The role of external auditors is very clear and governed by statute. They are required to make judgements on whether individual bodies have proper financial arrangements in place that comply with various laws, regulations and statutory guidance. For example, the responsibility of all local government bodies in relation to the collapse of Icelandic banks is to follow recognised Treasury Management guidance and prepare an Annual Investment Strategy. The audit role is to review whether bodies have discharged those responsibilities and applied them in practice. Spending and investment decisions are entirely a matter for individual bodies.

The closing of the last financial audits, up to 31 March 2008, saw no significant issues being reported to authorities by auditors in relation to investments or deposits. This is not the same as saying, as has been reported, that auditors have confirmed that investment portfolios are sound. If any emergent issues have come to light since this period, regarding investments or any other financial matter, they would be reviewed and reported in the Auditor’s Annual Letter to the individual authority concerned and considered at forthcoming audits.

External auditors are not financial advisors, but the Wales Audit Office, and the Auditor General for Wales, are committed to making a positive contribution to ensuring that Wales benefits from well-managed, accountable public services that offer the best possible value for money. The Auditor General issues regular guidance and advice to auditors on a wide range of topics including treasury management. He will continue to issue advice and guidance to auditors to fully equip them for considering the financial standing of bodies as part of their 2008-2009 audit activities. The risks and issues brought on by the current economic climate are being built into the planning cycles for the latest financial audits, which take in the crucial period 1 April 2008-31 March 2009.”

Notes to Editors:

• The Wales Audit Office does not hold any funds in Icelandic banks.
• The Wales Audit Office is independent of government and is responsible for the annual audit of some £20 billion of annual public expenditure.
• Its mission is to promote improvement, so that people in Wales benefit from accountable, well-managed public services that offer the best possible value for money. It is also committed to identifying and spreading good practice across the Welsh public sector.
• The Wales Audit Office was created in April 2005 through the Public Audit (Wales) Act, 2004, which expanded the functions of the Auditor General for Wales and enabled the transfer of staffs from the Audit Commission in Wales and National Audit Office in Wales to his employment.