The Comptroller and Auditor General, Amyas Morse, has for the second successive year qualified his opinion on the financial statements of Defence Equipment & Support (DE&S).
DE&S has again been unable to provide sufficient evidence to support certain costs, or demonstrate that all costs it has incurred, have been included in the financial statements.
The C&AG has therefore limited the scope of his audit opinion in respect of this expenditure which amounts to £434 million for private sector support costs and £65 million for other programme costs.
Private sector support costs include manpower support, consultancy assistance and technical support in the areas of project management and logistics capability. Other programme costs include travel and subsistence, training, safety and other office running costs.
In 2015-16, DE&S introduced an improvement programme to address the previously identified weaknesses which led to the 2014-15 qualified audit opinion. However, given the scale of the challenge, the programme was designed initially to provide evidence to support the trade and other payables balances meaning that the C&AG was able to remove this element of the 2014-15 qualification.
To remove its qualification relating to expenditure the Department needs to improve how it identifies and records private sector support and other programme costs. The Department’s ongoing improvement programme acknowledges this and it is developing financial management systems, processes and controls to record its costs to a level of accuracy needed for a clear audit opinion in future years.