WIREDGOV

Amyas Morse, the Comptroller and Auditor General, has again refused to sign off the financial accounts of the Ministry of Defence.

While the Department has improved its recording of the equipment and supplies it holds in its warehouse and stock systems, the C&AG has not been provided with sufficient evidence to support MOD’s valuation of military equipment in the form of inventory worth £3 billion and capital spares worth £7 billion.

The Department has not yet obtained the necessary approvals for the remuneration package of the Chief of Defence Materiel. Consequently, the C&AG has reported on the absence of this authorisation.

The C&AG has also qualified his audit opinion because the Department has not complied with the accounting requirements, introduced under International Financial Reporting Standards, for determining whether a contract contains a lease. The Department has therefore omitted a material value of assets and liabilities from its Statement of Financial Position for the third year running. The C&AG cannot quantify the impact of this on the accounts with certainty because, as a result of its accounting policies, the Department has not maintained the records, or obtained the information required.

Amyas Morse, head of the National Audit Office, said today:

“The Ministry of Defence has made welcome progress in improving the way it keeps track of its inventory and capital spares. It is still not able, however, to provide enough evidence to meet the accounting requirements for its valuation of over £10 billion worth of military equipment.

“It has again not followed proper accounting requirements with regards to leases. Therefore, I am qualifying my audit opinion.”

Notes for Editors

1. The C&AG has removed his limitation in scope in respect of BOWMAN radio equipment which in previous years the Department had been unable to verify to suitable accounting records. The Department has now established sufficient mechanisms to verify these assets to the standards required for the purposes of the audit opinion.

2. Press notices and reports are available from the date of publication on the NAO website, which is at www.nao.org.uk. Hard copies can be obtained from The Stationery Office on 0845 702 3474.

3. The National Audit Office scrutinizes public spending for Parliament and is independent of government. The Comptroller and Auditor General (C&AG), Amyas Morse, is an Officer of the House of Commons and leads the NAO, which employs some 860 staff. The C&AG certifies the accounts of all government departments and many other public sector bodies. He has statutory authority to examine and report to Parliament on whether departments and the bodies they fund have used their resources efficiently, effectively, and with economy. Our studies evaluate the value for money of public spending, nationally and locally. Our recommendations and reports on good practice help government improve public services, and our work led to audited savings of more than £1 billion in 2011.