NAO qualifies more Whitehall accounts

20 Jul 11
The National Audit Office has been unable to give a clean bill of health to two more sets of government accounts.
By Richard Johnstone | 20 July 2011

The National Audit Office has been unable to give a clean bill of health to two more sets of government accounts.

The Department for Environment, Food and Rural Affairs joins the Ministry of Defence and the Department for Work andPensionsin having its 2010/11 accounts qualified.

Auditor general Amyas Morse was unable to give an audit view of the Skills Funding Agency’s accounts, as they did not include further education colleges as required by International Financial Reporting Standards.

Defra’s accounting problems follow £175m worth of fines it has had to pay to the European Commission over the management of the Single Payment Scheme subsidy, part of the Common Agricultural Policy.

Morse said that the penalties result in a loss to the UK Exchequer outside Parliament’s intentions.

The fines, which come in the form of deduction from future EU funding, follow the Rural Payments Agency’s difficulties with the Single Payment Scheme, and relate to both overpayments and underpayments of money from the scheme between 2007 and 2009.

Both the Rural Payments Agency’s and Defra’s accounts have also been qualified on the grounds that the agency has not been able to make an accurate assessment of the value of overpayments and underpayments made to farmers since the scheme began.

The accounts include provision for a further £84m in penalties, including £53m for the Single Payment Scheme in England, for 2010.

Morse said: ‘There continues to be a significant loss to the taxpayer because of weaknesses in the administration of the Single Payment Scheme by the Rural Payments Agency. I welcome the appointment of a new senior leadership team at the agency which should now urgently address the issues which have led to my qualifications.’

Morse has said that the Skills Funding Agency’s accounts, which are the first he has examined since it was formed on April 1 2010, did not present a true and fair view of its activities. He said that under IFRS, further education colleges should be treated as subsidiaries of the agency, a partner organisation of the Department for Business, Innovation and Skills. As they were not, he could not give a clear opinion.

The agency provided £5.4bn of funding in 2010/11 to further education colleges and other skills and training organisations for adults.

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