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Watchdog refuses to sign off 'problematic' MoD accounts

26 July 10 16:37
Ministry of Defence

Whitehall's spending watchdog has refused to sign off the Ministry of Defence's accounts for the fourth year in succession.

The National Audit Office (NAO) said it had failed to account properly for more than £6bn of equipment.

The head of the NAO, Amyas Morse, said the MoD had made efforts to improve its accounting.

But he said there remained "systemic and deep-rooted" problems with its asset management system.

Mr Morse said it had emerged the problems were more extensive than previously thought, as the work done to track down the equipment had brought fresh difficulties to light.

The report from the National Audit Office -an independent body that monitors government spending - said the MoD was unable to account for the whereabouts of £5.5bn of spares and other stocks.

It said it could not find £752m of military equipment, including firearms and 5,961 Bowman radios worth £184m.


The NAO's Comptroller said he had also qualified his audit opinion because the department's accounting policies were not fully compliant with International Financial Reporting Standards.

"Despite action by the department to improve its asset management and accounting, the issues I have identified are systemic and deep-rooted," Mr Morse said.

"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 said that the issues in the report had no impact on the provision of essential equipment to frontline troops.

"The National Audit Office has recognised that the MoD has improved procedures for inventory management and, by the end of March this year, had completed a full reconciliation of Bowman radios.

"We are continuing to work hard to improve our inventory management and ensure our accounting systems become compliant with financial reporting standards, but recognise that both issues will take time to be rectified."

Last week, a separate NAO report said the MoD must stop "living beyond its means".

It said the department had a tendency to revise up each annual budget as the year progressed.

For example, it said the MoD now expected to exceed its budget for the financial year by £500m, up from its previously forecast deficit of £185m.

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