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Poor financial management appears to have been the main cause of the collapse of a North Wales Local Enterprise Agency, affecting the lives of hundreds of people, according to Jeremy Colman, the Auditor General for Wales. But, in his report published today, he also identifies a lack of communication by the Assembly and other public sector bodies in Wales in respect of publicly funded projects.
Antur Dwyryd – Llyn Ltd was established in 1988, providing business advice and training to communities in Gwynedd. But its collapse in September 2004 led to 45 redundancies, 320 creditors being owed £500,000 between them and the Inland Revenue not being paid a further £600,000.
Today’s report concludes that, while the company was largely dependent on contracts and grants from the public sector in Wales for its survival, the Assembly Government and its sponsored bodies were not to blame for Antur Dwyryd-Llyn’s collapse. Instead, the report points to what appears to be poor internal control and mismanagement, poor contract performance and financial instability within the company.
According to the report, it appears that Antur Dwyryd-Llyn overstretched itself with certain projects and suffered cash flow problems. It relied too heavily on its own money as match funding1 without obtaining firm assurances of subsequent help from public bodies, such as the Assembly-funded Local Regeneration or Pathways to Prosperity Funds.
The report also points to a lack of communication between and within the Assembly Government and its own sponsored public bodies when dealing with Antur Dwyryd-Llyn. Although this was not a factor in the collapse of the company, the Auditor General recommends that public organisations involved in funding and overseeing such projects should share information to protect public funds and to enable grant applications to be treated properly and promptly.
The Auditor General, Jeremy Colman, said today:
“Important lessons can be learned from the collapse of Antur Dwyryd-Llyn. Poor financial management in companies providing vital training and assistance to the community can do widespread harm: it is not just the shareholders who stand to lose. Prompt and effective communication between funding bodies and applicants is also essential and the Assembly Government needs to make improvements in this respect.”
Notes to Editors:
• This report examines the contracts awarded and grants advanced to the Antur Dwyryd-Llyn by the Welsh Assembly Government and Assembly Sponsored public bodies.
• This investigation was carried out following correspondence made to the previous Auditor General for Wales, Sir John Bourn, from two AM’s, asking for an assessment of the issues behind the company’s financial failure.
• The Wales Audit Office (WAO) is independent of government and is responsible for the annual audit of some £19 billion of annual public expenditure.
• The WAO was created on 1st April 2005 in consequence of 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.
1 Projects cannot be totally funded with European Structural Fund money. The rest must be raised by the project sponsor and is known as match funding. Match Funding can be from applicants own resources or other national sources of funding, namely the public, private or voluntary sector.
Ends
For more information please contact Rachel Harries (Communications and Media Officer) on 02920 262 675.
A copy of the report can be obtained via the WAO website http://www.wao.gov.uk/
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