PracticePeople In PracticeMinistry of Defence finances under fire

Ministry of Defence finances under fire

The Ministry of Defence has been condemned for poor financial controls which led to millions of pounds of losses and excess expenditure, poorly-managed computing projects and fraud.

The House of Commons Public Accounts Committee said this was ‘clearly unacceptable’.

The all-party group was alarmed but suspense accounts still contain unreconciled balances. It said this was ‘unacceptable’.

It added: ‘A rapid resolution of the remaining problem accounts is now required if Parliament is to place reliance on the resource aAccounting produced by each department.’

The PAC was also alarmed that an employee in the Glasgow-based Pension Division of the Army Personnel Centre defrauded the MoD of £447,000. He has since been imprisoned. So far the MoD has recovered £48,000 from him and is seeking more High Court action.

The PAC said: ‘A lack of awareness among staff has to fundamental accounts procedures, and weaknesses in password control, allowed the fraud to continue undetected for over a year.

‘No single individual should be able to complete all stages of the payment process. Segregation of the organisation of the payment function is a fundamental control. The department must dissimulate to their management of staff the lessons learnt from this case without delay.’

The PAC also condemned the loss of almost £40m in two failed information technology systems.

Overall the MoD exceeded its expenditure limits by £37m and had to seek retrospective approval from parliament to make up the deficit.

PAC, took ‘a very serious view’ of this especially as the MOD ‘had incurred unacceptable expenditure every year for the past 4 years’. The MPs said: ‘This is clearly unacceptable’.

PAC chairman David Davis said: ‘This report raises serious doubts of financial management in the MoD. The MoD’s ill-considered attempts to develop bespoke IT systems and its inadequate system of control have led directly to significant losses of public funding. Taxpayers have a right to expect much better stewardship of their money’Mr. Davis added that in future the MoD should recognise the high risk of developing bespoke IT systems and give, considerable consideration’ before authorising anymore in the future.

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