Audit Scotland said in a statement: “Scottish Canals’ struggle to value its assets meant auditors did not have enough reliable evidence to provide assurance over the public body’s finances.

“Scottish Canals status changed from operating as a public corporation to a non-departmental public body from April 2020.

“But it has not been able to fully adapt to the financial reporting and accounting rules required by its change of status.

“Chief among these issues is ongoing difficulties around valuing its 4,000 assets, ranging from 200-year-old engineering structures such as the Avon Aqueduct to tourism attractions The Kelpies.”

Audit Scotland said Scottish Canals management have taken steps to address concerns raised by auditors in 2020-21, including undertaking a new asset valuation.

But progress has been limited “by underlying issues with the accuracy of Scottish Canal’s documentation and data.”

This has impacted the body’s financial statements, “meaning auditors are again unable to provide public assurance over Scottish Canals’ financial position, how it spent public money allocated to it or its performance.”

Audit Scotland added: “To date Scottish Canals has spent more than £500,000 on consultant support for its asset valuation activity which had not originally been budgeted for.

“These costs will be ongoing, with £100,000 set aside for valuation work in 2022/23.”

Stephen Boyle, Auditor General for Scotland, said: “Scottish Canals urgently needs to develop an effective plan to resolve these ongoing issues relating to the valuation of its assets.

“Senior leaders also need to ensure they have the right staff and expertise to draw on in order to meet their financial reporting responsibilities in a way that provides value for money.”