Who audits the public sector in Wales?
The Wales Audit Office and the Auditor General for Wales operate under the collective umbrella term Audit Wales.
The Auditor General for Wales is the statutory auditor of the Welsh Government and its sponsored bodies, certain non-profit Welsh Government companies and other independent central government bodies, Welsh local authorities and other local government bodies, Welsh local police and fire services, Welsh national park authorities, Welsh NHS bodies and the Senedd Commission. Wales Audit Office performs the audit work on behalf of the Auditor General and may appoint other organisations to carry out work on his behalf.
Private sector firms also audit certain other Welsh Government and local government companies.
The Wales Audit Office currently contracts with ICAEW’s Quality Assurance Department for external audit quality monitoring on a voluntary basis.
Public sector financial reporting in Wales
As in the rest of the United Kingdom, Welsh central government and NHS bodies are required to prepare their financial statements under International Financial Reporting Standards (IFRS), as adapted by HM Treasury’s Financial Reporting Manual.
Local authorities, other local government bodies and local police and fire rescue services produce accounts under CIPFA / LASAAC’s Code of Practice on Local Authority Accounting, which is based on IFRS.
Whilst Welsh government bodies and agencies produce separate accounts, the Welsh government does not have “departments” like Northern Ireland or the United Kingdom government. The Welsh Government produces a single set of consolidated government accounts that includes Welsh Government agencies and sponsored bodies, Welsh NHS bodies, and some large Welsh Government companies. It does not include local authorities or other local government bodies, nor their companies, nor local police and fire services.
All Welsh government bodies, both central and local government, are included in the UK-wide Whole of Government Accounts, audited by the National Audit Office.
Public sector financial audit in Wales
As in the rest of the UK, the financial audits of the public sector in Wales are carried out in accordance with International Standards on Auditing (ISAs) as interpreted for the public sector by Practice Note 10 - the Statement of Recommended Practice on audit in the public sector.
The Auditor General for Wales’ financial audit opinions of the Welsh Government, Welsh Government’s sponsored bodies and Welsh NHS bodies include an opinion on whether income and expenditure are in line with the purposes intended by the Senedd (the “regularity” opinion). The regularity opinion for NHS bodies includes whether they have met their statutory duty to break even over a three-year period.
There is no regularity opinion for local authorities, police authorities or other local government bodies as they are not accountable to the Senedd.
Wider public sector audit work in Wales
Under the Code of Audit Practice, public sector auditors carry out a variety of other audit and assurance work to hold public sector bodies accountable for their spending in Wales. These are the main types of other work and the bodies they apply to:
Value for money examinations and studies
These are studies evaluating the economy, effectiveness and efficiency with which public sector bodies use their resources. They usually focus on projects or areas of spending rather than individual bodies. The Auditor General for Wales has discretion as to which areas to focus, which he will normally do after consultation on his work programme.
Conclusions on proper arrangements for securing economy, efficiency and effectiveness in the use of resources
The Auditor General has a statutory duty to conclude whether certain bodies have made proper arrangements for securing economy, efficiency and effectiveness in the use of resources.
Certification of claims and returns
Where required by legislation or requested to do so by a grant-paying body, Audit Wales conducts assurance engagements over grant claims or related returns. Under the Code of Audit Practice, auditors should also provide advice to grant-paying bodies of the most effective ways of obtaining assurance.
Future generations examinations
The Well-being of Future Generations (Wales) Act 2015 requires the Auditor General to carry out sustainable development examinations of each public sector body named under the Act at least once every five years to assess the extent to which they have acted in accordance with the sustainable development principle when setting well-being objectives and taking steps to meet them.. This is a unique feature of Welsh public sector audit that has no equivalent in the other nations of the UK.
Public reporting and quasi-judicial functions
The Auditor General for Wales is required to consider issuing reports in the public interest if they become aware of matters that need to be brought to the attention of the public or the audited body. A local authority in receipt of such a report must hold a public meeting within one month to consider its response to the recommendations. As in the rest of the UK, local electors have the power to object to local government accounts.
Other work
Audit Wales may also carry out a variety of other work such as governance reviews, data matching exercises, IT audits, capacity building support, advice to social landlords and briefings to the Senedd Public Accounts and Public Administration Committee and other Senedd committees.
Further reading
For an introduction to public sector audit across the UK, please refer to this page.
For more information about how public sector audit operates in the other nations of the UK, please refer to our nation specific pages:
