By David Williams
26 July 2010
The Ministry of Defence has had its accounts qualified for the fourth year running after auditors identified ‘systemic and deep-rooted’ problems with the department’s book-keeping.
Amyas Morse, head of the National Audit Office, has written to the Commons today detailing why the MoD’s accounts fail to meet International Financial Reporting Standards.
It is the fourth year in a row that the MoD’s accounts have been qualified.
Morse acknowledged that the ministry had improved its asset management and accounting practices, but concluded: ‘The issues I have identified are systemic and deep-rooted.
‘The level of control exercised by the department is not yet sufficient to enable me to provide an opinion on a significant proportion of assets reported in the financial statements.’
The MoD spends £41.5bn a year, and has assets such as land, buildings and equipment worth £130bn.
In last year’s report, which covered the department’s accounts for 2008/09, the NAO highlighted the MoD’s difficulty in maintaining records on some stock including vehicles and radio equipment.
Although improvements had been made, auditors were still unable to find evidence to support the existence and value of some assets. There were examples of discrepancies in stock counts and of warehouse records not matching up with other accounting systems. These issues were even more widespread than before, says Morse.
The NAO acknowledged that the MoD had made some progress on the administration of staff expenses, a major source of concern last year. But it called for the department to make a ‘serious and concerted effort’ from the department to comply with accounting standards.
Last week, another NAO report criticised the MoD’s approach to budgeting, pointing out a £700m shortfall last year and a £500m deficit for 2010/11.
In December 2009, the NAO forecast a deficit of between £6bn and £36bn over the next ten years.
26 July 2010
The Ministry of Defence has had its accounts qualified for the fourth year running after auditors identified ‘systemic and deep-rooted’ problems with the department’s book-keeping.
Amyas Morse, head of the National Audit Office, has written to the Commons today detailing why the MoD’s accounts fail to meet International Financial Reporting Standards.
It is the fourth year in a row that the MoD’s accounts have been qualified.
Morse acknowledged that the ministry had improved its asset management and accounting practices, but concluded: ‘The issues I have identified are systemic and deep-rooted.
‘The level of control exercised by the department is not yet sufficient to enable me to provide an opinion on a significant proportion of assets reported in the financial statements.’
The MoD spends £41.5bn a year, and has assets such as land, buildings and equipment worth £130bn.
In last year’s report, which covered the department’s accounts for 2008/09, the NAO highlighted the MoD’s difficulty in maintaining records on some stock including vehicles and radio equipment.
Although improvements had been made, auditors were still unable to find evidence to support the existence and value of some assets. There were examples of discrepancies in stock counts and of warehouse records not matching up with other accounting systems. These issues were even more widespread than before, says Morse.
The NAO acknowledged that the MoD had made some progress on the administration of staff expenses, a major source of concern last year. But it called for the department to make a ‘serious and concerted effort’ from the department to comply with accounting standards.
Last week, another NAO report criticised the MoD’s approach to budgeting, pointing out a £700m shortfall last year and a £500m deficit for 2010/11.
In December 2009, the NAO forecast a deficit of between £6bn and £36bn over the next ten years.
