Wales Audit Office uncovers £1m black hole in accounts


The Wales Audit Office (WAO) has uncovered a black hole in its accounts of more than £1m.

WAO, which ensures billions of public money in Wales is spent properly, also admitted it had been breaching financial rules since 2005.

The £1.049m shortfall relates to pension liabilities for staff who had left, which should have been disclosed in its accounts.

The assembly Public Accounts Committee chair said he is "extremely concerned".

On the advice of external auditors the liabilities did not appear in the accounts, which is contrary to the financial reporting standards the WAO expects of other public organisations.

The organisation has asked the UK public spending watchdog the National Audit Office to conduct an investigation of the WAO accounts for the last five years.

This is to examine whether there have been any other breaches of the financial reporting rules.

The disclosure was described as "embarrassing" by the new Auditor General for Wales, Huw Vaughan Thomas, and "staggering" by AMs.

Mr Thomas told the Public Accounts Committee: "The accounts that have been prepared from 2005 onwards by the Wales Audit Office have adopted a convention where pension contributions which are paid to people who leave were not actually brought into account or shown as a future liability.

"Clearly, we have this year to regularise the position on our accounts. We need to produce accounts that adhere to the international and public sector accounting standards. There can't be any question about that really.

"Given the fact that the practice concerned has been going on for some years, to regularise our accounts mean that I have a total of just over one million to bring into account this year."

Mr Thomas said the WAO would not seek more money from the public purse to remedy the shortfall but would try to meet it from existing resources.

He added that this would probably reduce the office's financial reserves to nothing.


The Conservative AM and committee member Angela Burns said: "I have to say I am quite staggered that the Wales Audit Office, which is full, in my opinion, of financial people and auditors, didn't comply, for whatever reason, and nobody picked it up since its inception.

"As someone who has run businesses for years before I came into this game, even I know, and I'm not an accountant, how you have to treat things in accounts."

The chairman of the committee, Jonathan Morgan AM, said he was "extremely concerned" about what had happened.

Bethan Jenkins AM, a member of the committee, welcomed the governance review.

"I'm on record as having called for it for some time. This has been triggered by recent events, but I believe that if we had exercised greater scrutiny of the audit office earlier on, we could have most likely caught the problem sooner," she said.

She said she supported calls from other AMs for a full investigation into the matter.

The Wales Audit Office's external auditors, Cardiff-based KTS Owens Thomas, declined to comment on Thursday's committee meeting.

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