The National Audit Office has called on the Ministry of Defence to step up
its use of “professionally skilled finance staff” to develop a long term
financial planning strategy — and keep to it.
The demand is contained in a special report ahead of the MoD’s Security and
Strategic Defence Review. The report complained that some of the issues which
NAO chief Amyas Morse to qualify the MoD’s resource accounts for 2008-09 remain.
The report revealed astonishingly that although the MoD now has a
professionally qualified finance director on its board, it is the director
general for strategy who actually leads on strategic aspects of financial
planning, leaving the finance director to the limited task of only providing
advice on the financial coherence of the emerging plans.
The NAO report said: “We take the view, in line with HM Treasury, that this
is undesirable as it reduces the authority of the finance director.”
The NAO concluded : “There have been improvements in financial management in
the Department; however we consider that it still does not place financial
management at the heart of its decision making.”
The report also records that financial planning rounds within the MoD had
identified measures need to reduce costs because of shortfalls between forecast
expenditure and budgeted provision, but they were claimed to adversely impact
defence capability and “could not be agreed within government”.
By the end of July 2009 the forecast expenditure exceeded budget for the rest
of the financial year by £700m and by the end of the 2020 planning round it was
claimed to be £185m, but the real deficit was more than £500m.
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