By Alex Klaushofer
05 June 2009
The Foreign and Commonwealth Office has drawn criticism for allowing major underspends.
A report published by the National Audit Office on June 3, Financial management in the Foreign and Commonwealth Office, highlighted an underspend of £128m for 2007/08. This is despite the fact that the department had requested extra funds from the Treasury to prevent a projected overspend.
The latest figure is part of a history of discrepancies between budgeting and spending in the FCO. The NAO attributed this to the department’s failure to embed accurate financial forecasting.
The NAO, noting the FCO’s resolution to limit future underspends to a maximum of 1%, was pessimistic about the prospects for significant improvement.
‘This is a stern challenge considering how difficult the department has found budgeting its income and expenditure in the past,’ the report said.
Public Accounts Committee chair Edward Leigh also criticised the underspend.
‘The FCO has consistently failed to spend against its budgets,’ he said. ‘Such underspending suggests either ineffective management of the budget, or an overgenerous budget in the first place.’
But the NAO congratulated the FCO for having made ‘significant progress’ in its financial management, highlighting a ‘strong financial management culture’ at senior levels.
‘The external recruitment of a qualified finance director, and his promotion to the board as director general, finance, provides a strong signal of the corporate importance of finance,’ the report said.
