"The Department knows its increase in funding, and new
approach to aiding developing countries, brings challenges. This
report shows considerable progress is being made, but a better
information environment is needed to deal with the heightened
levels of assurance required in targeting future aid at higher risk
locations
Amyas Morse, head of the National Audit
Office, 6 April 2011
Sound financial management will be essential
at the Department for International Development as its spending
increases by a third over the next four years, according to the
National Audit Office.
The Department has improved its core financial
management and has an ambitious programme underway to improve its
focus on value for money. It has put important building blocks in
place; however its financial management is not yet
mature. The Department cannot yet assess important
aspects of the value for money of the aid it has delivered, at an
aggregated level.
The Department’s programme budget will grow by
£3.3 billion from 2010-11 to 2014-15 (34 per cent in real terms).
At the same time, its administration budget is going to reduce by a
third. The Department will face significant financial and
operational challenges, making sound financial management
essential.
The Department has increased the number of
finance professionals it employs, but this expertise needs to be
used more effectively across the business. In addition, new
financial information systems do not yet provide the data needed to
support well-founded decisions and forecasts are still an area of
weakness.
Having conducted a thorough review, the
Department now has a high level plan allocating its resources on
the basis of the results it aims to achieve. Along with
actions to strengthen measurement of aid projects, this has the
potential to help strengthen the focus on aid results and value for
money. But key risks need to be managed and the Department
should now develop a coherent, single strategy for doing so.
With greater spending in higher risk locations
and more fragile states, the Department must do more to assure
itself that it minimises fraud and corruption risks. Although the
level of reported fraud is low, it is likely to be
under-reported. The NAO has found that the investigation of
fraud is reactive and the Department does not attempt to quantify
its estimated likely fraud losses.
Publication details:
HC: 820, 2010-2012
ISBN: 9780102969665