Warning Raised Regarding Financial Reporting of Welsh Government-Owned Company
The auditor general of Wales has expressed serious concerns over the financial accounts of Industry Wales, a company wholly-owned by the Welsh Government. The company, which operates under the trading name of Sector Development Wales Partnership Ltd (SDWP), has received approximately £9.7 million in public funding over the last decade. Adrian Crompton, the auditor general, highlighted that he could not provide an audit opinion on Industry Wales due to irregularities in the accounts.
Industry Wales, established to offer expert advice and support for economic growth in Wales, has an annual budget of around £1 million. However, Mr. Crompton stated that the company’s accounts lack sufficient, appropriate evidence over material assets, making it challenging to form a clear opinion. This unusual situation led to his inability to provide a ‘true and fair’ or ‘regularity’ opinion on the accounts, raising significant red flags.
In his communication to the Senedd public accounts committee, Mr. Crompton noted the failure of Industry Wales to adhere to Welsh Government procurement regulations in awarding a contract in 2021/22. Furthermore, he highlighted a substantial investment in an automated decorating, cutting, and packing line, which remains non-operational, raising concerns about the company’s financial decisions and compliance with public sector standards.
The auditor general identified irregularities in the company’s asset valuation, particularly in relation to the packing line, casting doubt on the true value of its assets. He flagged £829,000 of spending as irregular and noted inadequate record-keeping and accounting controls for an additional £217,967 of assets. The delayed audit process revealed deficiencies in evidence gathering, further complicating the assessment of Industry Wales’ financial health.
Despite Industry Wales claiming assets worth over £1 million, Mr. Crompton’s report suggests that these valuations may not be accurate, indicating potential impairment in asset values. The company’s financial performance in 2024 showed a £35,000 loss, underscoring the need for a thorough review of its operations and financial management practices.
Industry Wales, chaired by Professor Keith Ridgway and led by chief executive Dr. Jenifer Baxter, focuses on key sectors like aerospace, net zero, and the automotive industry. With directors’ remuneration totaling £245,000 over the past two financial years and a small workforce based in Bridgend, the company faces scrutiny over its governance and financial stewardship.
Mark Isherwood, the Tory chairman of the public accounts committee, echoed concerns raised by the auditor general, calling the situation highly unusual and demanding further investigation. The Welsh Government acknowledged the issues at hand and assured of an internal review to address the identified shortcomings and provide recommendations for the future operations of Industry Wales.
In conclusion, the challenges faced by Industry Wales underscore the importance of robust financial governance and compliance with regulatory requirements for public-funded entities. The auditor general’s warning serves as a wake-up call for transparency and accountability in the management of government-owned companies, ensuring public resources are used effectively and responsibly for the benefit of the Welsh economy.