rangers spokesperson told Sky Sports News: "Rangers FC notes the Scottish FA's admission of an officiating failure following the non-award of a penalty to Rangers in Sunday's Premier Sports Cup final and welcomes the transparency from the Scottish FA.
"However, for such a failure to occur during one of Scotland's showcase matches is not only hugely disappointing for the club and its supporters, but also damaging for the credibility of Scottish football more widely.
"We acknowledge the Scottish FA's determination to use this and other decision-making failures as opportunities to drive improvements in officiating standards.
"As a club, we will continue to engage with the Scottish FA in an attempt to improve officiating standards for the benefit of all clubs in Scotland."
When asked how the mistake could have been made, Collum added: "I have to be very honest and say people need to take time to make sure is the holding inside or outside. Ultimately when you look at the TV pictures this is not a difficult decision for the VAR team.
"They are not forensic enough in the analysis, they move far too quickly. I think they're thrown because the majority of the Rangers player's body is outside the penalty area, but that's irrelevant because it's the holding they should be judging and they should be making sure they get an image to show them that that continues into the penalty area.
"We've dissected this incident because people will obviously hear me saying today that it's wrong, but that's not enough. We need to now understand: why did we get it wrong and how do we make things better? How do we improve? What are the lessons learned from this incident? People will find it very hard to accept this error, very difficult to accept it.
"The VAR, when he's checking the incident, doesn't analyse the holding enough and he then says to the AVAR who is supporting him and noting down the yellow card for the Celtic player at the time, he's focused on the paperwork.
"That's a learning point. We should park the paperwork and we can catch up on the paperwork. The focus has to be on the decision. The ball's dead, the AVAR isn't watching the play, it's an opportunity for the team of VAR officials to focus on the incident and the incident alone."
Collum was also asked how a similar mistake will be prevented from recurring and added: "By firstly acknowledging that it's a really poor decision, it's an unacceptable decision. The VAR team know that, everyone in refereeing knows it. It's unacceptable.
"We will do our very, very best through our coaching and analysis to make sure an incident like this never happens again. But it's a mistake, but it's a bad mistake.
"You talk about accountability, I was very open when I took up this role at the start of the season there would be accountability in refereeing. I told the media and the managers that we would deal with things internally, there would be accountability but we've been consistent with that throughout the season I can assure people of that.
"I did say if match officials find themselves not involved in future matches or we need to change the profile of a match for somebody we won't come out and publicly say that. The way that managers don't say he's maybe taken a player out. We've also got a responsibility to protect the wider group of the referees and we've also got a real responsibility to protect the match officials involved in this as well.
"What I'm assuring you as I sit here today is there is accountability in refereeing, but there's been accountability consistently since I've taken up post."
