Auditors asked to account for £1m black hole

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The Wales Audit Office's (WAO) external auditors will face questions over a £1m black hole in the public body's books.

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

On the advice of external auditors KTS Owens Thomas, the liabilities did not appear in the accounts, the assembly's Public Accounts Committee was told.

The Cardiff-based auditors have declined to comment.

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

"There are a number of people who are to blame," said Peter Black, Liberal Democrat South Wales West AM, who sits on the Public Accounts Committee.

"First of all the Wales Audit Office for adopting that convention in the first place which is clearly against international accounting standards.

"But, secondly, there are some very strong questions we need to ask about the people who are being paid by the Welsh assembly to audit the Wales Audit Office's own accounts.

"We will be getting the external auditors in front of us because we are the ones who pay them to do this job and they will be coming to the Public Accounts Committee and answering some very searching questions."

The WAO 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 yesterday before the Public Accounts Committee was described as "embarrassing" by the new Auditor General for Wales, Huw Vaughan Thomas.

He 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.

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