MOD under fire for failing to follow IFRS

COMPTROLLER AND AUDITOR general Amyas Morse has qualified the Ministry of Defence's annual accounts for the fifth time running for failing to comply with International Financial Reporting Standards.

It failed to follow international accounting requirements for leases for the second year running. Becasue of this, a material value of assets and liabilities has been omitted from its financial statements.

Morse also limited the scope of his audit opinion on grounds of inadequate evidence in the annual accounts for certain expenditure and balances in financial statements.

He said that the MoD had made welcome progress improving asset verification but was not able to provide enough evidence to account for £5.3bn of military equipment in the form of Bowman digital radios, inventory and capital spares, as well as unquantifiable inventory and spares for which assets had been taken out of service with inadequate assessment of impairment.

The same assets were the subject to a scope limitation in the 2008-09 and 2009-10 accounts.

It also failed to follow accounting requirements for leases for the second year running.

The report did record an improvement in respect of accounting for food and accommodation and the number of personnel subject to a scope limitation last year.

Morse's audit opinions follow the astonishing row between the NAO and MoD accounting Officer Ursula Brennan over publication of a report criticising a government claim it was cheaper to proceed with building two aircraft carriers and mothballing one when scrapping one would have saved £200m.

She protested over publication of NAO findings in a report the terms of which she had not agreed. The NAO said that she had plenty of time to propose changes before the deadline for printing the report.