The recent publication of the Senedd Public Accounts and Public Administration Committee (‘PAPAC’) Report, ‘Scrutiny of Accounts, Welsh Government 2020-21’, attracted significant media attention.
Much of this has been about the loss to Wales of £155.5m which could have been spent on public services. This followed HM Treasury’s decision to reject the Welsh Government’s request to flex the rules it agreed in 2016 with the UK Government. This wasn’t the only issue identified by the PAPAC. This article looks at some of the other findings in its Report.
The Welsh Government finalised its Accounts nine months later than planned
Having agreed a timetable which would see the Accounts laid before the Senedd by the end of October 2021, the Welsh Government did not sign off its 2020-21 Accounts until early August 2022.
Check out our timeline to see what happened.
31 March 2021
End of the financial year 2020-21
Welsh Government to submit Draft Consolidated Accounts for 2020-21 to the AGW.
The Welsh Government Permanent Secretary to approve and sign the Consolidated Accounts for 2020-21.
The AGW to lay the Welsh Government Consolidated Accounts 2020-21 before the Senedd
The Welsh Government and the AGW tell PAPAC informally that the 2020-21 Accounts may be delayed by around a month as Audit Wales was doing additional work on Welsh Government support for business grants.
The PAPAC informed about a further delay as the Welsh Government had told the AGW about a payment to the former Permanent Secretary on the termination of her employment.
Revised deadline for finalising the Welsh Government Consolidated Accounts 2020-21.
The Welsh Government updates the PAPAC in confidence about the delay in finalising the Accounts.
The AGW writes privately to the PAPAC about the delay and reports he has asked Welsh Government officials for further information by early January 2022.
23 December 2021
Statutory deadline for the AGW to lay the Welsh Government Accounts before the Senedd if they were presented to him for audit on 23 August 2021 (4 months).
Delay to Welsh Government Accounts 2020-21 raised in Plenary
The PAPAC asks the Permanent Secretary about the delay since the Accounts have not yet been signed off.
The PAPAC writes privately to the Llywydd to express concern about the delay.
The PAPAC receives regular private updates from Welsh Government officials and the AGW.
31 March 2022
End of financial year 2021-22
The PAPAC Chair makes a Plenary Statement about the delay.
The Permanent Secretary approves and signs the Welsh Government Accounts.
The AGW signs his Certificate and Report.
The AGW lays the Welsh Government Consolidated Accounts 2020-21 before the Senedd.
The AGW publishes his Public Interest Report, "Payment to the Welsh Government’s Former Permanent Secretary on Termination of Employment".
“Deficient record-keeping about how important decisions were taken resulted in a lack of clarity”
When the former Permanent Secretary left her post in October 2021, three months before the end of her contract, the Welsh Government paid her £80,519 (not including her final month’s salary). The Welsh Government said £30,289 of this payment had been included in its 2020-21 Accounts.
However, the Auditor General for Wales (AGW) concluded he had not been able to “obtain sufficient, appropriate audit evidence about the Permanent Secretary’s working arrangements from April 2018 and consequently whether the Permanent Secretary was entitled to receive the payment”. He added:
The Welsh Government did not keep contemporaneous records of its reasons for making the payment, the rationale for the amount paid or evidence of who authorised the payment.
The PAPAC said:
We are concerned that deficient record-keeping about how important decisions were taken resulted in a lack of clarity and insufficient opportunity for scrutiny by this Committee, particularly around the payment to the former Permanent Secretary.
This is not the first time the PAPAC has raised issues around the Welsh Government’s documentation. The PAPAC reported “poor record-keeping has been a consistent shortcoming within the Welsh Government’s procedures and processes” and it questioned why these shortcomings had not been addressed.
Accounts qualified again?
As we noted in our May 2021 article, it’s very rare for the AGW to qualify his ‘true and fair’ opinion. However, for the second consecutive year, the AGW qualified his ‘true and fair’ opinion on the Welsh Government Accounts.
A ‘true and fair’ view is one in which the auditor has not identified any errors of such significance that the reader of the accounts would be misled by information included in them. Such errors are known as ‘material misstatements’.
In the AGW’s view, the Welsh Government Accounts provided a ‘true and fair’ except for the effects, or possible effects, of the following matters:
- He had been unable to obtain sufficient, appropriate audit evidence about the Permanent Secretary’s working arrangements from April 2018 and consequently whether the Permanent Secretary was entitled to receive the payment on the termination of her employment.
- The Welsh Government should have included expenditure relating to clinicians’ pension tax liabilities in its 2020-21 Accounts.
- The Welsh Government included expenditure for some COVID-19 business grants in its 2020-21 Accounts but it should have included this in its 2019-20 Accounts.
The AGW also qualified his regularity opinion in relation to the payment to the former Permanent Secretary.
Welsh Government estimates fraud and error in some of its COVID-19 business support schemes ranges from £0.7m to £37.2m but auditors identify issues with the figures
During 2020-21, the Welsh Government provided more than £2bn in COVID-19 financial support for businesses “with the aim of helping them to survive and to protect people’s jobs”.
- grant and rates relief, which were administered by local authorities and totalled £1.1bn. Limited eligibility criteria were applied for these schemes, based on business type, rateable value and other criteria, which could be checked before awarding the grants.
- expenditure on Phases 1-4 of the Welsh Government Economic Resilience Fund (‘ERF’) and other schemes administered by local authorities, with an aggregate value of £893m. Wider eligibility criteria were applied for these.
The Welsh Government assessed that the range of fraud and error was between 0.08% and 4.17%. Applying the range to the £893m of expenditure on schemes with enhanced eligibility criteria gave an estimate of the risk of fraud and error between £0.7m and £37.2m.
The AGW drew attention to uncertainties with the estimate and auditors provided further information about these in a separate report, ‘COVID-19 business support in 2020-21’ (October 2022). They noted issues with the data the Welsh Government had used and how the range had been calculated.
Welsh Government officials confirmed they expected to report on the estimate of fraud and error in the 2021-22 Accounts but did not say explicitly they would change their methodology in light of auditors’ findings. The PAPAC said it was concerned about this and it was “disappointed” to note the 2021-22 Accounts, which were laid after its scrutiny but before it published its Report about the 2020-21 Accounts, did not include an estimate of fraud and error.
Post completion monitoring of some COVID-19 support for business may take another 18 months or two years
The Welsh Government is carrying out Post Completion Monitoring (‘PCM’) to ensure businesses in receipt of COVID-19 support it administered adhered to grant terms and conditions and to address incorrect allocations.
The PAPAC noted the Welsh Government had not completed PCM within its own timescales for completion. The Welsh Government explained it had not expected to still be providing support two years after the start of the pandemic. It said PCM would take another 18 months to two years to complete.
The PAPAC recommended the Welsh Government provided six monthly updates on the progress made.
The Report will be debated in Plenary on 26 April 2023, which will be available to watch live on Senedd TV.