Press Release - Home Office Resource Accounts 2005-06
11 December 2006
Sir John Bourn, head of the National Audit Office, has today
reported to Parliament that he is qualifying the Home Office
2005-06 Resource Accounts because Accounting Standards require
these accounts to include the 2004-05 results. But for this, and
the qualification relating to its accruals at 31 March 2006, and
the corresponding expenditure, he would have been able to give an
unqualified opinion on the truth and fairness of the Home Office
2005-06 Resource Accounts.
Today’s report shows that the Home Office has worked to address
many of the fundamental problems in the 2004-05 accounts and has
been able to provide a much improved set of accounts for 2005-06.
This situation represents a significant step forward for the Home
Office.
The Home Office has been unable to provide sufficient evidence
that there is not significant duplication between the different
methods of recording on its accounting system its liabilities to
suppliers. Weaknesses in the system have also meant that the Home
Office cannot easily match its records to supplier records and that
invoices to the Department can be paid without their being properly
matched to purchase orders. The Home Office is working to address
these issues and hopes to be able to fully support this balance in
the 2006-07 accounts.
Sir John has also qualified the accounts because of the knock on
impact of his disclaimed opinion for its 2004-05 accounts. The Home
Office has, however, revised the 2004-05 balance sheet and Sir John
was content that the comparative balance sheet included in these
accounts presents a true and fair view.
Many of the system and control weaknesses from 2004-05 remained
present in 2005-06. In particular, there were inadequate controls
to match payroll and personnel records to determine exact staff
numbers within the department. Furthermore, due to ineffective cash
management procedures the Home Office failed to draw down
sufficient funding from the Exchequer, which resulted in a
technical overdraft of £246 million with the Office of the
Paymaster General.
The Home Office faces significant challenges in 2006-07 given
that many underlying system weaknesses have continued into the
current financial year and a full assessment of remedial action is
only now taking place. The focus at senior levels will need to be
sustained to drive through the process and cultural changes
necessary, including enhancing in-house capabilities, to support
effective financial management across the Department’s
activities.
Sir John Bourn, head of the National Audit Office, said
today:
“The Home Office has recognised the need to improve its
financial management and the action taken this year led to a better
set of accounts. Building on the improvements to its accounts
production processes, there is much to be done to embed a culture
of strong financial management at the heart of the Department. As
part of this, the Home Office will need to continue to build a high
quality team of in-house finance professionals.”.
Notes for Editors:
- Accruals are liabilities to pay for goods or services that have
been received or supplied but have not been paid, invoiced or
formally agreed with the supplier, including amounts due to
employees.
- 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.
- The Comptroller and Auditor General, Sir John Bourn, is the
head of the National Audit Office which employs some 850 staff. He
and the NAO are totally independent of Government. He certifies the
accounts of all Government departments and a wide range of other
public sector bodies; and he has statutory authority to report to
Parliament on the economy, efficiency and effectiveness with which
departments and other bodies have used their resources.
Press Notice 75/06
All enquiries to Mark Anderson NAO Press Office: Tel: 020 7798
7558
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