PracticeAuditMPs demand MoD finance review after Iraq kit fiasco

MPs demand MoD finance review after Iraq kit fiasco

The Ministry of Defence has been urged to conduct a review into whether resource accounting ­ used to fully cost the war in Iraq ­ is leading to poor decision making on stock levels for vital war equipment.

The demand follows an in-depth investigation by the all-party House of Commons defence committee into the lessons of the Iraq war, and the admission that army units went into action with shortages of kit ranging from body armour and nuclear chemical and radiological defence suits to desert boots and even ammunition.

Reports at the time were denied by the MoD and government ministers, who insisted there was sufficient equipment in theatre.

The defence committee established that serious shortcomings in logistics tracking meant supplies acquired at the last minute from industry under ‘urgent operational requirement’ (UOR) procedures, reached Kuwait but were subsequently ‘lost’ and failed to reach military personnel.

Tory shadow defence minister Gerald Howarth, as reported by Accountancy Age in January, warned that the just-in-time supply philosophy underlying commercial accounting principles had ‘put service people in peril and cost lives’. The MoD denied using this supply philosophy.

The committee’s report described resource accounting as ‘a complex financial process’ and said the MoD needed ‘to ensure its staff were appropriately trained in its application’.

The MPs said: ‘We remain concerned that the application of resource accounting may, through a misinterpretation of its aim, have led to stock holdings being reduced too far.’

During the pre-deployment phase, 190 UORs, worth £510m, were issued to fill previously recognised stock gaps, which had not been funded earlier ‘for reasons of affordability’.

The Iraq war was the first to be costed under full resource accounting.

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