PracticeAuditMoD accounts qualified for sixth straight year

MoD accounts qualified for sixth straight year

The Ministry of Defence 2002-03 accounts - which record spending of £630m on additional resources for the Iraq war - have been qualified for the sixth year running because of stock control issues.

Link: MoD rejects MPs’ auditing demands

This is despite attempts to produce the report and accounts in a brochure that ‘accords with best practice in the commercial private sector’.

The claim came from defence secretary Geoff Hoon who said in the foreword: ‘The department fully met the target to keep net financial resource expenditure for routine operations within budgeted limits.’

He reported a total underspend of £63m against departmental expenditure limits – less than 3% of the budget. Total operating costs reached £42bn.

Hoon claimed on the qualification by NAO chief Sir John Bourn: ‘The department has only one outstanding resource account qualification issue, relating to stock systems. Defence remains a complex business and our progress towards an unqualified resource account has been acknowledged as encouraging.’

Bourn said the department had made good progress on one of two issues resulting in the previous year’s qualification relating to charges for the use by contractors of departmental stock and capital spares.

But he complained of an ‘autobalance’ procedure used by the Defence Logistics Organisation, which generated data that could not be wholly supported by an audit trail.

It generated a net credit to the operating costs statement of some £1.1bn, with gross monthly postings varying between £114m credit and a £117m charge for consumable stock.

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