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The auditor general sounded the alarm about the “irregular” accounts of a wholly Welsh Government-owned company, warning of a lack of evidence to support financial claims.

Adrian Crompton took the extraordinary step of stating he could not form an audit opinion on Industry Wales, the trading name of Sector Development Wales Partnership Ltd (SDWP).

Industry Wales, which aims to provide expert advice and support to grow “Wales plc”, has received about £9.7m from the public purse in the past decade, according to accounts.

Mr Crompton said: “This is a highly unusual position whereby I am stating that I am unable to provide either a ‘true and fair’ or ‘regularity’ opinion on the accounts as I have been unable to obtain sufficient, appropriate evidence over material assets.”

In a letter to the Senedd public accounts committee, he wrote: “Unfortunately, this inability to obtain sufficient, appropriate evidence applied to multiple connected parts of the accounts.”

‘Pervasive’

The auditor general concluded: “The impact is so significant and pervasive in the context of SDWP’s accounts that I am unable to give an opinion at all.”

Industry Wales – a relatively small umbrella organisation for forums in key sectors such as aerospace, net zero and the automotive industry – has an annual budget of about £1m.

In a disclaimer on the 2024 accounts, Mr Crompton pointed out that the company failed to follow the Welsh Government’s own procurement law in awarding a contract in 2021/22.

The company, which was set up by ministers in Cardiff Bay in 2013, has spent more than £1m on an automated decorating, cutting and packing line which is not yet operational.

Mr Crompton said Industry Wales did not consider Welsh policy when buying the packing line “and therefore has not complied with public sector procurement regulations”.

‘Deficiencies’

The firm entered into a contract with Llanelli-based manufacturer EBS Automation which scored second on price in the non-compliant procurement process.

Mr Crompton said Industry Wales claims to have assets valued at more than £1m but the bulk comes from the packing line, with indications it may have significantly impaired value.

Declaring £829,000 of the spending to be “irregular”, the auditor general also warned of a lack of robust record keeping and accounting controls for another £217,967 of assets.

The audit, which had an initial deadline of December 31, was delayed until late February due to “significant deficiencies” in obtaining the required evidence.

But Mr Crompton, an ex-senior civil servant in the Senedd, remained unable to complete the work he was appointed to undertake on the 2024 accounts which showed a £35,000 loss.

‘Questions must be asked’

The arm’s-length body is chaired by Professor Keith Ridgway and run by chief executive Dr Jenifer Baxter, who are experts in manufacturing and sustainability respectively.

Directors’ remuneration has totalled £245,000 over the past two financial years and the Bridgend-based company employs three to four people, according to accounts.

Mark Isherwood, the Tory chairman of the public accounts committee, said: “It is a matter of concern that the auditor general has ‘disclaimed’ his audit opinions on these accounts.”

The north Walian added: “This is a highly unusual position and there are questions that need to be asked as to why this has occurred. The public accounts and public administration committee will be discussing this matter on Thursday.”

Internal review

A Welsh Government spokesperson said: “We are aware of this matter and actions the company is taking to resolve the issue. We are also currently undertaking an internal review of Industry Wales. This will include recommendations for the organisation’s future.”

Industry Wales has been invited to comment.