Amyas Morse, the Comptroller and Auditor General (C&AG), has qualified his audit opinion on the MOD’s 2013-14 accounts.
Accounting for lease-type arrangements
The C&AG has qualified his opinion for the fifth year because the Department has not complied with the accounting requirement under the International Financial Reporting Standards (IFRS) for determining whether a contract contains a lease (the kind of contract which provides the Department with exclusive or near-exclusive use of assets and capability). The C&AG has noted that the Department has made some progress in quantifying the impact of non-application of this Standard. The Department’s review confirms that the omission is material to the financial statements.
The MOD has provided a materially correct valuation of military equipment in the form of inventory and capital spares (at 31 March 2014). In response to previous NAO reports, the Department has implemented a systematic impairment review process and exercised greater control over its inventory and capital spares equipment.