"Defra has made progress in its financial
management. However, there is more to do and progress needs to
speed up. The Department should grasp the opportunity of its
recently-launched change programme to instil good financial
management across its business and deliver better value for
money."
Amyas Morse, head of the National Audit
Office, 25 November 2011
Despite the fact that the Department for
Environment, Food and Rural Affairs has made improvements in its
financial management, the NAO cannot yet conclude that the
Department is achieving value for money in its financial management
activity. This is because the spending watchdog expected faster
progress in improving performance since it last reported in 2008
and a higher level of financial maturity, given the resources spent
and the focus on financial management.
The Department has undertaken a number of
projects designed to strengthen its financial management. These
have had some positive results, such as revised management
reporting and improved forecasting, although the Department has not
fully assessed all the benefits of these projects.
The Department has improved its financial
capacity and capability, by increasing the number of permanent,
qualified finance staff and also by offering financial skills
training courses for non-financial staff. However, there are still
weaknesses in financial capability; and financial skills could be
better integrated across the Department. The Department should also
focus on improving its commercial skills, such as contract
management.
Internal control and risk management, both in
the Department and its arm’s-length bodies, have improved, but the
Department should now focus on developing greater oversight of
those bodies. The Department has started to work more closely with
them, but it needs to be more proactive in its engagement, so that
this becomes ‘business as usual’. It should also develop a
strategic model for engagement with its arm’s-length bodies, to
understand the risks that they face and opportunities open to
them.
Since 2002, Defra has consistently underspent
against its Parliamentary estimate. The underspend in 2010-11 was
£530 million (10 per cent). The Department has, however, improved
its management of expenditure against its departmental expenditure
limit, reducing its underspend in 2010-11 to £34 million (one per
cent of expenditure).
Publication details:
HC: 1593, 2010-2012
ISBN: 9780102976922