Literature Wales and Due Diligence

Since Literature Wales is coming under intense scrutiny just now, having been accused of spending 75% of its budget on its own staff salaries and other in-house expenditures, I have been trying to find out who keeps an eye on the governance of the organization and its spending priorities.  (I have checked its accounts quite carefully, and find that the 75% figure is just about right, as far as I can see from the figures paced in the public domain.)  So if public money is being improperly or inappropriately spent, who takes ultimate responsibility?

Since Literature Wales is a "national company" and has a quasi-official status, it is reasonable to assume that it is a part of the Welsh Government establishment. That being the case, presumably the Wales Audit Office is the body that ultimately ensures that there is no bad practice and that "value for money" is being delivered on behalf of the taxpayer.  So I wrote to the Auditor General for Wales and asked the following questions:

What are the due diligence tests that are applied to Literature Wales and other organizations with respect to the monies that they receive and the bursaries and grants that they distribute?
Where are these tests published, and who is required to enforce them?
What are the reporting mechanisms insisted upon by those who disperse public funds?
What are the procedures insisted upon by the Wales Audit Office?

I was surprised to learn, when I got a reply, that the Audit Office has no involvement whatsoever with Literature Wales.  More surprisingly, it does not get involved in "value for money" matters.  The Audit Office only scrutinizes the accounts of  "top tier" organizations -- in this case Arts Council Wales, which then has responsibility for passing on funding to second-tier organizations such as Literature Wales.

So any due diligence tests are applied by the Arts Council -- and responsibility is placed upon that organization for ensuring good governance and financial rectitude.  As we know, ACW has classified LW as a "red risk" organization for most of its six-year life, and the Assembly Culture Committee devoted a lot of time to this matter in its recent sessions.  So how is due diligence testing applied?

I wrote to the ACW Chief Executive Peter Capaldi about this, and to his great credit he replied literally within the hour!  He did not specifically answer my questions, but he did say this:   "I can assure you that a very high degree of scrutiny is brought to bear on the affairs of Literature Wales.   (I cannot comment on Welsh Books Council or Library of Wales.)  You might have seen that Hughes quotes liberally from some of the documentation that we shared with the Panel.  I think there can be no doubt, reading these, that our oversight of Literature Wales is detailed, specific and wide-ranging.”

We can take that as confirmation that due diligence is being exercised by ACW over the affairs of LW -- and so we who pay taxes can take that as a form of reassurance.  But it is still very vague, and I hope that somewhere the tests are described and enumerated and that the reporting mechanisms are adhered to by LW and assessed regularly by ACW.  And I still have niggling concerns that if there really had been "tight oversight" LW would not still be a "red risk" organization, and would not have gone off at a series of wild tangents from what its core activities are supposed to be.