The biggest health board in Wales is still facing “fundamental challenges” a year after it was put into special measures, a report has said.

The Betsi Cadwaladr University Health Board (BCUHB) came under increased scrutiny last year after financial irregularities were uncovered and “serious concerns” raised about its performance, leadership and culture.

The Welsh government placed the health board under special measures with the entire board removed in February, and staff from the finance team were later suspended.

I fully understand that there is much more to be done as we continue on our improvement journey in order to ensure excellent healthcare services for the people of north Wales

Now, the public sector watchdog in Wales has praised improvements in the organisation after a “dysfunctional year” but stressed that further action is needed.

The auditor general for Wales, Adrian Crompton, has said vacancies on the board must be filled “as quickly as possible” and “ongoing personnel issues in the finance department” must be resolved.

Investigations into the suspended staff “have proved to be complicated” and are still ongoing, the auditor said.

A previous report by the Ernst Young accountancy firm found that the finance team had deliberately made incorrect entries in the accounts, allocating spending to a single financial year when it was in fact spread over several.

Mr Crompton said: “It’s assuring to see that the dysfunction within the health board’s senior leadership that we described last year is no longer present.

“There is now a need for the board to build upon this progress and provide the unified organisational leadership that is needed to address the significant and ongoing challenges facing the health board.”

The report has been welcomed by the chairman of BCUHB, Dyfed Edwards.

He said: “I welcome this report which acknowledges the progress the health board has made over the past year.

“I fully understand that there is much more to be done as we continue on our improvement journey in order to ensure excellent healthcare services for the people of north Wales.

“I see the Audit Wales report as a milestone to show we are moving in the right direction.

“Over the last 12 months we have worked to create stability and a positive and supportive culture within the health board, whilst focusing on quality of service provision and reaching out to patients and the public we serve.”

He said they now have a “firm foundation” from which to build on, with a new chief executive and board members in place.

The health board said it could not comment on matters relating to the suspended staff until the investigation was concluded.

This is the second time the organisation has been placed under special measures, with the health board under increased scrutiny between 2015 and 2020.

In October last year, Welsh Secretary David TC Davies called for an independent inquiry into the health board.

The Welsh government dismissed the call saying it would divert resources and attention from improving care in north Wales.