PracticePeople In PracticeMoD’s resource accounts full of errors

MoD's resource accounts full of errors

The Ministry of Defence has failed to produce accurate resource accounts due to 'fundamental uncertainties and errors', according to the National Audit Office.

As a result, the NAO has refused to give an audit opinion on the MoD accounts for 1999/2000.

This was the first time the MoD resource accounts were formally audited by the NAO, although the previous year?s accounts had been given a ?dry run? review.

Sir John Bourn, head of the NAO, recognised that the move from cash to resource accounting had been a colossal task’.

The NAO’s report criticised the MoD’s lack of audit evidence available for the accounts, particularly on holdings of land and buildings, and highlighted difficulties with the ministry’s logistics supply systems which had not been originally designed to provide financial information.

It also revealed that errors and inconsistencies in the 1999 balance sheet had remained largely uncorrected and that there were serious doubts about the accuracy of charges in the operating cost statement for 1999/2000.

But the report acknowledged that the MoD, which had been required to value and keep track of £90bn of assets, was taking steps to correct the shortcomings of the accounts.

The MoD’s assets included specialised buildings, aircraft, ships and military vehicles, the value of which had never been assessed before resource accounting had been introduced.

Resource accounting, designed to give departments better management information on the cost of their activities and assets, was first introduced at the MoD in 1998, but this year’s results were the first to be presented to parliament.

An MoD spokesperson said: ‘The move [to resource accounting] has been an enormous project, involving a complete change in culture. We have had our weakness pointed out and expect to see improvements next year when the system is more mature.’

Links

MoD reforms bring costs under control

Ministry of Defence finances under fire

MoD urged to revise procedures

MoD online

National Audit Office online

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