Auditors urge grant-making checks

17 May 10
Grant-making public bodies should make sure the organisations they award money to are financially robust, auditors in Wales have said
By Vivienne Russell

17 May 2010

Grant-making public bodies should make sure the organisations they award money to are financially robust, auditors in Wales have said.

The Welsh Audit Office today published its investigation into the collapsed private enterprise agency Cyma Cyf. It concluded that the agency failed to manage effectively the £3.6m it received in public funding between 2003 and 2008. When it went into liquidation in August 2009, it owed the Welsh Assembly Government £311,000 for rent and a European Union grant.

Cymad Cyf, a not-for-profit company based in Gywnedd, assisted the development of rural communities by running projects financed from public sources.

The WAO discovered that the conditions attached to the grants it obtained were poorly understood by Cymad Cyf, while the agency’s financial management was weak. It found no evidence that funding was used fraudulently.

Auditor for Wales Gillian Body said: ‘Every year, public bodies in Wales distribute large sums of money to small organisations in Wales. It is absolutely essential that these organisations have effective mechanisms in place to manage the risks of loss or misuse of taxpayers’ money.

‘It is particularly important that public bodies share information with each other about any weaknesses identified at those private sector organisations that are receiving public money.’

The WAO also recommended that public bodies include a standard clause in grant offer letters requiring a recipient to inform them if any officers are suspected of fraud. It added that public funds should only be paid out in advance where grant recipients can demonstrate that a project cannot go ahead without it.

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